Why MLM’s Are a Crappy Business Model
Ok, I’m throwing some truth bombs today. I can’t be a good business coach and not address the broken model of MLM’s that many innocent wannabe entrepreneurs fall trap to.
For those of you who don’t know what an MLM is — it stands for Multi-Level Marketing and some of the most popular brands right now include DoTerra, Rodan & Fields and Lularoe.
Now don’t get me wrong, many MLM’s have GREAT products (I’d be embarrassed to tell you the number of DoTerra essential oils in my bathroom cabinet).
But I am here to shout from the mountain tops that they are a crappy business model and that if you want to be an entrepreneur, joining an MLM is the worst of your options.
What do they say?
These companies will try to tell you otherwise. Selling the dream of ‘work from home,’ making money while you sleep and making your own hours, all while showing you the 1% (yes, that is a real stat from the Federal Trade Commission) of people who succeed.
So let’s have some real talk about these so-called businesses, shall we?
Some Straight Talk
First off, let me be clear: MLM’s are not a real business. GASP! Clutch pearls.
They call it multi-level marketing for a reason. You aren’t a business owner, you’re a marketer; a sales rep for their product. And the people who benefit the most are those at the top of that pyramid.
What most MLM’s won’t tell you in their initial pitch is that the only way to really generate a lot of income is to enroll others into becoming a rep, with very little money coming from product sales alone.
So it really annoys me when I hear people talking about their MLM gig as ‘their business’. The truth is you have a side job, not a business. At best, you have a franchise.
And in all honesty, it infuriates those of us who really do own a business. You don’t get to skip the sleepless nights and thousands of hours and dollars invested into birthing a unique idea, product or service out into the world and say you have a business.
Who’s on Top?
When you own a business, YOU are at the top of the pyramid, not the bottom.
This isn’t a personal attack on the representatives (I’m friends with many). Most of my anger is directed at these MLM’s for convincing you that you aren’t one of their drones, inviting you to join an opportunity where the stakes are AGAINST you.
On top of that, they make you PAY upfront to be one of their employees through initiation fees and product purchases. Can you imagine going into an interview at Google and being asked to shell out hundreds of dollars before getting hired?
So let me save you some grief. If you want to make more money on the side, here are a few simple alternatives: babysitting, personal assistant, Task Rabbit, Uber/Lyft, DoorDash. At an average of $15/hr, your odds have already improved.
The Main Reason So Many Don’t Succeed
Most importantly, the reason so many fail at this ‘business’ is because they don’t have the same skin in the game as a true entrepreneur would.
MLM representatives didn’t create the product, which rarely aligns with their bigger ‘WHY’. Most people join an MLM to make money and I know I sound like a broken record, but if you are going into business just for the money, you’re better off just finding a second job.
Especially with the 99% failure rate of MLMs (read more here about the stats), you have more of a chance of winning at the casino.
Starting a business is always about so much more — it will take everything you got so you have to really know deep inside that it is your life’s calling.
For most people, selling essential oils or face products is not what they were put on this earth to do. So they lose their motivation due to this lack of alignment and after a while, their interest in making this model work fizzles out.
It is why I rarely work with someone who comes to me to help grow their MLM ‘biz’. If it doesn’t rattle your soul, we’d be wasting our time.
The Other Reason
The other reason so many are not successful is due to the lack of real entrepreneurial training. I know many of these companies have online portals with helpful information and maybe even educational weekly calls, but this does not replace true one-on-one mentorship and business know-how.
The biggest complaint I’ve heard from those in an MLM is the lack of support. The person who brought them in generally lacks the leadership skills to train and mentor them so they feel isolated.
So even if these companies have an excellent product, most people suck at sales (I know I did when I started). And succeeding in an MLM is all about having strong leadership and sales skills.
These companies do offer opportunities for more advanced training, but you have to PAY for it! And when you do, you’re put into a big conference that is more like an entertainment show than a business training. Who is making money again?
My Real Point
I know this post will probably piss off some of those in my network who belong to these companies. Of course it will — because it challenges something they strongly identify with.
I also know that for some people, joining an MLM really made a difference for them financially but what is important to note is that this is the EXCEPTION, not the rule.
I do know one person who has been able to quit her day job as a result of her participation in an MLM … and she hustles. She has the entrepreneurial spirit and strong marketing skills. I would be so bold as to say that she’d be even more profitable if she had put that time and energy into a business of her own.
My intention is not to vilify you if you’re a representative for one of these companies. I’ve just seen too many disillusioned MLM reps come to me trying to figure out how to stop losing money because the company has failed to fulfill on their promise to support them.
If you are considering joining one, I do hope that this blog post will have you do your due diligence and research first.
If you truly want to start a business, an MLM is not the easy, plug-and-play model they’d like you to think. Your long term success rate is way higher if you choose something that matches your purpose and unique gifts.
