If you’re reading this page, there’s a good possibility you’ve been pitched on starting a multi-level marketing business. Or maybe you’ve heard the term MLM spoken among friends and you’re looking into what the multi-level marketing industry is all about.
I’ve got good news. In this article, you’re going to find out what MLM is, who it’s for, and even not for, why you might consider starting an MLM business, and finally how to succeed in the industry.
Chances are you’re a little hesitant because of the overpromised large commission checks and massive residual income with next to no work.
Congrats, you should be hesitant.
Unfortunately, that’s the over-hyped promise made by many multi-level marketers, and quite frankly veiled promises like that have given this awesome profession a bad name.
I hope that this article will help you understand the business model and the truth behind MLM so that you can decide for yourself if it’s a smart move for you or not.
Now, before we dig into that, I want to first share with you my multi-level marketing experience so you understand my take on the industry and feel confident that this article doesn’t have an ulterior motive.
My Multi-Level Marketing Journey
Full Disclosure: I’m no longer an active MLM rep and I do not work for an MLM company.
However, I was the number one income earner of a network marketing company that I joined while in personal foreclosure.
My focus has changed to now serve the industry as a trainer.
Our coaching and training company was recognized on the Inc. 5000 list as one of America’s fastest-growing companies last year and we solely serve the network marketing profession. We have also been blessed to share the stage with people like Bob Proctor, Robert Kiyosaki, Brendon Burchard, and Tony Robbins.
When you decide to join a network marketing business and want to get started on the right foot, we will welcome you with open arms inside of Rank Makers!
What Is Multi-Level Marketing (MLM)?
Multi-level marketing can be called different things depending on who you speak with.
It’s often called network marketing, direct sales, or home-based business.
The business model is believed to have been in existence since the 1920s, but the exact creation is often disputed.
Most multi-level marketing companies follow a very similar structure in terms of how you are compensated, but it’s important to know that ultimately, it is decided by the individual company.
MLM companies sell physical products (like shampoo, healthy shakes, essential oils) as well as services (travel membership, shopping club) through independent representatives.
Those independent representatives can be referred to as a rep, distributor, consultant, independent business owner, or several other possible names.
The business model utilizes their independent reps as a marketing channel for the multi-level marketing company and pays commissions in a variety of ways.
Instead of companies paying for advertising, they take that budget and put it into the compensation structure.
Essentially, when a sale is made, a percentage of the sale is sent to them.
What it comes down to is this: companies pay their representatives to share their products and services with their network instead of paying for advertising.
Representatives can do one of two things…
#1 They can choose to build a customer base that solely consumes the products or uses the service.
#2 They can also build a team of representatives that also build their own business.
Taking path number two is where the pyramid structure tends to take place.
Those people in your team are known as your downline members.
Success is going to come down to how you and your team show up every day to do the work.
Every time a sale is made through a downline member, a small percentage of that transaction is passed up not only to the referring rep but in a lot of cases to the team above them that are known as their upline.
Despite what others have said…
Multi-Level Marketing is NOT a pyramid scheme.
There’s an easy entrance into MLM.
It doesn’t require a lot of money upfront, and therefore creates skeptics because they were never fully committed to figuring out this industry.
Yes, it does take some training, but without training, you probably won’t know how to reach out to your family and friends without getting embarrassed.
Here’s what an illegal MLM scam looks like…
A Pyramid or Ponzi scheme operates off of the principle of “robbing Peter to pay Paul.”
In other words – illegal and very short-term.
On the other hand, multi-level marketing is legitimate, legal and in fact, endorsed by some of the most well-known people in business and finance.
The reality is, people, wonder if it’s a pyramid scheme because of two reasons.
- People are very quick to point out that an MLM structure is shaped like a pyramid.
Let me ask you, can you think of one corporate structure or org chart that isn’t shaped like a pyramid?
Untrained multi-level marketers often give the profession a terrible vibe and it creates a lot of common misconceptions that people have.
If you think about it, almost anything out there has a pyramid shape in some way, or some form, but just know that the MLM industry is completely legitimate.
- The term “pyramid” is thrown around very loosely.
Here’s what I’ve experienced…
Most people have no idea what pyramid schemes are and therefore, I want to break this down for you.
The MLM industry is one of the most regulated industries around the “Pyramid or Ponzi” type activity.
You’ll see some of the strictest laws with MLM and therefore companies are extremely careful when it comes to how they pay their independent distributors.
A Word Of Warning
If you are introduced to a company that ONLY pays people based on recruiting, I suggest you run in the opposite direction because it won’t be around for long.
Bad press, terrible owners, a change in the product can all lead to bad press.
The unfortunate thing is some companies disguise their business model in an attempt to make it not look like MLM, but it’s important for you to stay compliant with the FTC.
Any time an investigation unfolds, the media gets out their pitchfork in an attempt to take down the profession as a whole.
The good news is, when you join a solid company that pays people based on the sales and production of their team, then you should be in a good place to not worry about losing your business.
Think about real estate brokers for a minute.
They bring on other real estate agents who bring on other agents, and in turn, get paid on every transaction when a home sells within the brokerage.
The same scenario applies to MLM. It’s pretty much an identical process, the only difference is, MLM goes multiple levels deep.
Before you join a company, make sure you do your research and find out more about the company, founders, business model, and compensation structure.
Who MLM Is and Isn’t For
Now that you have a pretty good idea as to what multi-level marketing is and how it’s structured, let me walk you through my take on who it’s for and who it’s not for.
This might shock you, but MLM is NOT for everyone.
Despite being a very legitimate profession, MLM quickly leaves a bad taste in people’s mouths and many people have labeled it as a shady industry that’s not legit.
Those people typically had a bad previous experience with the industry (or know someone who has), or they are misinformed about the profession.
Let me give it to you straight.
To be a multi-level marketer, YOU HAVE TO BE MENTALLY STRONG.
If you can…
- Have a 5-year plan vs. a 30-day or less plan
- Not require acceptance or approval from friends and family
- Commit to attend your company events, work on your skills, and regularly ask people if they are open to your product/service/opportunity…
…then MLM is a very good option for you.
When You Should Join A Multi-Level Marketing Company
If you’re in a place where you need to earn an extra income and are limited with your options, you may consider starting an MLM business because of the leverage it can provide.
It’s never been easier to make some extra money with a side gig.
People often ask me how much money I made in my first month of MLM and I told them I had no idea because I was still earning commissions from people I introduced to the products and opportunity more than five years later.
Crazy, right?
That’s why MANY entrepreneurs get their start in MLM and that start is not always perfect.
It simply isn’t true when people hype up the opportunity and tell you that it doesn’t require a lot of work to earn a decent income.
The sad fact is that those reps are ineffectively being trained by their company and just tell you what you want to hear because they have never had experience running a business.
So they try to sell you the dream, but don’t set the right expectations.
But I tell you, ALL professions have people that DO stretch the truth and don’t run their business with integrity…
…so let’s not single out MLM! 🙂
Building a successful multi-level marketing business is all about introducing your network to the tools your company provides and then allowing those tools to do the heavy lifting for you.
The tools should help build desire in the right prospects and having a conversation with you helps them identify if it’s the right fit for them or not.
If you approach building your business that way, and you don’t overhype the opportunity, MLM can be a great additional income stream, and you won’t be tied down to a schedule.
Always play the long game because that’s where sustainable business growth is.
Whether you decide to start building an MLM business full-time or not is up to you.
The key is to constantly be developing yourself and growing yourself as a person.
Personal growth is required not only in MLM but as an entrepreneur too.
If you’re not willing to commit to investing in yourself to learn every single day, then it probably isn’t the best time for you to get started.
For a lot of people, MLM is the gateway to becoming an entrepreneur and because of that, we are very proud to represent the profession.
Why Start A Multi-Level Marketing Business
Most people believe that income is the only benefit of starting an MLM business.
My wife and I believe that most people WOULD benefit from being in this incredible profession for the cultural experience alone.
It allows you to build your tribe or following…or even join someone else’s to be part of a community.
Once you get past some of the nuances, you’ll probably find the passion for MLM will grow on you!
I’ve personally enjoyed the personal development, community, time freedom, impact, and fulfillment of helping others.
On top of that, network marketing is the lowest risk, lowest overhead way for MOST people to start a business.
Take the show Shark Tank for example…
If you’ve ever watched it, you know you get a little glimpse of what it takes to run a business.
Words like trademark attorney, supply chain management, commercial overhead, outsourcing, research, and development are thrown around and it’s pretty intimidating.
Well, you don’t need any of that stuff to start a business as a multi-level marketer.
How To Get Started & Succeed In MLM
If you want to create success in multi-level marketing, here’s a list of things that aren’t the determining factor:
- The company
- The product, or service
- The timing
- The compensation plan
- Anything else external like that
Just like you would find in every business, the secret to getting started on the right foot and succeeding in MLM is by finding someone that can show you the path to accomplish your goals and guide you along the way.
But without a doubt, success comes down to you and only you.
What you put into growing yourself as a person and in building your business is exactly what you will get out of it.
After working with many top earners in this profession, I can tell you one of the most common traits you’ll find with all these top earners…
…it’s that they are coachable.
There are so many rabbit holes that most multi-level marketers fall into, which is the exact reason my wife Jessica and I started a special community called Rank Makers.
What is Rank Makers?
Rank Makers is a “secret tribe” of sorts where network marketing entrepreneurs, like yourself, can learn and grow WITHOUT feeling discouraged or “put down” by so-called leaders and “trainers” who just don’t understand us.
This group is a SAFE place to learn, grow, and implement “field-tested” and proven social media & marketing strategies to grow your network marketing business.
Inside this group, you’ll discover a community of some of the most inspiring and uplifting entrepreneurs on the planet.
Rank Makers help and support each other no matter what company they’re in. It’s in our DNA.
Our CORE mission and purpose is to help YOU and your team grow, thrive, and rank advance.
You’ll find unique and fun opportunities, limited-time competitions, and training sessions to help you in your quest to hit that next rank.
And when you do, you can BET on it that we are going to celebrate. In Rank Makers, we celebrate your wins.
When you rank advance or help another teammate rank advance. We’ll be among the first to recognize, celebrate, and cheer for you.
After all, this is exactly what being a Rank Maker is all about.
When you decide to join a network marketing business and want to get started on the right foot, we will welcome you with open arms inside of Rank Makers!
Want your team to join Rank Makers too? If so, feel free to tag them in this post and share it on Facebook.
Ray Higdon’s Network Marketing Blog
Email: [email protected]
Facebook – Facebook.com/rayhigdonpage
