Multi-level marketing better known as MLM was stared in 1945 by the California Vitamin Company which became Nutrilite which is now owned by Amway. Today there are tons of different MLM programs for just about every kind of product or service, including nutritional supplements, household products, cosmetics, diets, telecommunication services. Individual MLM programs are often under scrutiny because many experts and consumers believe them to be a pyramid schemes.
We’ve all received those offers from friends or random people who participate in MLMs to “make money in your spare time” “Control your own time and freedom”, “own your own business” etc. Many of these offers come through our Facebook and Instagram feeds daily and for some of us may even caught our attention once or twice. Then we might start to ponder is this MLM a legit way of making money?
Pros of MLM
- Small amount of risk – For many of us who don’t have a lot of capital to risk when it comes to the “risk factor” MLM is one of the lowest risk we could take. Rather than in a traditional brick and mortal business, the startup cost can be quite high. Therefore, deterring many people away from starting their own business. However, in a MLM style business with a couple of hundred dollars, it is possible to get started with a company of your choice, marketing products that you consume already.
- Residual income – Now for majority of Americans trying to figure out how to create residual income is always something near and dear to our hearts. Having money that comes every month on a certain day brings the financial security many of us desire. However, discovering ways to attain residual income is better said than done. But with MLM it gives you the opportunity to enjoy to enjoy residual income. After the initial effort of building your team is completed, you can enjoy the residual part of that business relationship.
- The income potential – While working in a specific industry there is usually a cap on how much you can make, but with MLM there is no cap on how much money you can generate.
Cons of MLM
To start, MLM often attempts to mask itself under other names in hopes that its bad reputation is not noticed. That’s why it’s often referred to “Network Marketing”, “Direct Sales”, or even “Community Commerce.” But MLM is the only term that explicitly states the “levels” that is indicative of what it truly is. With that out of the way, here are some cons of MLM.
- Fee to “get your business started” – Most MLM business models are usually based around selling products. Therefore, the up-front fees should be unnecessary and pointless.
- Purchases encouraged as “investment” – Often times MLM companies want you to think that making purchases for products within the company will advance your status, or grow your business, more than satisfy sales.
- High income projections – Many companies love emphasizing how much you will make, but rarely mention how you are going to make it. MLM opportunities have proven historically to be, at best, a little better than a side income for most people.
- Money from recruiting – Many MLM business models call for us to recruit another distributor than a new customer. Therefore, their products are not what is driving the company it’s the recruitment. A company that is filled up with people but no products is still just a group of people, not a thriving company.
What are your thoughts? Do you think MLM is a viable business model? Comment below and if you enjoyed this article please share!
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Great post. As an Arbonne consultant on the side, I think it’s important for people to be completely aware of all the areas of MLM before getting into it so that they aren’t caught off guard. Arbonne is very upfront and honest about their business model from the beginning and they never guarantee any kind of income, always emphasizing that you’re income will largely depend on your own personal efforts. There will always be skeptics no matter what though and your post summarizes the pros and cons quite well. 🙂
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Beautiful post. I agree that MLM was tough in past but now as technology has developed, different scientific approaches are created this is not remain tough. It is risky but risk is controlled through proper management decision and with marketing planing.
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You bring up an interesting subject. If you haven’t seen it, John Oliver did an amazing piece on MLMs for his show, “Last Week Tonight with John Oliver” (HBO and YouTube). Here’s the link: https://www.youtube.com/watch?v=s6MwGeOm8iI
Fascinating stuff.
That said, I can see / recognize how attractive MLMs are or appear to be, for women in particular. I’ve seen many women with kids be very successful in growing their businesses and online followings. I can spout off a list of companies that friends have joined over the last several years, including Advocare, Young Living, doterra, LuLaRoe, Jamberry, Scentsy, Plexus, The Pampered Chef, Rodan + Fields, Mary Kay, Beachbody, etc. … It’s a long list.
I have started to participate in Young Living Essential Oils and LuLaRoe (Strictly as a consumer), but I don’t ever plan to become a “seller.” I’ve been asked several times, and I’ve always refused. I have a full-time job that I enjoy, and trying to write for my blog and finish several novels on the side. I can’t see adding one more thing.
Great post, as always!!
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I used to have a very negative opinion of MLM companies, but my thoughts have changed. It’s all about finding the right one, with products or services that work and you can get passionate about promoting. The one I’m in only costs $34.95 U.S. to join and there’s no monthly quota you have to meet in order to stay active. Yes, you do still need to recruit to rank up, but it’s geared on building relationships with others and helping each other out. I think it’s a great business model with so much potential.
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These are often called, “pyramid schemes.” Sadly, many of these turned out to be simple frauds to separate people from their money. I know more people who’ve started selling these products and ended up with a garage full of products they can’t sell, than people who’ve made a profit. The folks who really make money on these aren’t the front line sales people, but rather the people who recruit people to sell and get percentage of of what their recruits sell. The most common pattern I see is someone getting sold on selling, drops a couple of thousand dollars on product, promotion, and start up fees. Then they sell one thing to each of their friends (mostly purchased out of friendship and pity) and two years later haven’t made the money promised in the original sales pitch. These MLMs are frequent targets of Federal prosecutors, the IRS, and various local tax and law enforcement agencies.
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Very good article.
As my business is an MLM I can state that it is a legit way to start your own business. For others wanting to get started in MLM, make sure it is a product you believe in and use yourself and you understand the compensation structure. As well, MLM isn’t a get rich quick scheme, you definitely have to work hard but it is rewarding when you see your clients enjoy your products.
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Great post!
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Very good article. I’ve been waiting for an opportunity to discuss the pros and cons of MLM for a long time. I still think it’s one of the best business models of our generation. The fact that has the potential to create more entrepreneurs and more “job opportunities “around the world, gives people the opportunity to get out of their long term financial ruts and the employee state of mind. This encourages us to live life on our own terms and conditions and increase our standard of living with great products and income streams.
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Your information was very helpful. Keep up the great work!
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Great post. I liked it.
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Great article! Very informative! My cousin has a business on MLM.
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Great Article. It is very easy to confuse an MLM with what most people equate it to “pyramid schemes”. MLM now widely known as network marketing is one of the best ways to build a side income with low or no over heads and a proven system to success. I have been in a network marketing company for the past 3 and a half years. Its single best decision I made because apart from the income streams it has also required me to grow wholesomely. My advice to anyone thinking of going the MLM/ Network Marketing way, find a company and a product that you absolutely love. Don’t chase the high income payouts because like any business there are challenges you will face in building an MLM business, but if you are passionate about the product and identify with the company’s culture and core values then you will be more driven to power through the challenges you may encounter.
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