Chances are, if you’ve expressed any interest in making passive income, a side income, or starting a side business, someone has asked you to join an MLM. These recruiters entice you with an opportunity to make some extra money, or enough money to quit your day job. But how realistic is the expectation that you can make money in multi-level marketing (MLM)?
Before we answer that, let’s start with what an MLM or network marketing is. Investopedia defines MLM as “a strategy that some direct sales companies use to encourage existing distributors to recruit new distributors.” Similar to MLM is network marketing which is another form of direct sales.
In direct sales, a product is sold direct from the manufacturer to the consumer. You won’t find these products at a physical store. You might find them online, but unlike Amazon or eBay, a distributor and their team will make commission on what you buy. Usually the distributor is someone you know, who gave you the link to the website. In my case, it was a long-time friend.
Network marketing is like an MLM in that products are sold direct from the manufacturer to the consumer. The main difference is in how the distributer is paid. Without going into the nitty gritty details, it’s generally easier to make commissions in a network marketing structure than an MLM structure.
The idea behind direct sales is to keep the cost of goods down. The consumer is no longer paying for the cost of displaying or marketing the product in a physical store. Instead, the distributers look for consumers and other distributors to join their company. For example, a friend may ask you to try out their skincare line.
You may have been asked to join an MLM or network marketing company because you said you wanted to make some extra money, or you wanted to start a business but you weren’t sure how to go about it. Or someone may have heard about your health issue and recommended some supplements. You may have been told that you could improve your health while making a side income.
But how much money can you really make from an MLM? Would it be enough to quit your job, or pay all your monthly bills?
Here are three ways to make money from MLM, based on my own experience with the industry.
1. Love the business and the product.
First of all, the key to success in MLM is to love the business (or industry) and the product you are selling. Otherwise, you will fail miserably as a distributer. I learned this lesson the hard way. In a sense, I got tricked into joining.
I’ll confess – it took a year before I decided to join a network marketing company. My friend asked about my ongoing battle with allergies and then offered products from her network marketing company as a possible solution. She also told me about the possible side income from selling supplements. At the time, I wanted to become an entrepreneur but didn’t know where to start. I was skeptical and it took a second meeting with her before I started to warm to the idea of network marketing. In hindsight, I was so naïve.
They told me, if I knew little about business, I could become an entrepreneur with just a small investment. They said that for a few hundred dollars, I could purchase health products that I needed anyway, and that investment could also double up to start my business! I would also be given all the business training I needed.
Those words were promising, and if you’ve been prospected for an MLM before, this situation will be all too familiar. If you haven’t, then be sure to read the rest of my caveats in this article before you consider joining an MLM company.
About a year after I joined, I learned my first harsh lesson about MLM: to be successful, you need to love the industry and love the product enough that you’ll live and breathe it. Let me explain what I mean.
Interest vs Passion
The network marketing company I joined was a health products company. I was interested in improving my health, but my dream was never to be in the health and wellness industry. Putting time into learning everything I could about supplements and health products wasn’t something I was passionate about.
In other words, there is a difference between being interested in something as a hobby and throwing your entire career behind it. When I prospected people, I thought they would be excited about my business because they too would see the value of making some money while getting healthy. I discovered how naive I was.
When you have a business you are passionate about, you tell your friends and family about it. You post pictures of yourself and your health products on social media. You write articles or post videos about what you do. Your business is part of your life, and you’re proud of it. Those are signs that your business is your love.
In my case, the only time I told friends and family what I was doing was when there was a product I thought could solve a health problem they were having. When that happened, I would tell them about my side business with the embarrassment of someone confessing they still fear the dark.
How to Avoid Self Sabotage
Somehow, I expected my uncommitted attitude would generate me lots of sales, which it didn’t. My lack of enthusiasm sabotaged my success.
I quickly learned that the first rule of success in MLM is to have a solid passion for the industry. Don’t sell skincare if you don’t want to be known as the owner of a skincare business. Don’t sell home care products if you’re not crazy about them.
Many MLMs recruit people by simply asking them if they want to make some extra money. That’s the sneaky part. I joined the business because they asked me two questions and my answers were yes and yes.
Would you like to own your own business? Yes. Are you open to learning something new? Yes. They signed me up. These questions could lead you to failure.
Instead, ask yourself, are you passionate about this industry? Do you want to learn as much as you can about this industry? My answers to these questions would have been No and No. If I’d asked myself those questions, I could have signed on as a consumer and ignored the business part of the MLM company altogether… and saved myself a couple years of grief.
2. Plan to invest yourself in the business for the long term.
An MLM or networking marketing business is not something you commit a couple of random hours here and there and expect results. You need to treat it as a long-term investment, like rehearsing for a performance or building a house.
Results are NOT Magic
The problem is MLMs tell you about amazing results. No matter which company you join, they will tell you about distributors who have become high income earners. They will share stories about distributors who moved up the ranks at a rapid pace and achieved title after title, while the average distributer stays at the same rank for years.
You desire to become one of those success stories. You’ll yearn to be one of those people who worked hard to build a team fast and got a recurring income from selling the MLM products.
For most people, however, their results are less glamourous. It’s a lot of work to build an MLM business. Depending on how much time you want to commit to your business, you may work your 9 to 5 job, then spend evenings and part of your weekends prospecting and trying to make sales.
Prospecting is meeting potential customers or distributers and telling them about the products you sell. You might meet them for coffee or hang out at a social event to get to know them better. For example, you might go jogging one day to start that relationship, and then talk about your business when they show an interest.
When their interest in your business is stronger, you may invite them to an event where other people from your team can make a presentation or give your prospect the chance to try your products.
The Cold, Hard Numbers
All of these activities take time. It’s rare that you’ll make a sale after just one meeting with your prospect. On top of that, you are also attending trainings to learn more about your products and how to build your business. You’re not likely to get rich overnight.
A study found that “44% of participants dropped out after less than one year working with an MLM.” And after five years, “a minimum of 90% of representatives leave.” In that time, they will have poured thousands of dollars into their business and gotten very little of it back.
In comparison, about 50% of small businesses (not MLM) are still in business after five years. That’s a difference of 40%!
A closer look at the numbers for the same study reveal more grim findings. In a survey of distributors, they found that “14% made less than $5,000″ and “3% made $25,000 or more.” That’s a very small percentage of distributors who can make a side income. That means very few can expect to replace their day job with their MLM business.
So if you do decide to join an MLM or network marketing company because you truly believe in their products, expect to invest many hours and years of your life in it before you make a steady flow of pocket change.
3. Invest in skills that make you money.
While working on your MLM business, take the time to develop your business skills and business savvy. As mentioned above, success doesn’t come overnight. Successful entrepreneurs become masters of perseverance.
As an MLM distributor, you will work long hours and people will question why you would want to be a business owner instead of employee. A job offers long term income and stability. You know exactly what you’ll be paid when you get your pay cheque.
Entrepreneurship is the world of the unknown. You risk pouring thousands of dollars into your business and getting little in return. Or you could hit the jackpot and earn a high income from your investment. You’ll need to put up with rejection and failure before you discover what works.
I learned to persevere and after I left network marketing, I continued to work hard and not give up while I developed my small business. Another skill I developed as a business owner was public speaking.
Most MLM distributors who are serious about building their business learn to make presentations about the products and MLM business. They learn to present one-on-one with a prospect or in front of a group during an event. Some refine their speaking skills through a group like Toastmasters.
You can also learn to elevator pitch – tell people in 30 seconds about what it is you do. I grew confident enough to apply my speaking skills at business networking events. Developing your speaking skills increases your skill set and income potential, whether you are an employee, MLM distributer, or business owner.
Strong leadership skills are the difference between being a manager and team leader, or someone who is a team member. You don’t need to learn to be a great leader. But if you want to step up and earn a higher income, you need to become a leader.
In an MLM, you need to develop leadership skills to be able to recruit distributors to join your team and keep them on your team. If you can’t lead and mentor others, you’re a team of one, without others to share your workload.
Leadership skills are also what you need to become a manager or CEO. It’s also a skill that will lead you to a promotion or income increase.
Is it possible to make money in an MLM or network marketing business? It is, if you fully understand what you’re getting yourself into, and you have a long-term plan. Don’t expect that you’ll become a millionaire but do take the time to learn some of the valuable business skills that they will teach you when you join an MLM team. I’ve moved on from network marketing, but the business skills that I learned while I was a distributor gave me an advantage in my current small business. To me, that is the biggest win.
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