Have you ever had an old friend contact you after years of no contact? Now suddenly they want to meet up and talk.
Once the ice is broken, you find out they want to pitch you an opportunity they think you simply can’t pass up.
They start throwing out terms like “be your own boss”, “earn a passive income” or “work from home”. They mention it is too good to pass up and how much money you can make.
Does any of this sound familiar to you? They are pitching you to join them in multi-level marketing or MLM.
Before you jump in with them, let’s take a look at how does a MLM work, should you join a MLM and can you make any money from a multi-level marketing business.
How Does Multi-Level Marketing (MLM) Work
Multi-level marketing is a marketing strategy where the distributor’s income includes their own sales and a percentage of the sales their recruits make, or their downline.
Customers can sign up to be a distributor. There is usually a fee to sign up, most times a very large fee. This fee is for purchasing inventory for yourself, and many times you will also be charged a fee for a website to promote their products and other miscellaneous administrative fees.
As a multi-level marketing distributor, not only will you be required to purchase your own inventory and sell your inventory, you will be required to have others join in your downline. See the chart below for a better understanding.
Your best chance for being success with a multi-level marketing company is for your to recruit several people below you, your recruit’s to recruit people and so forth through all the levels that you can earn an income from.
Different MLM companies will pay through different levels. It is not uncommon to be paid through 5 or 8 levels of recruits, it is just that most distributors never reach that level of recruits.
Is MLM A Pyramid Scheme
A MLM is considered a legitimate business strategy, since they are selling actual products. A Pyramid Scheme is focusing on just the recruitment of people and they don’t actual sell any products.
With a pyramid scheme, you pay a fee to join and a portion of that fee goes to the person who you joined through. The only way you can earn any income with a pyramid scheme is by having others join through you. You have no products that you are selling.
Although I would consider both of them a bit sketchy for making any money, a multi-level marketing company is considered legitimate because you sell products as well.
Popular MLM Companies
There are several very well-known companies that are multi-level marketing businesses that you might never have known are MLMs. If you are a woman, over the years you have probably been invited to several in-home parties. The parties most people hate getting an invitation to.
You are expected to go, since they are probably a good friend, co-worker, neighbor or family member and they are going to cost you money. They are also hoping that you join in with them to become a distributor.
It might be beauty products, clothing or home decorations. Here is a list of several MLM businesses that you probably have encountered and didn’t realize they were a multi-level marketing business.
- Mary Kay
- Rodan + Fields
- Team Beachbody
- Pampered Chef
I am sure many of you have been invited to at least one of these parties, but may have never known that the person hosting the party is hoping others would want to join her. That is the best way to be successful.
Should You Join A MLM-Can You Make Money From A MLM
My recommendation would be for you not to join any multi-level marketing company. Many times the expenses that are required to join are more that you will actually ever earn from them.
According to a report from Wikipedia, at least 99% of people lose money from being a member of a multi-level marketing company.
MLM’s continue to exist because participants are told they can achieve large returns, and they aren’t told that statistically it just doesn’t happen. There are promises of large earning potential when that just isn’t the case.
You can click on the MLM companies above that are listed in blue, and it will take you to reviews of those companies. All of them will layout the complete commission structure along with the investments you will be required to make to join.
None of the reviewed companies had people making an average of at least a minimum wage, and most of them average around $350 per year in earnings. That doesn’t take into account any expenses they would have incurred, which would put them in negative earnings.
Joining a MLM company can be a very risky decision and it is very likely you won’t make money from a MLM. If you are still wondering how does a MLM work, I suggest reading a couple reviews on multi-level marketing companies from the list above.
They will provide you with information on payment structure and fees that are required to join, or inventory that you have to purchase. They might not be the company that you were considering joining, but if you read more than 1 of the reviews, you will see they are all very similar.
There aren’t some magical MLMs that you are going to find success with. The only people who are making money from a multi-level business are the owners and maybe a very few who got into the business right when it first started.
My recommendation for should I join a MLM company would be no. They are not legally considered a scam, but the promises made for the amount of money that can be earned is a scam. There might be one person who reaches the top-level and makes good money.
The rest of the people that join, are just helping to support the top members. It is unlikely that most will ever be able to reach even the middle levels of commissions.
The other thing to consider if joining a MLM is how you are start to notice that friend and family will start to avoid you. They don’t want the pressure of you asking them to join, nor do they want to have you pitching your product every time you talk with each other.
If you have any questions or comments, please leave them below and I will get back with you. Please share any MLM experiences you have had below as well. You can follow momsmakingmoneyathome.com on Pinterest, FaceBook or Linkedin for all the latest updates.