When I turned 18, I immediately joined Amway. This was before I was married. I cold-called. I drew circles. I drove all over the country to rallies and events. I must have spent a small fortune during the 3 years I tried to succeed with MLM.
Well, sometimes I’m not a fast learner. Around the time I bought H. Roger Neal’s Fast-Flip Real Estate, I got involved with HerbaLife.
Let me tell you, that was really stupid. In fact, after I spent some time thinking about their “marketing plan,” I realized it would never work. So I got buyer’s remorse and asked for a refund a couple weeks later. I got some money back, but lost a good chunk of change. (Note: A couple of months later, I found out that HerbaLife’s marketing practices were outlawed. Shortly thereafter, there was a class action suit.)
Anyway, this is all really a set-up for my worst financial decision ever.
I got a mailer about a free seminar in the Denver area where I live. It was to present a business opportunity. The sales copy claimed you could make money while you sleep. That sounded pretty good to me, so I decided to attend.
At the seminar, I discovered the opportunity was to start a vending business. You purchased the machines from the company. Then you placed them at various businesses in your area, filled them with pop and candy bars, and collected the money.
This by itself was compelling to me. But what really got me (again) was the “marketing plan.”
In this particular case, you would buy your machines and be assigned a geographic area. This meant you wouldn’t have any direct competition from other people who bought the same types of machines. This exclusivity appealed to me because in multi-level marketing, anybody could sell anywhere.
Next, as part of the company’s package, they offered to provide a mailing list with pre-printed direct mail pieces. All you had to do was pay for postage and send them out. According to the company, many people were able to place their machines within a couple weeks of mailing the sales material.
All of this got me very excited. It seemed like a complete turn-key system. Just buy the machines, send out the marketing material, and start collecting cold, hard cash.
The cost for this opportunity? A minimum of roughly $18,000. That would get you three vending machines.
If you bought more machines, you paid less per machine. So in my haste to get rich, I decided I wanted five machines. The cost for five was about $28,000, including shipping.
I had one problem. Where was I to get the money?
I began by talking to a bank to see if I could get a business loan. The banker was a savvy man. He had been in the business for many years. He flat out told me the bank would not lend any money to start a vending business. It was too risky. Nearly all of them failed.
But he didn’t stop there. He was so concerned, he gave me some advice I will never forget. He said, “If I was your father, and not a banker, I would still tell you not to do this. It’s foolish, and you could lose a lot of money. There are better opportunities out there.”
Of course, I had spent three years in multi-level marketing. I had been told never to let people steal your dreams. So I interpreted this sound advice as an effort to steal my dreams. So after my wife and I left, I promptly began seeking another way to make the deal work.
That’s when I discovered the concept of a second mortgage…