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The truth behind passive income

This is a continuation of the previous article: Considerations before you become an insurance, mutual funds or MLM agent

The truth about passive income is that, it’s never entirely passive. Nothing is truly passive in this world unless you are the few fortunate persons like JK Rowling (who wrote Harry Porter) and famous artists whose records earns millions- and continue earning millions. Even so, they have to continue working very hard. So, passive line is not for the lazy. On the other hand, you can be a naturally ‘lazy’ person or what others considered as a ‘drifter’. But you could behave in that manner because you are generally demotivated. But once you found your true vocation, you would naturally be motivated to work hard. Again, if you never try, you’ll never know.

But before you decide to throw in everything you have and step into the ‘promised land’, here are some the truth even behind those who are truly successful in MLM or in high levels of the chain:

1. Recruitment can never stop

You need to continuously think of ways to recruit newcomers- and groom them. Nowadays, it seemed to get harder to find committed and hard working people- it’s the same challenge everywhere. You have to be there to motivate people, groom them ,teach them, share your clients with them- and out of 20 that you painstakingly groom and develop, probably 2 or less would end up staying with you. And maybe one or none would bring you enough income.


And the nature of the chain is that, once your downline bring in a substantial sales volume, he/she would ‘break’ free from you and their sales may not directly contribute to your group sales. In a way, it is healthy environment that encourages personal growth and independance.

For some companies that people work for, the environment can be toxic- as the capable may be pressed down (as people may be insecure with your abilities) and subjected to office politics.  In some organisations, incapable people are promoted not due to capabilities but on how well they suck up to the bosses.

On the other hand, in the passive income line, the culture promotes and nurtures talents- and those who are in this profession have very little time to indulge in gossip or backstab others- because in this line,  people are recognised through their accomplishments and abilities.  You can flatter and play politics all you want but in the end of the day, you would not be able to sustain if you cannot meet your sales.  So it’s a fair deal.

2. A single change in regulation or new finding can effectively put you out of business

 

An example I would like to give is the government’s continuous discouragement for people to hold too many credit cards especially those in the lower income group. This is to encourage debt. Now, 50% of Malaysians as mentioned in Bernama have income below RM36000 per annum- so a new regulation to limit the number of credit cards these large group have would adversely affect the sales of all credit card agents. Banks have to compete more as there is a smaller size of the pie.

If you are an employed credit card sales officer who consistently achieve high sales- this new regulation would affect your earnings. But from your high sales volume, any company would want you- even if it is not on a directly related field. You can move from one industry to another or move to other more ‘predictable’ positions like a sales director or team leader for a sales team. There’s always elsewhere to look for employment.

But for instance if you are an agent selling GI (general insurance) and have been in this for 20 years- suddenly the government say that customers can renew their road tax online or purchase insurance on their own (bypassing your service), you would find your profit spiraling down. You can’t just join a company at a high level because you do not have ‘working experience’. Furthermore, if you are very used to the flexibility of setting your own time, you would find the fixed hours of a company stifling and torturing.

3. If you don’t make it in the company, you need to start all over again- from zero to build up your business

Failing is not an option if you are in the MLM or an agency manager or leader. You have already worked yourself all the way up to where you current position is. But sometimes demand and marketing conditions changes- people either stop buying or products or they could get better deals from your competitor or via other channels. But because you are tied to the company, you are stuck there- you can’t just resign and move on to the next company.

Well, technically you can, but your existing downlines and customers would by default belong to your upline. It’s unlikely that all your customers and downlines would follow you when you move- especially if your downlines are established in that line. So even though ‘freedom’ is being sold, in a way, you are still totally at the mercy of the company that you are attached to- if the company starts becoming less customer centric or come out with lousy deals, it’ll be difficult to get new customers. If the company gets into a legal battle with a group of consumers for cheating or have anything that affects its reputation, your ‘business’ also suffers.

So they tell you it’s your own business, but really, you are still in the mercy of the company where your license to sell is maintained. Just that you need not subscribe to the regimented working hours and your income can really be unlimited if your hit it big.

4. Sometimes you cannot sleep at night when you cannot meet your sales targets

Of course, if you are a marketing or sales manager of any company, you’ll suffer from the same stress. But no matter how stressed you are, you’ll still get that monthly paycheck- you may not get a fat bonus but with justification why you fail to bring in the company’s ridiculous figures, you’ll still get to keep your job. Else, you can always manage yourself out and move to another company. If you are the sales director of company X, when you move to another company, you’ll still get the same position and probably a better pay.

But if you are an investment agent, meeting the bare minimum to maintain your license is not enough- you would not be able to make enough to pay the bills. You need to make more- and the moment you meet your target and get promoted, you need to consistently meet your numbers. Else, it’s embarrassing to get ‘demoted’ and stripped of your title. If your names appear in all the company incentive trips, and suddenly in a bolt of bad luck you and your team can’t seems to sell, it’s very embarrassing- you’ll probably have to pay out of your own pockets. My friends who are full time in this line do tell me that at times, they really cannot sleep at night.

As a MLM manager/ agency manager would need to continue to learn, improve your skills and maintain that competitive edge (which may not be a bad thing) because you’ll need it to continue motivating those who does not want to be motivated and to further drive your team up to achieve their goals and dreams.

On a brighter side, what continues to drive them is what they do benefits others. Some sold insurance policies to sole bread winners who suddenly got cancer or die of heart attack. The insurance paid for the treatment and compensate the family- so even though the wife is grieving, she need not worry about not having money. For those who are into this line for years, they’ll tell you that it’s always not about the money. The money is what they get on secondary basis. There’s only so much of policies that you can get your relatives and friends to buy- in the long run, those who remain in this field is because they get additional sales through recommendation of others because of their good after sales service. For those who go in just solely for monetary gains, they would not last long- because it takes up to a few years, patience, perseverance and the desire to help others before one can see long term and consistent growth in income.

Most important, you must believe in what you are doing- and when you feel what you are doing matters and you find that it helps and benefit others, you will feel motivated to go on and on. There are challenges in everything that we do- and through meeting these challenges we have personal growth and strength.

If you want to remain in the life of earning passive income, you can choose this route but you MUST REMEMBER NEVER TO REMAIN COMPLECENT. Continue learning and explore other channels of income. Or budget aside earnings that you would take and invest- don’t waste it on expensive holidays, cars, houses (unless you are buying houses for investment). Keep aside as much money as you can- because if things suddenly go downhill at the time your kids are growing up and you need money the most for their education, you’ll be able to afford it.

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