Often when you ask about joining an MLM (Multi Level Marketing), people have a strong, highly opinionated reaction. You may have heard MLMs are out to scam you, put you in debt, waste your time, and destroy friendships. All are true. Yet people are still signing up to join MLMs and you can still hear stories about people making a solid living 100% on an MLM income. So what information is the truth and what is a lie?
If you’re still wondering whether you should join an MLM (or network marketing), you’ll find answers here. This article will break down the pros and cons of joining an MLM, based on actual personal experience. For some, joining an MLM is the right choice, while for others, it isn’t. Let’s see which option best suits your situation.
The Cons of Joining an MLM
We’ll start with the cons of joining an MLM. If these negatives don’t deter you, then the positives may be the extra income option you’ve been looking for.
- It’s a saturated market. If you’re considering an MLM company that has been in business for a long time, many of your prospects will already have been approached by at least one person from that company. In one case, someone I spoke to had already been approached by two others in the same company over the years. However, if your company is new, chances are, there is competition in the same niche. For example, there are a lot of supplement and skin care companies.
- The initial and ongoing investment. The cost to start your own MLM business is a lot less then the cost of starting a traditional (non MLM) business. But each month, you will need to order products, maybe products you don’t use yourself or can’t sell, just to keep your business open. You’ll also be expected to spend hundreds or thousands of dollars to attend annual and occasional company training events.
- The stories about getting rich and leaving your 9 to 5 job are exaggerated. Most associates who join an MLM barely make a commission that covers the cost of their minimum monthly order. You will hear stories about a handful of people who went from zero to a six-figure income in a year or two. Success stories like these are the exception, not the norm.
- They say you are self-employed if you join an MLM but technically you are more like an employee (without the salary). The commission structure, price for products, and regulations for advertising your business are all already determined by your company. A true self-employed person decides how much to charge customers, what products to sell, and how to advertise.
- You potentially alienate friends and family. The MLM company encourages you to start by prospecting people you know, which would be friends and family. People who know and trust you could be the easiest to convert into customers. Some people press their friends too hard, however, and cause friendships to end. A friend of mine said his friend gave him an ultimatum: join his MLM team if he really was a true friend or end the friendship. My friend was hurt and haunted by the choice he was forced to make.
- Introverted people with a small social network will struggle. As stated above, you’ll probably start by prospecting friends and family. If you’re an introvert with few friends, you will struggle to find prospects. An MLM doesn’t provide you with leads, so it’s up to you to network and attend social events to meet new people. You can expect to spend a lot of time and money going to lunches, dinners, parties, sports activities, and all kinds of social activities to build these connections.
- Biased information about company products. The company will give you statistics and proof from scientists, medical experts, and industry influencers about why their products are the best or one of the best in that niche. They will explain why direct sales products are not found in stores and are more expensive but high in quality. But they will not tell you if there is a product on the market that is better suited to your specific situation. In my case, they told me I was using the skin cream incorrectly and six months was not enough time to get results. (Later, I tried a product from another company and got the results I wanted in two weeks.)
- Training that depends on the strength of your team and upline. When you join an MLM, you join a team. Your upline (the people who joined before you and brought you onto their team) are responsible for training you on the products and how to get leads. The quality of their presentations and ability to help you with prospects directly affects how quickly you will learn the business.
- MLM is advertised as a source of passive income, but that is a myth. MLM associates look for people who want to start a side business or who are interested in making a passive income. They will tell you that when you recruit your own associates and build your own team, you will make commissions from their sales. In theory, this sounds great, but in practice, you will constantly be working to recruit new members to replace the ones who drop out. You will also need to train and support your recruits. Your income will not be passive – you will work to earn your commissions.
If these cons don’t deter you from joining an MLM, then take a look at these pros. There are success stories about people who do join an MLM and stay on their team because they like the benefits of being an MLM associate.
Related: How to Make Money in an MLM
The Pros of Joining an MLM
For some, joining an MLM has many perks. If these situations suit you, then definitely consider joining an MLM company. I have friends who have been an MLM associate for years.
- Joining an MLM is a lot easier than starting a traditional business or transitioning to self employment. The initial cost of joining an MLM is a lot less than the cost of starting a business. Also, because you are joining a team of people who are part of the same company, you will have people who already know the answers to most of your questions. When you start your own traditional business, you’re on your own as you handle many legal questions such as licensing and collecting GST. You won’t have an upline to teach you about business strategies. You’re the one deciding on what products to develop and what services to sell. If you don’t have a strong business background, all your questions about marketing and sales can be overwhelming.
- You are part of a team. Unless you’re going into business with a partner, it can get lonely really fast if you’re self employed. Many sole proprietors join business groups and networks for the support from people in other companies. If you’re in an MLM, your teammates are part of the same company, and your upline works to support your goals. You’ll make friends who have the same interests.
- Tax deductions and write offs. If you have a stable job (or source of income), your MLM business can provide you with some enviable perks. First, if the products you are buying, such as supplements and energy drinks, are products you want to buy anyway, you can buy products and write off some costs. Second, your MLM business is a business, so you can write off costs such as attending training events and items needed to run your business, such as a phone. MLM associates have received thousands of dollars back at tax time. Third, if your company training event is at a destination such as Vegas, then your hotel and meals are part of your business expense and write offs. It’s like going on a working vacation!
- Learning skills that apply to your personal and professional life. In order to learn to speak to prospects about your business, you need to perfect a few skills.
- The first one is to learn a strong mindset. Many people will say no to you before you get a customer. All those no’s can be hard on you emotionally.
- After mindset, you learn skills such as time management, goal setting, and organization. It’s up to you to decide how often you want to work on your MLM business. Will you work on the weekend or be lazy and watch a movie? It’s up to you. It’s also your responsibility to stay organized and keep track of receipts and other information for when you do your taxes.
- One of the most important skills you will learn is public speaking and giving a presentation. You’ll need to learn how to talk about your MLM business. For many, public speaking is one of their greatest fears. If you can’t overcome this fear, one of the most important aspects of an MLM business will one of your greatest hurdles. If you overcome your fear of speaking to strangers and speaking to groups, you will develop a confidence that will benefit you in your personal and professional life.
- Learning business skills that give you a foundation for starting a real business. You will hear that your MLM business is a business. However, you’re not really self-employed in the traditional sense. You have no control over how much you can charge customers, how much you pay yourself, or how you can advertise yourself on social media. As a traditional business owner, you have control over all those aspects. However, as you learn about building an MLM business, you will learn the foundation for entrepreneurship and developing a business mindset and attitude. If you decide to start a business later, you will already have some important business knowledge and acumen.
Related: Cold Market Prospecting
People may warn you to stay away from joining an MLM because it is a scam. The truth is, joining an MLM may suit the needs of people who are looking for some of the benefits of those who have a side business, without the hassles of a traditional side business. For those who want to get rich, or replace their income with MLM income, their goals may not be realistic. There is no simple answer to whether you should join an MLM, but hopefully this pro and con list will help with your decision.
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