MLM: 5 Reasons Why Network Marketing Should Be Avoided

Dangling the carrot stickEver been contacted by a friend or business contact with out-of-the ordinary enthusiasm to catch up and tell you about a potential business opportunity? If you have, it’s more than likely a multi-level marketing or as network marketing scheme. It’s happened to me countless times. Over the years, I’ve joined a couple of schemes. In the end, I realised that MLM wasn’t for me after soon looking at the business model in detail. There are many different organisations that sell products through the MLM model, some more reputable than others. A lot of companies try to change their diagrams so they don’t look like pyramids. Typically, an MLM scheme has a product and an associated business opportunity (which is to sell the products and the business opportunity). Regardless of the actual product, the fundamental business model remains the same.

Dangling The Carrot Stick of MLM

If you’re experienced the MLM pitch before, you’ll know it sounds interesting. With talk of building massive amounts of wealth and setting up your financial future so that eventually you won’t have to work again, who wouldn’t be interested? You’ll learn that income building is all about working smarter and not harder. You will be given resources by Robert Kiyosaki and probably introduced to his ‘Cashflow Quadrant’ concept (I have nothing against Robert Kiyosaki – quite the contrary). You will be introduced to the concept of not being stuck in the employee mentality for the rest of your life.

You’ll learn why now is the opportune time to get involved in this business venture, and that it doesn’t require a lot of time. In fact, it’s flexible. You devote the time you have available. Once you learn about the compounding effect of building your sales funnel, you’ll see some numbers that might seem a little too good to be true. But at the same time, you’ll probably thinking ‘how hard can it be?’. The idea of surrounding yourself with other like-minded entrepreneurs and independent business owners is tempting. As they say – environment is everything. You might be introduced to the team that will motivate and inspire you to achieve greatness. You’ll be given access to other personal development materials and sales tools. The stuff to keep you focused and pumped on a daily basis. You’ll feel awakened and empowered to finally bring about change in your life.

This is the far too familiar picture that gets painted, but unfortunately this experience is part of an over-enthusiastic sales pitch.

Here are my top 5 reasons why I think you should avoid network marketing:

# 1. You Must Fake It Until You Make It

Fake it until you make it

Unfortunately, in order to get people to become their own independent business owner, you have to sell them on the ‘dream’. The ‘dream’, referring to the ability to sign up others who will actively push the business opportunity more so than the products themselves. That’s where the real leverage kicks in.

In the beginning, you’re selling a dream that you haven’t achieved yet for yourself. Your ability to reach your dream is directly related to how many people you can convince that this dream is actually achievable. The cold hard reality of your life right now might be the opposite of what you’re preaching. You’re working your ass off with multiple jobs just to pay the bills. The amount of hours you spend on this business is a lot more than you let on. It seems a lot easier on paper than in reality. You have to work a sales pitch that you know is a little too sugar coated.

# 2. You’ll Sell Products That Are Way Overpriced

Business woman pull money from vacuum cleaner

This a very generalised statement and isn’t the case for all products. However, there is some truth in it. Quite often, how you make money from product sales is comes from savings the company makes by outsourcing the majority of sales and marketing to you. The idea then, is that savings made get passed back to you and your up-line. Depending on what the product actually is, its common for a product to be equally expensive if not more (especially when you consider the added cost of postage and handling).

Sometimes people can get caught up in the hype of the business opportunity and can be blind-sighted by just how average or mediocre the products actually are. People get a little too enthusiastic about the products – it comes across as very disingenuous. If the product itself is very poor, or there isn’t an obvious product, then this would get closer to falling into the definition of one of those nasty ‘pyramid schemes’ that isn’t long-term sustainable. So if you do get involved with an MLM, make sure that you LOVE the product more than the business opportunity. Make sure that you can see the long term value of the product, and be genuine.

# 3. You Don’t Have Ultimate Control

Businessman with his Mouth Taped shut

From the beginning, you will be sold on the lifestyle of an independent business owner. Owning your own business, becoming your own boss, setting your own hours and creating your own opportunities. However, there is a catch. Most MLM companies set strict requirements on how you can and can’t promote their products. In essence, you’re at their mercy.

You often can’t on-sell or re-brand the products – ie. buy in bulk and sell yourself under a different label. There could also be catches to the way you can advertise the products, so make sure you read the terms and conditions throughly. You might initially think you’re an independent business owner, but soon you could realise you’re nothing more than a commission only salesperson with no control whatsoever!

# 4. You’ll Lose Friends In The Process

Talk to the hand!

Typically, you get involved in this business with the understanding that it can become part of your daily life. You mention in general conversation about what you’re doing and next thing you’ve organised a catch up with your friends, family or colleagues… Or the guy from the corner store. In time, you’ll start approaching your wider network of contacts. The problem? MLM has been around for a very long time and doesn’t have a good name or reputation, regardless of the reputation of the individual company. You’ll be faced with people who are instantly turned off by the fact that you’re involved in a network marketing company. Some will be annoyed by the fact that the reason why you contacted them wasn’t just to ‘catch up’, because you had another motive.

MLM typically encourages you to pitch to everyone. I’ve seen workbooks whereby you have to write down everyone you know… and then start contacting them. Big mistake! I suggest do the opposite. If you do get involved in MLM, don’t pitch to your friends. Define a very targeted demographic outside of your friendship circles.

# 5. You’ll Wear Yourself Out

Exhausted businessman from too much MLM

The fundamental problem: the ideals and the vision behind multi-level marketing schemes are fantastic, but the vehicle itself is highly overrated.

The vision of being to strive to work smarter not harder, dream big and aspire to create great wealth sounds fantastic. Especially if you can impact the world in a positive way! The problem is, multi-level marketing is much harder than it’s made out to be. When you are promoting something with a bad reputation in the industry, your strike rate for new signups probably won’t be high. I have no doubt there are a select few that do extremely well from MLM, but for the majority, its a frustrating exercise that sucked up a lot of your time. Do you really want to be a 24/7 salesperson?

My Advice? Build Your Unique Dream

follow your dream

Build your own unique dream. Don’t copy a manufactured dream. I’ve heard MLM be described as the business opportunity for the masses. It’s the ‘done for you’ business solution that takes away the need to be creative. It’s a rinse and repeat model for people who aren’t entrepreneurial by nature and don’t want to build something from scratch.

I believe you do better than MLM. I know you can. Tap into and harness your own true abilities and turn them into products that you can scale up and generate passive income. Write books and create educational video courses. Create something, invent something. Share your story. Leave your legacy. Don’t settle for anything less! This will be far more rewarding than selling yet another business opportunity attached to a product.

This of course is my opinion, and I respect your views on this could be different.

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