HERBALIFE SCAM OR BUSINESS OPPORTUNITY?...

People often ask if Herbalife is a scam or a legitimate business opportunity. Rather than expressing concern for the products, most prospective entrepreneurs want to know whether the Herbalife business model is legitimate or a pyramid scheme. This is a reasonable question for anyone who’s searching for a reliable home-based business.   My objective here is not to express an opinion for or against Herbalife’s products or corporate policies. Rather, my intent is to present data obtained from official company reports that may help you make an informed decision.

Let’s take a look at the company itself. Founded in 1980 by Mr. Mark Hughes, Herbalife is a multilevel marketing company (MLM) that offers products for nutrition, weight-management and personal-care. A 2008 corporate annual report claims 1.9 million distributors in 72 countries, with annual sales of 3.8 billion dollars. Of the 1.9 million distributors, the report estimates that 505,000 were “sales leaders.” This is their term for distributors who 1) actively market the products and 2) recruit other salespeople into their “down-lines,” or sales teams.  Sales leaders are paid a commission on 1) personal sales of products and on 2) sales made by others who have been directly or indirectly “recruited” into their down-line teams. Sales leaders may also receive bonuses and other commissions on overall corporate sales volume.

Approximately 80% of Herbalife’s 2008 net sales occurred outside of the United States. With the exception of China, the worldwide sales system—multilevel marketing (MLM)–is similar to that used in the United States. China published regulations in 2005 prohibiting “pyramid promotional schemes.” Quoting from the 2008 Herbalife annual report, “These regulations require us to use a business model different from that which we offer in other markets. In China we have company operated retail stores that sell through employed sales-management personnel to customers and preferred customers.” Some non-employee sales representatives are also permitted in select provinces to sell “away from fixed retail locations.”

Herbalife’s 2008 report claims that they are “A world-class company with visionary leadership to support your business.” The report also states: “Herbalife’s mission for good nutrition, a healthy, active lifestyle and financial well-being helps millions of people reach their ideal weight, look and feel healthier, and earn what they’re worth.”  Please remember this quote.

The following statement of earnings is taken from their 2008 Annual Report.

“Herbalife Ltd. Statement of Average Gross Compensation
of U.S. Supervisors in 2008
Herbalife offers its Distributors an opportunity to achieve a lifetime of better health through its scientifically advanced weight-management and nutrition products. While many of our Distributors join the Herbalife family simply to enjoy our life-changing products, others want to share their results and take advantage of the many income benefits our business opportunity provides. With Herbalife, you can work part-time and earn a supplemental income or focus solely on your Herbalife Distributorship and increase your financial potential. It’s completely up to the individual how much he or she wants to achieve! A Distributor earns profits by buying Herbalife products at wholesale and reselling them at retail. If the Distributor wants to increase his or her involvement in the business and enjoy the possibility of higher levels of income, he or she may sponsor others into the business and develop an organization.
Over 25% of Distributors reach the rank of Supervisor and above (“Leader”), qualifying them for additional compensation which is paid by Herbalife based upon the sales production of those they have sponsored directly and indirectly. The annual gross compensation paid by Herbalife to all Leaders during 2008 averaged $2,200. Over 42% of Supervisors are “Active” (defined as those who generated at least 2,500 points of volume in 2008 after becoming Supervisor). The gross annual  compensation paid by Herbalife to  Active  Leaders during 2008 averaged $5,245.

ACTIVE LEADERS
Earning  % of Total;  % of Active Leaders;  Average  Leaders’  Earnings (USD)
President’s Team  0.2%  0.5%  $ 475,789
Millionaire Team  0.7%  1.6%  $ 80,983
GET  2.2%  5.1%  $ 17,785
World Team  2.7%  6.4%  $ 4,479
Supervisor  36.4%  86.4%  $ 440
Total  42.2%  100.0%  $ 5,245″

The same 2008 annual report states:  “We are listed on the prestigious New York Stock Exchange, are members of Direct Selling Associations around the world, and have brand visibility through sports sponsorships.”

A highly significant section of the same report states: “Holders of our common shares may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.  Our corporate affairs are governed by our amended and restated memorandum and articles of association, and by the Companies Law (2007 Revision) and the common law of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Island law are not as clearly established as under statutes or judicial precedent in existence in jurisdictions in the United States. Therefore, shareholders may have more difficulty in protecting their interests in the face of actions by our management or board of directors than would shareholders of a corporation incorporated in a jurisdiction in the United States, due to the comparatively less developed nature of Cayman Islands law in this area.”

To summarize, Herbalife is a Cayman Island Corporation with 1.9 million distributors, of whom 505,000 are “sales leaders.” The average annual income during 2008 for all Herbalife sales leaders was $2,200. Among their active sales leaders,  86.4% earned $440 for the year. 6.4% earned less than $5,000, and 5.1% earned an annual wage of $17,785.  This means that 97.9% of their active sales leaders earned significantly less than $18,000 for the entire year.

Do you recall the Herbalife mission statement from above? It stated: “Herbalife’s mission for good nutrition, a healthy, active lifestyle and financial well-being helps millions of people reach their ideal weight, look and feel healthier, and earn what they’re worth.”

If there is a Herbalife scam, it is that Herbalife management  considers that 97.9% of active sales leaders are “worth” significantly less than $18,000 per year when they choose Herbalife as their home business.

The business model that Herbalife uses appears to be legal in many countries, including the U.S.; however the income distribution is  heavily weighted in favor of the top 0.5% of active sales leaders. Hundreds of thousands of workers at the broad base of the structure do most of the work and produce the income to support a few at a very narrow top. Does this model/structure suggest a pyramid to you?  Should we ask the  Chinese?

Investing precious time and money in a home business is an extremely important decision.  What you choose to do can have a huge impact on you and upon your family’s future.  Please consider wisely before starting  any new business.

After taking a personal look at several of the top multilevel marketing  and other home-based businesses,  Internet marketing offered the best  fit for me. The earnings potential appeared  much greater, and the rate of growth far faster.  This business model allows me to leverage the power of the Internet. More than 1.6 billion prospective customers are already connected to the Internet, and this number is growing daily.

Whether you conclude that Herbalife is a scam, pyramid scheme, or legitimate business opportunity, I encourage you to give serious consideration to Internet marketing before making a final decision.

Click HERE for more information about the Herbalife Scam.

INTERNET MARKETING MAGIC–1.6 Billion Customers Ready To Buy...

Internet marketing is the largest store in the world today. It’s not Wal-Mart or Sears or Costco. Customers don’t even have to leave their homes in order to buy your goods via internet marketing. The magic of Internet marketing is that your customer base becomes much of the civilized world.

Just imagine having a single location for your business where 1.6 billion (with a “b”) potential customers pass by your store every day. That’s how many people are currently connected to the Internet in more than 100 English-speaking countries. Many of them are searching for products or services that will help solve some problem and improve a personal situation or condition.

Each time you sit in front of your computer connected to the Internet, you literally sit about three feet from the world marketplace. This business model is unique in the history of the world, and the market grows daily. Thousands of potential buyers exist for any legitimate product or service you offer at a fair price. Yes, there are many competitors for this business. But many of those competitors are still using outdated marketing methods that don’t work very well.

Hello, Mr. or Ms Entrepreneur–do you sense an opportunity here? Internet marketing magic means money in your bank account.  IM Magic = money.

I once  conducted an in-depth search of top home based businesses. The business models I looked at included multi-level marketing, affiliate marketing, direct sales, medical billing, envelope stuffing, phone surveys and sales, and Internet marketing (IM.) Some Internet businesses are less than ingenious. However, I quickly discovered that the entrepreneur who 1) truly understands Internet marketing and 2) has an efficient marketing system in place, can earn a great deal of money very fast.  Notice that I did not mention the products offered. While any good product or service must legitimately solve a problem for the buyer, the marketing system appears far more important in determining one’s success.

The majority of early Internet marketing entrepreneurs were quite young—in their 20s or early 30s. However, an efficient Internet marketing system today removes much of the guesswork from Internet marketing, regardless of a person’s age or experience. A good system significantly flattens out and shortens the learning curve. The result is that people of all ages with little or no prior marketing experience can now compete quite successfully in this huge marketplace.

Bottom line, my investigation showed that the majority of people of any age who apply the magic of a good Internet marketing  system are: 1) making more money than ever before, 2) setting their own work schedules, 3) spending more quality time with friends and family, 4) eliminating the hassles of commuting, 5) reducing their levels of stress, and 5) enjoying life the way it was meant to be.

Even during the current recession (or depression,) Internet marketing’s magic has continued to expand more than other business models. It appears that this method of doing business is not only here to stay, but growing every day.

Click HERE for an  inside look at the magic of  internet marketing.  Discover in minutes what  most others take years to figure out.  And welcome to the 21st Century.