What is MLM you ask? Simply put, MLM stands for Multi Level Marketing. MLM is a business model used by companies as a means to market their products and/or services. Whereas traditional American businesses use the standard supply chain to distribute their products, MLM companies do not. MLM companies utilize people and word of mouth (both, rather than storefronts, to market and move their inventory. This has many advantages relative to the standard business model like say Microsoft, Toyota, or Dell. Rather than have to setup retail outlets, hire employees, and mark up their products, instead a MLM company can ship straight to a distributor, or customer for example. This saves MLM companies a lot of money in supply chain logistics costs, and as a result those savings can, and in most cases are, passed on to both distributors and customers in the form of enhanced products (through research and development), as well as increased compensation packages.
One of the major problems new business owners face when entering the MLM world is negative criticism. When asked what MLM is, the MLM industry and the concept of negative publicity through the years comes to mind. One of the main reasons for a seemingly large negative rap is the fact that the internet did not exist in the early days of MLM (1970s and 80s). And unfortunately, since distributors acted more like point-of-sale clerks back then, a lot of innocent customers were taken advantage of. Credit cards were abused by reps, products would get ordered and not hand delivered, and things of that sort. It was exceedingly difficult for the MLM companies to regulate this behavior beyond just saying it wasn’t allowed. Today, the majority of MLM companies do their business on the web; this includes enrollment of new distributers and customers, and ordering of products or services.
Another major reason some people frown on the MLM industry is possibly due to the fact that they heard something negative from someone close to them. This is a phenomenon known as word of mouth marketing, and can cause considerable harm to any industry or company.
In the marketing world it is documented that a positive experience by a customer is relayed to 3 people on average, however a negative experience is relayed to 9 people on average! It’s unfortunate that bad experiences get translated to the overall business model or company. This would be the equivalent of starting a restaurant business, having it fail, and then claiming all restaurants are crooked and not sound business models. Ultimately in my experience, when someone solicits tons of negative towards MLM I find it is usually because they haven’t taken 100% ownership of their own results, or done their due diligence in research; nothing more.
The most powerful draw in the MLM industry is the concept of time leverage and residual income. Tim Ferris writes in The Four Hour Work Week about this very concept, and in MLM it is no different. The MLM industry operates on the principle that through sponsoring and training others one can achieve leverage over time through their efforts. Now at first this may sound negative and wrong, but I’d ask you to consider your current situation and the way in which the world works. If you work for ANY company, you are what is called a “wage expense” on their accounting books. This means that if your effort did not result in a net increase that was greater than what it cost to keep you, your company would lose money. It doesn’t take a genius to figure out what would happen to your job at that point.
In addition, the fact that your company is making money off your efforts puts you in the “fulcrum” position, meaning you are being leveraged! In the small business world it is no different; you open a restaurant and hire a bunch of employees, but then have to tend to them, check up on the operation, do the accounting, and whatever else your restaurant demands of you. This type of business model results in ZERO leverage of time. I personally know several restaurant owners, and all of them attest to the fact that although the money is great, they have no time at all. In fact each of them works 80+ hours a week!
There are other business models that do allow you to leverage time, but I personally picked the MLM industry due to the incredible fact that I don’t have to employ anyone! Each new rep in essence becomes their own business, creating a 1099 type income for themselves. Additionally, in order to make any money from the efforts of a new distributor, the new rep first has to make money (it can’t come from nowhere or it really is a pyramid scheme). I can’t think of a business model that is more fair than that.
So below I’ve drummed up a small list of common reasons people decide not to get involved in MLM. I’d like you to consider each one as you read through them, especially if you are new, and see how each reason relates to the human mind’s concept of FEAR and DOUBT. These two emotions are the only emotions that stand in anyone’s way of creating financial success. And I truly believe that if you read the list, you can find a place for each one. Also as a note, if you are new to the industry and have happened upon this site while doing research please make sure as you make your decisions you weigh them accordingly, casting aside any reasons/excuses that contain the above emotions.
Finally, just realize, in the words of Napoleon Hill that you don’t have to be passionate about a business to succeed (since passion can be developed), you just have to possess or build a BURNING DESIRE to achieve your end goal regardless of what that is. One of my mentors said it this way: “If someone told you Jason, I’ll give you $500,000 per year to shovel dog crap would you say no? If it were me I’d ask for a bigger shovel.”