How to Supplement Your Income
Monday, August 14th 2006
Most of us dream of winning the lottery, of getting a call out of the blue to say we're the sole beneficiary of a long-lost rich relative's estate. What wouldn't we do if only we had financial freedom?
Multi-level marketing (MLM) companies promote such dreams - take charge of your life, work the hours you choose and earn unlimited amounts. Products or services are sold direct to customers via a network of sales representatives, who may also be encouraged to recruit more people, who recruit more people and so on. With a solid team under you and group commissions passing through your "business centre", MLM companies promise a path to financial freedom.
While MLMs are legal in New Zealand, pyramid schemes are not. In a pyramid, earning money relies solely on recruiting new people into the scheme; those on higher levels earn more then those below, but ultimately it becomes impossible to recruit enough people for new-comers to make money. MLMs, on the other hand, offer a commercially viable product and the opportunity to earn a living through repeat sales.
Diet supplements company Usana uses the MLM model. Founded in 1992, it listed on the Nasdaq stock market in 1993. Reported net earnings for the first quarter of 2006 were $US9.6 million - a nice earner for majority shareholder and company founder Dr Myron Wentz.
The New Zealand subsidiary's latest financial statement shows it sold $16.9m of product in the year to December 2004, though net profit was a mere $301,204.
I meet a Usana Associate at the company's year-old offices on Auckland's North Shore where I admire the display of products in the foyer.
"Oh, we don't have anything to do with those," I'm assured, "No selling or anything like that."
Nonetheless, I can apparently earn from hundreds to thousands of dollars a week.
I'm whisked through the advantages of Usana's dietary supplements. Aimed at preventing the degenerative diseases that plague modern society. I'm told they're superior to products available in stores. For quality control they're all manufactured at the company's plant in Utah and formulated to the regulations of each country they're shipped to. But we don't linger on the products - it's "the opportunity" that's all-important.
If I buy a minimum of 100 sales points of product each month and then share "the opportunity" with just two people, who buy their share of product and recruit two more people and so on, I'll get my supplements for free and start to make a profit.
This is Usana's "binary" system, where every new person recruits two more. As long as associates ensure that each side of their business is balanced - that everyone in the left and right "down lines" is recruiting two more people, they can't go wrong.
I quickly calculate that if everyone brings on board two people, by the 22nd level of two by two you run out of people in New Zealand.
"It's not true that there is 'no limit to the number of levels from which you can earn your commissions', I tell my contact. "There aren't enough people. And isn't the point of the business the products? Surely Usana is all about people buying vitamins?"
My contact gives me a sad smile and shakes her head.
"You have to share the dream," she insists.
Usana's "opportunity" is sold as a lifestyle choice, a way of taking control of life, your finances and your health in one hit. The pitch is backed up with endorsements from medical professionals with strings of letters after their name and high-profile people in the sports sector.
Initial investment ranges from $99 for a Business Development Pack plus around $280 for the minimum 100 sales points of product (repeated monthly), to $2495 for the Professional Pack containing every Usana product and paraphernalia such as conference tickets and prospecting tools.
The bottom line, however, is that the simple maths of the proposition don't work. The company itself admits that average earnings are little over $1000 per annum. Given that the lowest investment level is around $3460 for the first year, does that seem like a risk worth taking? I don't think so, but maybe I'm just not dreaming hard enough.
Sourced from the New Zealand Herald, By Naomi Madelin
Footnote from Ideal Health:
The following products are all useful for Optimum Health:
Clean Lean Protein
Inner Health Plus
Good Green Stuff
Hi Strength Fish Oil Caps
Superior Olive Leaf
Super Multi Plus
Whey Protein - Vanilla
Mega Zinc Powder Raspberry
Related health information can be found here:
Recommended calcium intake for New Zealanders
Good nutrition for positive weight control
Colds and flu
Water, the elixir of life
Protein - a macronutrient so often overlooked
Related articles can be found here:
If you need help or advice, you are welcome to email our naturopathic team with your health question.
Disclaimer: The health information presented here has been written for the New Zealand health consumer. It is of a general nature and is only intended to provide a summary of the subjects covered. The information is not intended to be comprehensive or to provide medical advice to you. While all care has been taken to ensure the accuracy of the information, no responsibility or liability is accepted, and no person should act in reliance on any statement contained in the information provided. All health ailments should be treated by a qualified health professional.
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