MLMs Aren't Worth It. Here's Why.
I resisted writing this for a long time.
Speaking out against Multi-Level Marketing companies, or MLMs, is a dangerous game to play.
Those who dare, face incredible backlash and entrenched forces. The men and women leading these companies have massive amounts of power and control enough money and influence to silence me...or anyone who speaks out.
And what’s more, theyactively seek out people who are speaking out against them. They know they’re doing shady business, and know they have to watch their backs. And silence whistleblowers.
I also hesitate to write this because I believe there’s more power when you stand for what you’re for rather than what you’re against.
Normally, I prefer to stand on my soapbox and speak out about things I unapologetically support, including:
- Equity for everyone
- Fair wages for all workers
- Businesses that exist for the good of humanity vs. the sole benefit of a few
So speaking out against MLMs feels like it goes against my core values. But... something called me to share this. And when you look at those 3 core values, this message is actually in alignment. This issue weighs heavy on my heart. And if even one person benefits from me speaking out, I’ll consider that a win.
Some hard truths up front: I’m not professionally qualified to convince anyone to leave an MLM. MLMs use cult recruitment tactics - it's tough to break someone free from that without high-level knowledge of how to save someone from brainwashing.
I know you might think I’m being dramatic, but the scammy tactics MLM leaders use ARE this harmful. So this post is not me trying to convince someone who is already fully rooted in an MLM. I need to leave that to the professionals.
I’m here to reach you if you’re considering joining an MLM. Or have recently escaped from one. And I’m here to tell you: If it’s your dream to own a product-based business, an MLM is NOT the right choice.
MLMs “pay” based on recruiting. Because of this, recruiters will tell you ANYTHING to get you to join, not because it’s in your best interest (they know it’s not) but because it’s in their best interest (and their only hope of recouping the money they’ve already invested).
Recruiters use powerful emotional tactics to lure new sellers underneath them.
One of their strongest techniques is to sell the dream of selling what you love. The hope of selling what you love is appealing for obvious reason, but this dream soon becomes a nightmare once the veil is lifted on the flawed foundation of the business model. And because it never pans out, people then think it’s impossible to build a business where you love what you sell, AND make a profit. But I’m getting ahead of myself...
The one way to maybe make money in an MLM is through recruiting others to join below you. If that’s the business you want, ok (of course, there are more lucrative and less scammy ways to make money as a recruiter, but I digress…).
BUT if you joined an MLM because you wanted to make money selling a product, please keep reading (and please don’t join an MLM).
There are so. many. reasons. why MLMs are scams, and not a profitable business for anyone other than the people at the top who are firmly rooted in their position. They never tell you that no one in the bottom ranks will ever rise to their level. That’s done deliberately.
But there is one thing that proves selling products for an MLM will never be profitable for a seller. And that’s the profit margins.
Retailers have to mark up products significantly to make any money. In a retail business standard mark-up is 4x. So if the product cost is $20, the retail price needs to be $80, leaving a $60 profit.
Let’s compare that to the wholesale structure of an MLM.
Most MLMs offer a 20-40% discount for wholesale pricing. If you buy the product at a 40% wholesale discount, and the product sells for $80, you pay $48 for the product, leaving your profit at $32. Much lower than if you used the standard 4x.
$60 profit vs. $32. That’s a BIG difference.
High profits are needed to cover basic business expenses and to pay yourself. This is why 99% of MLM sellers make nothing or lose money (Vegas slots have better odds...seriously).
There just isn’t enough profit to sustain a profitable business (for the seller).
Commission is never high enough to meet that standard mark-up. So after expenses and wages (paying yourself), the 40% “commission” will never be enough.
This leads to recruiting as the only way to make money in an MLM. And even that is shaky.
Bottom line: If your dream is to sell a product and make money loving what you sell, an MLM is not the way.
How do you know? Simple math.
So while I will never convince anyone to leave an MLM, I’m here for anyone who’s thinking about joining. Or for whom the MLM fog has lifted, and they’re ready to pursue their original dream of having their own product-based business that allows them to work flexible hours, make a profit, and be home for their kids.
Shame and blame are the tools used by MLMs to silence anyone who’s “failed” after following their business model. But around here there is no shame, guilt or embarrassment. There is only support. And the belief that it is 100% possible to LOVE what you sell.
The truth is, you CAN love what you sell, AND make a profit, but not if you're working for an MLM. To love what you sell means the product and business are fully aligned with you and your values. It's fully YOU.
I have a method that I've used to create multiple profitable businesses selling what I love. It's a repeatable process you can use too. And I'm here to share that method with you today.
Ready to truly love what you sell? I've got what you need.
It's the first step to creating a business you truly love that ALSO has the solid foundation of a profitable business model.
Get the BRAND NEW guide: 7 Steps to Love What You Sell
It's 100% free and will completely change the way you think about your own product based business.