Here Is Why MLM Is Just About The Worst Choice For Business You Can Make

[DmitryDavydov]

But like many multilevel marketing companies, Pre-Paid Legal suffers from high turnover. In 2005, the company replaced at least 50 percent of its active sales force, according to filings with the Securities and Exchange Commission. Industrywide, multilevel marketing companies typically replace almost all of their sales representatives every year.

Source - NYTimes.Com

http://www.nytimes.com/2006/11/13/business/13short.html

[mrkpinero]

*shrug* Who needs legal services on a day-to-day basis? Yuck.

[Dave Kaminski]

McDonalds has on average a 300% employee turnover. Doesn't make it a bad business model

[tropicality]

Having been part of mlm myself and then really studying it (its also what brought me into personal development) I have to come to the following conclusion, and I think anyone would agree:

The reason mlm is given a bad rep, is because there is no one telling you what to do (and society is conditioned to be told what to do!). You are basically given all the freedom you want to go forth and reap the benefits of a mlm system IF YOU CHOOSE TO. However, many people 'unconciously' make the decision to get involved, or are excited about it the day they sign up but then everyday after that they lose more interest. And because they lack self initiative (they are waiting for someone to tell them what to do...) they develop the idea that mlm has scammed them and that it doesnt work...

It only works for the people who work it! People expect too much from nothing. Another problem is that most people will listen to their broke friends advice that it isnt going to work and so they take on that belief and create it a reality.

And now they have to go and create laws to protect this? I mean some companies were sued for making false claims, and so now every (smart) mlm company is already stating their turnover rate or income levels during the signup process.

It is kind of ridiculous to have to make a law like this if you think about it, it is a bandaid to the real problem - that people need to wake up and smell the roses around them. I have met many people who are experiencing abundant success in all areas of their lives because of mlm.

[mrkpinero]

Originally Posted by tropicality

Having been part of mlm myself and then really studying it (its also what brought me into personal development) I have to come to the following conclusion, and I think anyone would agree:

The reason mlm is given a bad rep, is because there is no one telling you what to do (and society is conditioned to be told what to do!). You are basically given all the freedom you want to go forth and reap the benefits of a mlm system IF YOU CHOOSE TO. However, many people 'unconciously' make the decision to get involved, or are excited about it the day they sign up but then everyday after that they lose more interest. And because they lack self initiative (they are waiting for someone to tell them what to do...) they develop the idea that mlm has scammed them and that it doesnt work...

It only works for the people who work it! People expect too much from nothing. Another problem is that most people will listen to their broke friends advice that it isnt going to work and so they take on that belief and create it a reality.

And now they have to go and create laws to protect this? I mean some companies were sued for making false claims, and so now every (smart) mlm company is already stating their turnover rate or income levels during the signup process.

It is kind of ridiculous to have to make a law like this if you think about it, it is a bandaid to the real problem - that people need to wake up and smell the roses around them. I have met many people who are experiencing abundant success in all areas of their lives because of mlm.

I totally agree.

[DmitryDavydov]

Originally Posted by Dave Kaminski

McDonalds has on average a 300% employee turnover. Doesn't make it a bad business model

Yes, but McDonalds employees AT LEAST MAKE MINIMUM WAGE. When you look at MLM, an average "distributor" makes 800-1500 A YEAR. And a lot of people actually invest more in MLM than they get back.

But I think we found some common ground there MLM is the McDonalds of wannabe entrepreneurs. I certainly wouldn't recommend working for the clown either.

[mrkpinero]

One of the things most people don't realize is they have to LEARN how to do it and look for a good company to work for. They're razzled and dazzled by everyone screaming and shouting about hype and no substance.

I'd say one of the greatest things about MLM is it's an opportunity to grow into a better, more well-rounded person (if you do MLM right). Every situation people go through have different circumstances.

[trekr5]

Donald Trump said that if he lost it all again he would become an MLM marketeer

[PMcDonald]

Originally Posted by tropicality

And because they lack self initiative (they are waiting for someone to tell them what to do...) they develop the idea that mlm has scammed them and that it doesnt work...

It only works for the people who work it! People expect too much from nothing

You hit the nail on the head my friend. People lack personal responsibility for their actions. Period. End of story.

People see other people having success and achieving financial freedom in Network Marketing and automatically think it is a piece of cake. The reality is that it is not - it does take real, hard work. However, the distinction is that if you are willing and do put in the sweat equity, you absolutely can get the results you want because you are in complete control

Many just think they can go in, make a conservative effort, and expect their bank accounts to grow overnight and when it doesn't they scream "scam". The only scam is the one committed by the people who pull the sheets over their heads and think they can get microwave results without doing much.

Another thing I crack up about is the people who equate Network Marketing to pyramids. If you have read Kiyosaki's books and in particular the book he co-authored with Trump called "Why We Want You to be Rich", there is a section in which both of them talk about Network Marketing and Kiyosaki lays out the typically corporate structure as being a pyramid. Think about it, one CEO at the top making huge money, with a few VPs under him making a pretty good wage, followed by upper management making a decent wage but less than the VPs. Then you have middle management, making less than upper management but more than the bottom of the pyramid, the worker bees.

I absolutely love that comparison.

[Dani]

50% of companies fail in their first year too.
50% of the remainder fail in the second
50% in the third..

And so it does on. These people often lose tens or even hundreds of thousands of dollars, an MLMer in a genuine company would typicaly only lose 2-5 thousand if they were REALLY high spending and did nothing to earn anything back.

Where are the people screaming scam about starting your own business?

The benefit of MLM is also its down side, the low get in cost means people often lack the incentive to give it a good shot like they would if they put in 50k.

It also means any loser can get in, scam a few people with an otherwise legit business and run for it.

Those of you who have a multi tier affiliate program going on your web site are MLM ing under a different name.

For me, MLM participation has been more about self development and meeting entrepreurial people. I made a bit of money, probably spent more though, but I consider it the best investment of my life.

My non MLMer friends used to laugh at me when I talked about going into business. My MLMer friends not only encourage and support me, lots of them have invested with me in different ventures.

My non MLMer friends just winge and complain about how hard done by they are. My MLMer friends talk about how good life is and how they can make it even better.

I know without a doubt which group I prefer to hang out with.

(on a side note MLMs do tend to attract an above average number of crazies)

Kiyosaki was spot on about the corporate comparison. The biggest difference is that anyone can become a CEO quickly in an MLM if they work at it, regardless of race, age, colour, religion anything. It can be a LOT harder, if not impossible to do it in a normal company for some of those people.

[chicagosuccess]

It also comes down to what organization you'e involved in. Some are built on selling a service, some are built on selling a product, and others are built more on developing a network with some sales thrown in. I think lumping every MLM/Network Marketing opportunity together is like lumping every college together. They don't all have the same professors, or offer the same degree, although their fields of study are usually somewhat similar.

Someone mentioned that no one is there to help you in MLM's and I would contest that this isn't true. As someone currently involved in one, I would say the support is better than anything I've ever done. I agree that the fact that it's open to everyone is a key factor. Yes, McDonald's pays minimum wage, but they also have a hiring process. With many MLM's, for less than $100 you can start if you want to and then there is no pressure to perform.

[Narz]

Originally Posted by Dave Kaminski

McDonalds has on average a 300% employee turnover. Doesn't make it a bad business model

No, if all you care about is profits (no ethics, conscious, etc.).

[Narz]

Originally Posted by tropicality

It only works for the people who work it!

When someone says this you know there organization is shady.

A.A. is a big fan of that one.

[Addict]

I'm gonna be frank. I think this thread could use a lot more skepticism. You are handling a highly controversial system that is now widely considered a scam as a really positive experience.

I'm not gonna go into detail about it. There is already enough information out there if you are willing to look:
In pursuit of the almighty dollar - Consumer Alert - MSNBC.com

I was in a public speaking class a year ago. After a guy gave a speech about owning your own business and he brought in energy drinks into class, I realized he was basically pitching quixtar, which he worked under. In response, I made a speech about the pitfalls of MLM. I researched it and I thought about it. The conclusion I came to was this: you can make a lot of money from MLM, mainly from convincing other people that they can make a lot of money from it as well. People who make the real money are:
a) selling motivation tapes, seminars, and books to people below them
b) using the pyramid system to get profit from lots of people on their downline.

If you want to do MLM, fine. You can make money on it, but all you're really doing is selling overpriced products that are already on the market. I think Steve would agree the best part of owning a business is providing real value to people, not selling them things they don't need in a desparate effort to become rich.

[Isis Kali]

Originally Posted by Addict

I'm gonna be frank. I think this thread could use a lot more skepticism. You are handling a highly controversial system that is now widely considered a scam as a really positive experience.

I'm not gonna go into detail about it. There is already enough information out there if you are willing to look:
In pursuit of the almighty dollar - Consumer Alert - MSNBC.com

I was in a public speaking class a year ago. After a guy gave a speech about owning your own business and he brought in energy drinks into class, I realized he was basically pitching quixtar, which he worked under. In response, I made a speech about the pitfalls of MLM. I researched it and I thought about it. The conclusion I came to was this: you can make a lot of money from MLM, mainly from convincing other people that they can make a lot of money from it as well. People who make the real money are:
a) selling motivation tapes, seminars, and books to people below them
b) using the pyramid system to get profit from lots of people on their downline.

If you want to do MLM, fine. You can make money on it, but all you're really doing is selling overpriced products that are already on the market. I think Steve would agree the best part of owning a business is providing real value to people, not selling them things they don't need in a desparate effort to become rich.

I agree. Plus, there's the old adage, "If it sounds too good to be true, then it probably is." Don't people's mental alarms go off at any point in this? And why, if you're not making enough in profits, would you keep on paying top dollar to go to seminars? That seems a waste of money.

[Dani]

All of the current and past success in my life I attribute a significant portion to the people and materials I studied during my MLM dabbles.

I didn't make much profit in MLM but I made a lot of money outside it using what I learnt inside it, and through contacts with other entrepreneurs.

I do kind of agree that MLM is the McDonalds of the entrepreneurs world. It's the place many start (and many finish I will agree).

I won't try to say they haven't had any negative affects on some peoples lives, but I am glad they exist, for the positive effect they have had on mine.

In the end, you get back what you put in. It works that way with everything in life.

[openmind]

Originally Posted by tropicality

The reason mlm is given a bad rep, is because there is no one telling you what to do

I think it's the other way round: Most MLM companies tell their reps exactly what to do and what they shouldn't do. If you were a real entrepreneur with some common sense, you would not stay long with any MLM company. The best thing about MLM is that they introduce you to some basic success principles. Once you have learned them, you don't need that MLM company any more. Chances are, that company will be out of business by that time, anyway.

[ScottLee]

I just now wrote about MLM today, actually. Here's what I've had to say:

Dirty Mechanism - Personal Development » Challenges and Powerful Potential With Network and Multi-Level Marketing

I just got involved with Prepaid Legal myself. One thing I do stress with people is that there is no guarantee you can succeed in any MLM/network marketing company, and the majority of the people who attempt doing so will fail. It takes a massive amount of energy, and can sometimes give very little return. The biggest challenge is time - how can you utilize time in an MLM scheme to suit your best interests? You can certainly build your income, but how long will it take doing the things that they say will work?

I have currently invested about a year's worth of expenses to attempt a MLM business. If, after a year, I cannot succeed, I will be faced with no other choice but to not only cancel my attempts as an associate of the company, but also to cancel the use of the product that the company provides. I've been at it now for about 2 weeks - and that 2 weeks has already been a difficult challenge.

As many others here have already mentioned, I think there is one thing that some of these MLM companies are doing right, if nothing else - and that is teaching success principles. Many of these companies use systems that pound concepts of personal development related ideas into your brain. And, if people are smart enough to take the advice of these concepts, then there is no excuse for them throwing out $35,000 or however much they're spending purely on training material. That is ridiculous.

You have to know when to quit. And another problem with a lot of these training materials is that people will often pursue only the training materials, and nothing else. People will become addicted to receiving positive motivation, but trapped into doing nothing about what they're being told. It's true that you cannot sit around and do nothing and expect to earn any money using MLM, or any business, for that matter.

There is no reason you would ever have to lose more than you could afford if you're making intelligent decisions. Invest a portion of funds that you can afford and if after a period of time you do not succeed, cut your losses and move on. This is a standard business concept any individual in their right mind should know.

[Liara Covert]

The comments in this thread are great. They remind us that in most cases, the biggest problem with networking marketing is not the systems, but network marketers who lack the initiative, continuing motivation and willingness to learn. That doesn't send an encouraging message to prospective downlines who are supposed to be motivated and teachable to qualify as hot prospects. I would recommend an insightful book on this subject by a successful mlm businessman:
Network Marketers are Upset... New Book: "The Worst Things About Network Marketing Are the Network Marketers"

Funny that although many people don't admit their primary motivation to get into mlm is self-improvement, this actually appears one of the greatest benefits. You can develop traits like self-confidence, determination, resilience, resourcefulness and ingenuity. No matter how long you're involved, or what you earn, transferable skills you develop help have potential to help you excel in all areas of your life.

[sunraybrett]

I have been in several traditional business ventures in the last 20+ years and I am currently part of a MLM.

Some similarities are:

The more effort you put in the more return you get, training materials and seminars improve your motivation and performance and once established you can enjoy passive income. In both there is a lot of work upfront with little return. When the business is build there is a lot of return with little upfront work.

The differences are quiet pronounced:

Capital investment to start:

A franchise: $15,000+ (+ Stock & Equipment)
A business capable of passive income in 2-5 years $100,000+ (+ Stock, Equipment, Staff, Tax, Rent, Insurance, Legal, Advertising etc)
MLM: ~$5,500 including twelve months supply of product, seminars, CD's and books.

Training: Business Conferences +$1500 (+airfares USA) MLM +$125.
Subscriptions & Reference Books: +$7,500 (IT Industry) MLM +$50
Business Coaching: +$5,000 (IT Industry) MLM Free

Is MLM easy? No
Is MLM for everyone? No
Is MLM offer good training, low risk, business opportunity? Yes

If you have ever stepped out of the comfort zone of employment into the self-employer or employer roles then the risks are high: Less than 20% survive the first 5 years. MLM suffers from similar high attrition rates but with one big difference. The people that fail in business can easily lose the house when the business goes bankrupt. If you quit at MLM you lose the $100 or so dollars you initially invested.

MLM does require constant work, training and effort on the part of the person running the business. If you decide you want to watch TV, go play sport or take the kids on a holiday, you can. The business will still be there when you are ready to resume your work effort. Try disappearing from work for a month without notice, or tell your boss you can't be bothered working today, the football is on TV. Will you have a job when you return, not likely?

Put things in perspective, treat MLM as a business, and it will reward you. Unlike your j