A reader of Nadlique’s Blog, Armandd, has asked for my perspective on Multi-Level-Marketing (MLM). I was supposed to do this write-up a couple of day ago. Sorry for the delay.
This entry might cop me some flaks from the Multi-Level-Marketing (MLM) hardcores. So, allow me to say that these are just my own personal opinions. Thus, it could be wrong. Anyhow, do share any ideas or comments through the comments section. Let’s have a constructive discussion.
Ok, let’s get down to the nitty-gritty details.
So, what does Nadlique think about Multi-Level-Marketing (MLM)? Read on…
MLM is pretty similar to the pyramid scheme, except that you also sell products. However, it is not the same as Ponzi schemes or other illegals pyramid schemes in a sense that a majority of profits are made from sales of products. When I say sales of products, I’m also referring to earning money through sales made by downlines.
But whatever it is, you still work under the pyramid models.
Also, in the MLM industry, you need to work bloody damn hard to actually succeed (granted, you need to work hard as well in other industries!). So, don’t be blinded by promises of easy money or overnight success.
Okay, to me, when it comes to MLM, you can only succeed if you’re the pioneer or… among the pioneers (i.e. you’re at the apex of the pyramid).
When it comes to any pyramid-like business models however, there is one major problem. There’ll be a point in time when the pyramid base is so wide that it’ll be very very hard (to the extent of impossibility), to find new members to join. That means, there’ll be a point in time when a particular MLM business will reach a plateau (flat land). In other words, little to no expansion.
Yes, in the MLM industry, money can be made. In fact, TRUCKLOADS of money can be made. Just that, when you’re right at the bottom, i.e. you’re at the base of the pyramid, things tend to be much harder.
It’s like this you see. Imagine a place where there are only 100,000 people. Say, half of that are interested in MLM and products of MLM. So, that’s 50,000 right?
Assume that you’re in the MLM business yourself and you’re the first one to join. You then recruited another 2 of your mates to be as your downlines. These two found another two for each of them, to be as their downlines. Now, you have 7 fellas in the business. Each of the 4 then found 2 downlines of their own. Now, there are 13 fellas. Soon, it will vastly multiply, further closing to the 50,000 mark. Now, if you happen to be at the bottom, who else are you going to find to be your downlines?
See the diagram below
Yes, you can just maintain only on selling the products instead of finding downlines but remember, others from your pyramid level will also be doing the same thing. You’ll be competing against each other. Not to mention, out of the remaining 50,000 (minus the ones already in the MLM business) in the place you’re staying, how many are actually interested in the products you’re selling. Do you reckon you can replace your income only through selling?
Granted, it might take a while before these problems actually surface, but it will happen sooner or later. And you do not want to be at the bottom of the pyramid.
Of course, one way to encounter this problem is that after one MLM company’s membership base has become too big, change over to another company, i.e. start fresh. That’s why you can read about people in the MLM industry trying their luck in a number of different companies before actually settling with one and hitting the jackpot!
It is also wise to remember that out there, not all MLM companies are legit. Due diligence is necessary to determine the integrity of the company.
I actually know of somebody who is in the MLM business. She made truckloads of money through MLM but after a while, she said that it is not challenging anymore. No new members to be recruited. No more growth, she says. I think this was after 5 years plus.
She now works as a motivational speaker in the MLM industry (seems like more money can be made there!).
So, can money be made from MLM? The answer to that question is… MOST DEFINITELY YES! I’ve read and heard stories of so many folks becoming millionaires through MLM.
Just remember that in the business world or the financial markets, hard work is needed and there are no guarantees of success.
Remember also of the adage of “high risk, high potential returns. Low risk, low potential returns.”
Knowing where you actually are within the pyramid structure and join a reputable MLM company is also a help.
In a nutshell, to make lorries of dough in MLM, you need to either be amongst the pioneers, be a motivational coach in the MLM industry, or….. OWN A MLM COMPANY YOURSELF!
Personally, would I be in a MLM business? Honestly, I haven’t actually put much thought into it. As of now, I don’t have any intention to do so but who knows, in the future, I might actually venture into MLM.
P.S. Pardon me if I used any MLM jargons wrongly.
Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.
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