Even if you are foolhardy, at most it is likely you will lose less than $5,000 before you give up! Of course, if you quit your job and don’t have other income sources while you are building your business, you may end up broke.

OK, what about unrealistic expectations?
You would never believe that people would go into business with stars in their eyes and the idea that they spend a little money and talk to a few people they will be rich? Yet, that is what many recruiters in MLM would have you believe. Of course you can earn $100,000 or even $1m a year in an MLM business. You may even get lucky, but for most of us, an extra $500 a month would make a real difference. Many experts believe that for most people enough to cover the cost of their product would keep them involved.

When you go into a “normal” business, there are many expenses. First you spend money on premises, advertising so people will know you are there. You may do a publicity campaign, opening specials or other way to get people into your shop. There is shopfitting and display and all the cash registers and other logistical stuff. Oh yes, you have staff to pay as well. Finally you need products to stock on the shelves for people to buy.

For many small business something from $20,000 to $1m or more is put at risk when starting out. This is before a single customer walks through the door!

In MLM, we spend money on initial stock, some promotional material, web sites, telephone and mail. Typically you could run an MLM business including autoship, initial pack purchase, and promotions for less than $2,000 for 6 months. With that small an expense, there is little motivation to succeed. If you have $1m hanging over your head, are you more or less likely to get up in the morning and get going than if it is a mere $2,000? The answer is obvious.

MLM is a sales business and with my methods, we are looking for customers who pay us money and help us recover our costs. We want to get more back from fast start bonuses than we spend on recruiting new distributors. Some of the people will introduce others, and some will place a regular order. It is this money that builds our passive income base.

Monetising your business means receiving more in direct bonuses on new business than you spend on promotion and your monthly autoship. Pretty simple, isn’t it!

What this means.
I would consider the initial pack purchase as a necessary expense.  It is like the shopfitting costs to a normal business. Your internet, telephone, mail, promotional and other expenses are your ongoing business expenses. Your autoship is an expense less the retail value of the product you and your family consume.

When you get your monthly commission cheque, it usually consists of fast start commission, organisation commission (from ongoing purchases) and volume bonuses. So the income from new business is the volume bonuses you wouldn’t get if you weren’t spending the money on recruiting, plus fast start bonuses.

An example of my own. I spent $109 a week on a local paper ad. Over the year, I spent $5,668 In that year I received as a result of that ad income of around $7,000 in fast start bonuses and volume bonuses. I also won two overseas trips! This was a profitable venture. As well as this, my volume commission rose from less than $1,000 a month to nearly $3,000 a month.

Now this didn’t all happen in the first month. Most of it was after 6 months. I attracted a number of business partners and was able to add many customers, some of whom are still purchasing product!

Now imagine if you did this and found 3 other partners who did the same. Imagine if you encouraged and coached them so they received a positive cash return for a year while building an organisation. Yes, you are going to be very successful! The trick is to make a profit from all your recruiting efforts and not rely on your MLM income to pay your household bills.

There you have it, a way to build a long term residual income that doesn’t send you broke and doesn’t cost the earth.

John Gaydon is a successful Internet and Network marketer. He has over 10 years of success with a variety of MLMs and has developed his own unique style of building an organisation. John stays away from the hype and teaches how to build a solid business. He can be contacted at john@pems.com.au