Can I make money in network marketing/MLM?

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Yes, this is a somewhat random topic for a blog about music but I wanted to write about MLM (multi-level marketing) for a few reasons.

First of all, I have a lot of experience in that world. Before I started Vitabase, my first attempts at marketing health supplements were with MLM companies. To this day, I am still getting commission checks from at least 4 MLM companies.

Secondly, MLM is a relevant topic for practically every one of you. At some point or another, you have been approached by a friend about joining a MLM company to sell products and build a downline. In all probability, you have joined (and subsequently quit) a MLM. If you go to church, your chances of having been exposed to MLM are even higher. To the dismay of many church leaders, MLM is very common in church.

The most famous MLMs are Amway, Shacklee, Melaleuca and Herbalife but there are hundreds more. Most of them are health companies though MLM is used to sell many other products as well.

If you know me, you probably would never guess that I am involved in MLM. I never recruit people I know into downlines. You will never have to worry about me having that uncomfortable conversation with you. I don’t mix MLM with my music or Vitabase or anything else. The sole reason I have ever joined any MLM is to sell their products online. I never set out to build a network or downline. In several cases, it just happened on its own as a percentage of customers decided they that they wanted to become distributors themselves.

The main reason I refuse to recruit people into business opportunities like this is because I don’t want friends running the other way when they see me coming. MLM is very bad for relationships.

But a second reason I refuse to recruit people is because I know it almost certainly will not work for them and I don’t want that on my conscious.

I want to give you some numbers in a second to expose you to the truth and help you ward off the people that will try to recruit you. In the unlikely event that you are currently involved in MLM as a business and recruiting other people, I hope these numbers may help you present your MLM in a more realistic way.

The truth is that financial opportunity in MLM is not what it is often portrayed to be. It is true that people can get wealthy in MLM, but most people get poorer.

Let’s take an example of a hot MLM at the moment. I am not going to name it but I am going to share some statistics that they are legally required to publish. (The government has cracked down on MLMs that over-promise financial opportunities and recently decided to force those companies to disclose these numbers.)

Here is a snapshot of their report.

mlm1.jpg

What this chart tells you is that if you join this particular MLM for the business opportunity, the odds of success are small. About 84% of the people who try earn less than than $2,000/year. By the way, that $2,000 is not really what they earn; to participate in this opportunity, they have to place minimum product orders of $100-$150/month. There are numerous other expenses as well such as promotional materials, travel expenses, etc. So really, almost all of that 84% are either breaking even or losing money.
What percentage of the distributors even earn $1000/month (before expenses)? About 9%.

How many distributors could actually potentially feed their families on their earnings? Less than 4%.

How many distributors earn enough to at least be considered middle class? Provided they keep their expenses down, less than 2%.

And how many people earn a great income? Less than 1%.

Seriously, this is a horrible “opportunity.” I am not picking on this company in particular. The numbers are as bleak for all those companies. And frankly, there are lots of problems beyond the lack of money.

My best advice for anyone considering MLM for the business opportunity. Don’t even consider it at all unless the products are good and reasonably priced. And then, be very suspicious. Understand the numbers I just showed you and realize that there are far better business opportunities that have a higher potential for success.