Simple answer, NO!
Some of the best known MLM have been around for decades. Some are traded publicly on the stock exchange. Tupperware (TUP), Herbalife (HLF), Avon (AVP), and Nu Skin (NUS) are just some of the ones I know about. There may be more.
We have taken the time to review various Multi Level Marketing (MLM) companies and review the internet for what people are saying. We were amazed at some of the claims we found from some of the MLM’s but we were more amazed by some of the accusations that are floating around on the internet.
What is an MLM and what is not
If you are not aware of what an MLM offers and is all about, I’ll try to provide a short synopsis based on our findings.
What is an MLM:
- Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate from various products or services, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation.
What a true MLM is not:
- A pyramid scheme is a non-sustainable business model that involves promising participants payment , primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public. These are the scourge of the business world and are total ripoffs. My favorite example of this one is the “Airplane”.
The airplane scheme is pure money based. To get on the plane, you must pay a fee which puts you at the back of the plane. Your job is to get more people on the plan thereby advancing you forward. Once you advance all the way to the captains seat, when the next person comes on board, you are paid a pre-determined amount for having a full plane.It’s crazy and has been around for a long time.
So which one do you try?
My staff and I have been involved with several MLM over the span of our lifetimes. Some have been good and some have been lacking or maybe just not fully developed ideas. We have made money in some and have lost some money. However, I will stress that each time we learned from our experiences and carried them to the next opportunity whether it’s a traditional store front, internet business, or yes, another MLM.
Things we recommend or suggest when looking MLMs:
- Remember, NO MLM is a get rich quick scheme. They do not exist.
- An MLM is a REAL business and it must be treated as one.
- Beware of promises of “easy money”
- Beware of MLM that force you to buy subscriptions to “motivational” messages
- Beware of the MLM that is all about recruiting (see pyramid above) but no product or service
- Investigate the company. Check out its financial standing.
- Check with others already in the MLM to get their opinion
- Check with your trusted friends relatives as sort of a gut check. It’s always better to have different eyes look at something.
- Do your OWN gut check to make sure this is something you are ready to do. If you are not willing to commit to building a business, it is doomed to fail before you start.
- Know your WHY. Why are you starting a business? Is it to get bills paid off, is it to take the family on vacation, is it to be financially responsible for your future and not rely on someone else? Your WHY is what will keep you going during the slow periods. Only you know your WHY.
- Does the MLM offer products / services that people want and need? If you are trying to sell widgets but no one needs a widget, you might be in for a hard time.
- What is the support network like? How does it work? Is there a fee for training or support?
- How engaged is your sponsor? You don’t want a sponsor who brings you in then disappears. You will have a much harder time if your sponsor is not engaged and helping you succeed.
It is a real BUSINESS, Treat it as one
So many people I have run into during my lifetime do NOT treat it as a business then wonder why it fails or they make no money. Of course the easy answer then comes out, “It’s a scam!” when in actuality, the MLM was real but it was mismanaged.
If you open a brick and mortar store, do you keep the lights off, sit in back, and hope that customers come to you? No! Yet, so many MLM people do just that with the MLM. Why?
I would say it’s a lack of leadership from their up-line, lack of training and support, and/or a lack of motivation.
The up-line is just like an area manager for a major chain store. If he doesn’t keep in touch with his store managers and see that they have questions answers, are provided direction, and make sure the company is providing training, the store will fail. The area manager has a vested interest in making sure the store succeeds because his compensation is based on the sales of that store as well as the others in his district.
OK, I know what you are going to say. The area manager probably gets a salary from corporate. I would argue that he also receives a bonus and salary reviews based on his stores performance. BUT, the corporation is the real owner of the business not the area manager. The corporation is totally dependent on sales for it to exist. If there are no sales, there is no corporation, therefore no business.
So you don’t like that analogy. Let’s use a franchise.
Franchisees buy into a proven business model for substantial fee plus a % of sales each month paid to the corporation. Most of time, they must buy all their products & goods, advertising, cups, plates, etc… from the corporate franchise office. They are asked to follow a proven path for success. They are provided access to leaders and training staff who are there to make sure they are successful.
However, there is NO guarantee that they will make money or be successful. Two very important payments are usually required by the franchisor: 1) royalty fee for using the franchise trademark 2) reimbursement for training of the franchisee. These are usually called “management fees” in the contracts that the franchisee signs. (wait, they CHARGE you for training? Most do. Amazing isn’t it?)
The franchisee must work hard , must promote their business to make it work. If the franchisee makes no sales, then bills don’t get paid and neither does the franchisee. (sound familiar?)
I’ve owned franchises, brick and mortar stores, and e-commerce businesses. I assure you, if you do not promote your business and make sales, you as the owner, do NOT get paid and your business will fail.
I own two physical stores now and I am promoting my business daily.
Why are there so many negative things on the internet about MLMs?
That’s the beauty of the internet. It’s easy for people to express their opinions easily. It’s what makes the internet great.
Some MLM’s have gotten into trouble with the FCC and some state regulators over the years. There is no hiding from that fact. Usually it dealt with pushing internal products on their distributors or putting emphasis on recruiting business partners. If companies do something that is against the law, then yes, they should be taken to task over it.
However, if you honestly review most of the negative opinions out there, you will find it comes down to two or three reasons why people are spreading negative information.
- Their business failed and of course, they must find someone to blame instead of themselves.
Most people I have met over the years probably should have never tried an MLM as they really just don’t understand one key factor. It is a REAL BUSINESS and MUST be treated that way.
There is no magic potion or lotion that makes you a success. I met one guy recently who told me he was making no money and the MLM was worthless. I asked him how he had been marketing it. He explained he mentioned it to a few friends and family and they weren’t interested. At that point, he gave up. Really? That’s the whole marketing strategy? If that was all it took, we’d all be millionaires.
- Others I’ve heard or read blogs from never even tried an MLM. They heard from a friend who heard from a friend that MLMs were bad. Again, really?
- “It didn’t make me rich”. Well, who promised you it would make you rich? If someone is giving you false claims of instant riches, that is illegal and should be reported. MLMs are very careful about the claims they make. It is something highly watched by FCC and the States.
An MLM can provide you with a secondary source of income. It can help you pay off bills. If you work hard enough, it can provide a nice income. I have some friends that have done just that. However, it took a long time and A LOT of hard work. It did not happen overnight.
There are many more but those are the top 3 I would say I found or have heard over the years.
In general, MLMs are not scams. There are some that have pushed the legal limits and have been held accountable. You must treat your MLM as a business. If you expect it to be easy, then you are destined for failure. That is not the fault of the MLM but of you. Treat it as any other business, market your business, be coachable by your upline, take advantage of the training, and you too can build an income from it. Just remember, it takes time and perseverance. It does not happen overnight. Commit to it just as you would any other adventure in life and you will be successful.
MLMs are good options for some folks and are not right for others. Neither is right nor wrong. Every person must make the choice for himself after doing the proper research and doing their own gut check about what is right for them.
Good luck and I wish each of you success in whatever road life takes you.
The information shared here in this article is based on personal experiences and many hours of reading offerings of different companies. It is up to you, the individual, to do your own research and come to your own conclusions on what is right for you and your family.