MLM – Multi Level Marketing or Direct Marketing, Network Marketing, pyramid scheme, etc.

I have wanted to write this article for some time now since I have been in the MLM industry in some form or another for over 40 years. I’ve been in sales, in promoting, recruiting, management, development, planning and coaching.

I have to admit that I have made a ton of money in MLM, uh, lost a ton of money, bought a ton of or two of products, stored those products in my garage, a basement, a hall closet, attic, spare room, given it away and thrown it away too…

You can probably tell I have a love/hate relationship with MLM’s in general and specifically. I have to explain the reason why.  However, it should be realized that Network Marketing has created more millionaires than any other industry… including Real Estate.  It’s that profound… and yet, the vast numbers have failed trying to reach for that elusive dream of success… Success being measured as someone who is making more than $500 a month from commissions in a MLM company.  That’s hard to do… in fact, there is more than a 97% failure rate +-3%, depending upon the report or survey taken. That’s not so good for an industry.  Although, it might be interesting to see what the failure rate for… let’s say… the stock market is…? I’m sure it would be high as well.  Thus the love/hate relationship.  Love the success, but on the backs of hard working, hoping people the world over.

There are some inherent problems with Network Marketing that make it look like a scam when in reality, it’s just a typical form of business that corporations and partnerships have been using for eons of time.

Let’s look… the typical plan is one where there is one person or entity at the top, has to be, since the top is the tip top of the whole structure. When you look at a corporation, you have the president at the top, and when you look at an MLM, there is the president at the top. Then you have the admin team, then their friends and then you start getting friends of their friends and on and on until you get the last guy and girl at the very bottom who are looking for people to sign up so they can make a quick buck too… Well, a corporation is much the same way, with president’s hiring an admin team, who hire a support team, who hire sales teams, who hire more sales team’s and support teams and on and on.

So, why do people keep saying MLM is a scam?  I think it comes from the fact that people join because of the hype and hopium of everyone saying it’s so easy, it will happen quickly, it will be easy to get your family, friends and co-workers into it, etc. Well, it’s just not true for the average person, and it should actually be treated as a real business, which it is.  A real business will take a certain amount of capital to start up, a certain amount of time and a certain amount of commitment, dedication and moxy to make it work.  And, there is usually about a 60% failure rate of all business start ups that fail in the first 3 years. So, is an MLM any different from a “real business”? Not really…

However, the benefits of joining an MLM is quite compelling.  It’s actually more like a franchise than anything else I can think of… because it’s more like a business in a box. You pay a very small fee to join, pay for products and have a vast amount of marketing, advertising and support to make sure you are successful.. However, the franchise is not going to do the work for you… otherwise, they would take home the commission check… So, you do have to go to work and talk to people, advertise, get them to listen and buy the products or services.  That’s how business makes money.

I think that most people who are attracted to “get rich quick” schemes are attached to MLS’s for the same reasons… they think they will get rich quick by just joining and hoping the money will flow into their pockets. It won’t and doesn’t.

So, are MLM’s a scam… no, heck no, in fact, they seem to be above average as far as companies and products go because they have to be to survive or they won’t be around very long themselves.

There is so much to talk about MLM’s, their virtues and vices that I will come back to this time again in the future.

If you have a subject you would like me to write about, submit a comment and let’s chat about it.  I love to share my knowledge, expertise and experience on a vast number of topics in finance, health, nutrition, gardening, life and the pursuit of happiness…

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