1.22.2005

What's Your Risk Tolerance?

After my last post, I was struck by this thought.

In listening to radio shows about financial planning and investing, the phrase "risk tolerance" is often used by investment specialists in helping clients determine what type of investment best suits them. It occurred to me that there is an application of this concept to the MLM Industry.

The success and failure rates in MLM are effected by many factors as are traditional financial investments. (Now, I am not suggesting that MLM is any form of investment. Not even close.) What I am exploring here is that people should use some of the same criteria in choosing to involve themselves in an MLM as they may in selecting their investment strategy.

  • What are the initial financial investments one is expected to make in starting with an MLM?
  • Is this money you are prepared to lose?
  • What hardship will this investment create in your life were you to lose it?
  • Is there specific value you receive for the investment in terms of tangible goods or is it only service access?

Once started, what are the known factors that will dictate the maintenance and perpetuation of the business activity?

  • What will I HAVE to DO for the best opportunity of success?
  • Are there additional fees or service charges I will need to purchase for normal business function like office supplies, advertising & marketing costs, supplemental training & education?
  • What are the average costs associated for these items?
  • What is the minimum level of time commitment that will be required to expand my business?
Time is often the most overlooked investment and most often minimalized. Protect this investment most of all and make sure that others in your association share some respect of it.

I suggest that it is vital to consider these points with a realistic view BEFORE you start your business. Trust your instincts, assess yourself realistically, anticipate the degree of risk, and ask enough questions to make the most informed decision possible.

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