In these difficult times it is even more tempting for us to set up an income stream on the side.

Multi Level Marketing (MLM) / Network Marketing can look very appealing:

  • Amazing products (well at least the high prices are amazing).
  • Working from home, quality of life, being with the family and more free time.
  • A residual income plan – the income keeps rolling in when you stop working. Earn money while you are on the beach!
  • You can be a squillionaire in a matter of months and stress will be a thing of the past.

The reality? For most people, the dream of a residual income turns into a recurring nightmare… tiny commissions, reduced self-esteem, friends scared to come round to dinner, cupboards (or even garages) bulging with overpriced water filters, books, pills, potions and lotions.

MLM can work though. Just one MLM opportunity I joined a few years ago paid me over £80,000 and I wasn’t able to be actively involved after a couple of years. And someone I introduced earned over £300,000 from that business, which shows that it isn’t necessarily the people at the top who make the money – he did a lot more work than me and was rewarded for it.

What about pyramid selling?

Most countries have legislation which outlaws pyramid selling. The usual horror stories are:

  • There is no product – like a chain letter where people pay to join a scheme and you are paid a commission for those new ‘recruits’;
  • There is a product, but it’s overpriced to enable the company to pay out the large commissions;
  • New recruits are encouraged to buy a garage-full of products to get started. Water filters and burglar alarms here in the UK in the early/mid 90’s spring to mind;
  • Distributors are paid on recruits rather than on sales of products and services;
  • There’s a large up-front purchase commitment.

‘It’s a Pyramid!’ is the the usual cry from people looking at MLM type schemes. What they really mean is ‘It’s an illegal pyramid’. Every organisation, whether it be a business, a school, a church, the armed forces etc. has a pyramid structure, typically with the ‘boss’ at the top then a small layer of managers, beneath them supervisors and many ‘minions’ at the bottom. So it’s actually not the word ‘pyramid’ that is the key.

A Ponzi Scheme is also talked about a lot. This is actually an investment scheme where a firm or individual takes in your money, promising high returns and pays out those returns from the money of new people coming in. Ends in tears even if the authorites haven’t yet closed it down.

Here in the UK, the courts talk about ‘bound to fail’ schemes. The main reason why they are supposedly bound to fail is somewhere down the line you will run out of people. In reality that is unlikely… there will always be new people to join.

Golden Rules with MLM

  • Be aware of the statistics… well over 90% of people joining MLM schemes lose money and quit.
  • How long has the company been around? ‘Ground Floor Opportunity’ sounds exciting, however most MLM companies didn’t get off the ground when the law was far less strict.
  • Who is behind the company? What is their vision and do they have the track record and access to money to be around for the long term? Are they experienced in MLM as well as in the corporate world?
  • Do you believe in the products? And I mean really believe. Are they sensibly priced (at retail price)? That is often a tough one.
  • If it is pills and potions, make sure no health cure claims are being made and compare the price of their ‘jungle juice’ with health shop prices.
  • Watch out for how most MLMs make money: £100 per month autoship of product. That’s £1,200 per year and it soon starts hurting. That’s why most people quit… more money going out than coming in.
  • Does the pay plan provide short-term income as well as the promise of a long-term residual income?
  • The good news: the entry cost of an MLM business is usually small.
  • That’s also the bad news: there is very little, if any, financial investment. Unless you are highly motivated for your MLM business to succeed, it probably won’t… you have little to lose. The perception to most people (and to your subconscious mind) is it’s more like a hobby than a business. So it usually pays like a hobby.
  • Do you have a big reason for getting involved?
  • Don’t pack in the day job until you are consistently earning more per month than the day job pays. One leader in the MLM industry I know well advises you to wait until you have a buffer in the bank of at least 12 months income after tax before packing in the day job.
  • The BIG one: focus on helping people get what they want and you will achieve your goals. Always think about what value you can give people. The money will follow.

Famous Quotes for MLMers

“The richest people in the world build networks, everyone else looks for work.”

Robert Kiyosaki

“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.”

Calvin Coolidge

“Never, ever, ever, ever, ever, ever, ever, give up. Never give up. Never give up. Never give up.”

“Success is the ability to go from one failure to another without the loss of enthusiasm.”

Winston Churchill

“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.”

Mark Twain

“Most people give up just when they’re about to achieve success. They quit on the one-yard line. They give up at the last minute of the game, one foot from a winning touchdown.”

Ross Perot

“It is not whether you get knocked down. It is whether you get up again.”

“Confidence is contagious. So is lack of confidence.”

Vince Lombardi

“All of us have bad luck and good luck. The man who persists through the bad luck who keeps right on going – is the man who is there when the good luck comes – and is ready to receive it.”

Robert Collier