I live in the multi-level marketing (MLM) capital of the world.
Don’t believe me?
Utah is headquarters to over a dozen of the largest MLM companies in the world:
- Young Living
- And the list goes on…
In fact, a number of my friends either currently work in the corporate offices of these companies or have worked for one of them in the past.
(Shh…. If you know me in person, don’t tell them I wrote this!)
For a time earlier this year, my daily commute would take me past one of several billboards dedicated to “the father of the modern essential oils movement.”
I remember searching for jobs during my freshman year of college. As someone with limited work experience, I was always excited to hear back when I applied for any position.
Recruiters would provide a very general description of the opportunity (“direct sales”), affirm that I was the “the perfect candidate for the job,” and invite me to join a “group interview” with several other perfect candidates.
With so many frequent interactions with MLM companies, it was necessary for me to personally learn about what multi-level marketing is… and why even as a self-motivated entrepreneur and side hustler, it’s not for me!
What is an MLM (multi-level marketing)?
Multi-level marketing, sometimes called network marketing or referral marketing, is a product distribution strategy where companies pay “independent distributors” a commission for selling their products.
Distributors, typically stay-at-home parents, college students or other part-time workers, make money through one of two ways:
- Earning a direct commission for products sold to friends and family
- Earning an indirect commission for products sold by additional distributors they’ve recruited
Multi-level marketing companies promise an opportunity for financial independence, a flexible work schedule, and membership in an exclusive community of like-minded, ambitious go-getters.
So why the hate on MLM’s?
What’s wrong with multi-level marketing?
For starters, most people who participate in MLM’s don’t earn any profits at all!
“The loss rate for MLMs is at least 99%. This means that less than one in 100 MLM participants make a clear profit, and at least 99 out of 100 participants actually lose money!”
This is because there are often significant costs to getting started with an MLM. As a new independent distributor, you may have to pay a racket for your “first-time distribution kit,” training and coaching, product inventory, and more.
Remember those two revenue streams for MLM’s?
- Commission from your sales
- Commission from your recruits’ sales
The most likely profitable path for MLM distributors isn’t from selling products. At the end of the day, it’s all about building a “downline,” or recruiting other distributors who will earn a commission for you.
Doesn’t that sound like a pyramid scheme?
MLM’s can be an extremely profitable venture for individuals who get involved early. However, their reward isn’t for selling the product – it’s for helping to build the sales force.
Unfortunately, the average MLM distributor is going to:
- Struggle to sell the product to others. The exact compensation structure varies by company, but generally speaking, distributors will need to move tens of thousands of dollars in product each and every month to earn a reasonable income.
- Spend lots of their own money on the product. MLM distributors want to sell a product they use and believe in. This sometimes means spending hundreds of dollars each month on beauty products, nutritional supplements, or whatever the product might be. In this case, MLM distributors will often become their #1 customer, spending more than they actually earn.
- Spent lots of money on training and marketing. Business cards, house parties, group training, national conferences, private coaching, a personal website… Distributors can quickly spend hundreds of dollars on non-product expenses that claim to help speed up the path to riches.
- Make the MLM company very, very profitable. As mentioned before, only 1 in 100 MLM participants earn a profit from their efforts. Meanwhile, the MLM companies themselves are sometimes worth hundreds of millions of dollars. Who’s paying who?
So what makes a great side hustle?
Just because working as an MLM distributor isn’t the right option for pursuing your financial goals doesn’t mean it’s time to give on your dreams of finding a flexible way to earn some extra income.
Even though MLM’s may not be everything they claim, you’re still on the right track if you’re looking for a side hustle! Some of the features and benefits of a good side hustle include:
- A change of pace from your typical daily responsibilities
- Little or no startup costs to get started
- The chance to connect with new mentors and peers
- The opportunity to develop new skills
While at first glance, it may seem like an MLM offers these benefits, just remember…
Most MLM’s require an investment that’s rarely earned back, and participating in network marketing often burdens your existing relationships rather than building them!
What should you do instead of MLM?
If you’ve found yourself spurned by the idea of multi-level marketing – whether due to your own personal experience or the endless solicitations on social media – you may be asking yourself:
“Not an MLM… But then what?”
Well, good news:
There’s an almost endless supply of great side hustles out there that can fit your passions, skills, and resources. Whether you need something with full-time income potential or just want to earn some extra cash for a vacation or the holidays, you can find a side hustle that works for you.
If you Google “side hustle ideas,” you’ll find dozens and dozens of examples, but here are four popular side hustle ideas to get you started:
Find freelance work
Not sure how to find your first client? Good news: you can start making money with Upwork in just a few days by creating a targeted profile and submitting persuasive proposals. There are all sorts of projects available on the site, so whether you’re interested in writing code or writing blog posts, you can turn your time and skills into a source of income.
Offer consulting or coaching services
You don’t have to be “the world’s best expert” on a given topic to offer consulting or coaching services. You just need to further along the path than those you’re trying to help or have experience with solving a very specific problem. You could offer to coach a small business owner can how they improve their social media presence, offer personal training sessions within your home, or offer up your career/work experience to help companies on a project-by-project basis.
Start a blog
Earning money through blogging is one of the most popular side hustles because of it’s low barriers to entry. You can get started for just a few dollars. Bloggers earn income through banner advertisements, affiliate marketing, and selling their own products.
While it’s difficult (alright, impossible) to start earning money from blogging overnight, the flexibility of blogging makes it a great lifestyle business!
Launch your own shop
Instead of selling other people’s products, why not create your own? Whether it’s handmade jewelry, wedding decorations, or baked goods, you can enjoy lower costs and higher margins by selling your own products. Depending on what you’d like to sell, you can create an Etsy shop, put up listings on Facebook Marketplace, or set up a table at your local farmer’s market.
If you’ve ever joined an MLM but felt disappointed with the outcome, don’t be ashamed of your choice.
You’re seeking something that appeals to everyone: a flexible work environment, some additional income, and an opportunity to develop new skills and relationships.
While multi-level marketing companies may not be the answer, there are plenty of other side hustles out there to help you pursue your goals.
You don’t have to be an entrepreneur to start your own side hustle, but don’t be mistaken… A side hustle requires hard work, discipline, and time. Find a side hustle that fits your passions and strengths, then take the first steps to get started today!
What’s your experience with earning money through multi-level marketing (MLM’s)?