Starting a Multi Level Marketing Business – Why the Stigma and How to do it Well

Starting a Multi Level Marketing Business – Why the Stigma and How to do it Well

If I had a nickel for every way there is to make money, I wouldn’t be writing this article. I wouldn’t need to. A quick Google search will turn up many different ideas, some legitimate and some not so much. One of those sometimes questionable money making ideas is what we know of as an MLM, or multi level marketing business.

If you were to tell any of your friends or family that you were going to join a multi level marketing business, they would probably roll their eyes at you. Or maybe they would try to talk you out of it, saying that MLM businesses are scams. Just a quick way for you to lose money.

MLM’s carry that big of a stigma. Everyone knows about them. And everyone hates them.

But tell them that you are going to start selling Avon products, or Mary Kay and their reaction may be totally different. Why? Because the most successful MLMs aren’t thought of as MLMs. They’re thought of as legitimate businesses. And they are.

What is a Multi Level Marketing Business

And More Importantly, How do you Make Money

Multi level marketing, network marketing, referral marketing.

These are all different ways to describe this particular business model. But the best way to understand how this type of business works is to think of it by the name people most despise: a pyramid scheme.

I know the word “scheme” typically has a negative connotation, but try to ignore that for now. Just focus on the shape of a pyramid. Or a three-dimensional triangle if that makes you feel better.

At the top of the pyramid is the person who started the business. They sell the product they designed to others and that’s one way they make money. They also recruit others to sell their product.

Their “recruits” don’t get a salary like with a normal “job” but they make a commission on what they sell. And the person at the top of the pyramid makes a little bit from what the others sell as well. (It’s good to be on top, right?)

So how do you make money?

The same two ways. You sell the product to your family, friends, and anyone else you network with and you receive a commission for each sale.

Then you can start recruiting others to “work with you” or “be on your team.” You mentor them so they become great sellers, they sell the product to their network or buyers and you get a little bit of profit on the volume that they sell.

As they build out their teams, you get even more. Sounds great right? Yes and no…

Why Does MLM Come with Such a Stigma?

First off, as each seller builds out their “team,” more and more products are sold and more and more commission gets passed up the line making the few people at the top a lot of money. The people in the middle and the bottom? Not as much, though they’re doing most of the work.

Secondly, many people think that MLMs are illegal (remember that pyramid scheme title?). Typically, they are not, but the US Federal Trade Commission warns that businesses that incentivize you to recruit others to join a company’s distribution chain are illegal.

So if someone says you get cash or something pretty and nice every time someone joins your team (or any variation of that sentiment), it’s probably best to politely walk away.

And finally, MLMs typically ask you to start with “family and friends.” While this is perfectly fine for products/businesses like Mary Kay or some other well-known product, it’s not for others. Sometimes a product may not actually benefit your family or friends. And you typically know this beforehand, but you’re being pushed to offer the product to them.

This is bad product positioning. It’s like asking your dad to buy some Mary Kay toner and moisturizer. But hey, you hit up family, right?

Then there are the less legitimate products/businesses that should raise some red flags. To put it plainly, if you can’t describe what you are selling and the benefits of the product simply and easily, it’s probably not the greatest business to be part of.

And those are the kinds of businesses that create the stigma around MLMs. Don’t try to get your network to buy into one of these. Don’t be that person.

How to Be Successful at Being Part of an MLM

Like we mentioned before, there are very successful MLM businesses. Have you ever seen anyone driving around in a pale pink car? That’s the Mary Kay car. That person/person’s team is probably killing it selling Mary Kay.

And Mary Kay is a great product line. It was the first real makeup I owned as a cute little 14 year old. Same with Avon – we just happened to know a Mary Kay lady so we bought from her.

DoTerra is another successful MLM. They sell essential oils. The woman who started up the website and YouTube channel Weed ’Em and Reap sells doTerra. She is part of their top status where (according to the doTerra website) the average annual amount she earns each year is about twice what I ever earned with a career in Financial Risk.

(If you haven’t checked out the Weed “Em and Reap YouTube channel, it is a ton of fun. I used to watch it while working in a job I hated – my boss asked me what I was up to one day and I told him I was learning how to birth goats. He didn’t believe me… and I wasn’t lying.)

Of course, many people do not make it to such high earning potential with MLMs. Having a successful blog, YouTube channel, or any other social media presence is probably a huge help.

So you can be successful. But how?

1. First off, know that you are a good fit for this kind of business model.

  • Are you outgoing?
  • Can you sell things?
  • Are you good at networking?
  • Can you ask someone to buy something from you?
  • Do you think you can get others to buy into the idea enough to sell with you?

And while in person networking is probably easier for most of us, and once was the norm, don’t write off online networking. Strategies like social media marketing can increase your profitability in the long run.

Creating an online presence is great for this type of business. Selling a product on a website is a 24/7 opportunity. You get to take your kids to soccer practice, or go out for happy hour with your friends, meanwhile your website is still selling.

2. Secondly, decide what your goals are before you start looking into specific companies. Do you want to sell Rodan & Fields at your office as a side gig? It could be a great way to make some extra money or get the products you like at a discount.

Or do you want to replace a full time job? If so, be prepared to put in a ton of work. You are essentially starting a business – just with an already developed product.

3. Finally, find a good, proven business. There are a ton of choices out there. You need to pick a good one. I mentioned Mary Kay and Avon because many people don’t think of them as MLMs. They are that good.

Tupperware is an MLM – remember Tupperware parties? Herbalife, yep MLM.

Here are some questions you should ask yourself to narrow down your selection.

  • Look for the brands that you know and believe in. Do you use the product already? That’s a good sign. Do you hate the product? That’s going to come through in your sales pitch and you won’t make the sale.
  • Do some research on the company itself. Are the reviews good? What do others who sell their products say about them?
  • What are their payment structures like? Each company is going to be set up a little differently. Know how you are going to get paid.
  • Are there minimums that you have to buy each month? Is there a sign up fee? What kind of support do they have? These are all important questions. Do not join a company simply because they have the best commission structure. Or the best prizes or trips.

Remember, this isn’t a get-rich-quick business. You need to believe in the company you are joining (in fact, you should feel the same about any company you work for). If you don’t enjoy what you are doing, then you shouldn’t have quit your stable 9-5.

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