Multi-level marketing (MLM) is a type of sales in which a company’s products or services are sold to end customers through independent representatives. It’s known by a variety of names, including Network Marketing. MLMs are the subject of a lot of criticism. My only concern is whether or not this side hustle will be profitable.
THE CLAIM: Most people who join MLMs make little or no money.
Here we go! Let’s find out if this side hustle is legit.
Why did I choose MLM?
This is my wifes side hustle. She has been doing MLM for many years now (longer than I have known her). Its something she loves to do and has worked for various companies and is now selling for POSH. Check out her website Roseboutique.po.posh
What is Multi-Level Marketing (MLM)?
Companies utilize multi-level marketing as a distribution technique to get their product to customers. They use sales associates to distribute and sell their items instead of directly offering them to consumers online or in brick-and-mortar locations. Salespeople usually operate from home and purchase items to sell at in-person or online parties.
Instead of being considered workers, each salesperson owns their own business. The capacity of each representative to recruit and train other representatives to start their own business is referred to as the multi-level element. Each individual above them earns a commission as recruits make sales and recruit their own reps.
The commissions received on personal sales and a proportion of the sales earned by other reps recruited by you are the two sources of income in an MLM.
How MLM Works.
In an MLM, you’re usually recruited by someone who already works in the company. You may have liked their items after attending one of their sales events and decided you might want to sell them.
After expressing interest, you may be invited to a meeting to learn more about the company. In some cases, you’ll be required to sign a contract as well as purchase inventory. After you’ve completed those steps, you can begin.
To understand how MLMs work, it helps to be familiar with industry language. Below are some common terms:
- Sponsor: The representative who personally recruits another individual into the company is referred to as this.
- Recruit: This is a person who is introduced into the company as a new member by a sponsor, and is also known as a team member. Sponsors or other more experienced members train the recruits.
- Downline: These would be the recruits who have been brought in under you. This can include members you’ve recruited as well as members brought in by your recruiters.
- Upline: The sponsors who came in before you make up this group.
- Compensation plan: This section lists all of the ways reps can make money. Many organizations give bonuses and boost commission splits based on sales volume, in addition to commissions on sales generated by you and your team.
Why all the dislike for MLM’s?
It’s no secret that the multilevel marketing industry has a high failure rate. A few become wealthy, others make enough money part-time, and the vast majority make nothing or lose money. I am only going to cover a couple of reasons as to why MLM has such a bad reputation but all you have to do is google search a top five reason on MLM and you will get a clear understanding. For the record, I don’t have a bad opinion of MLM, but I do have issues with some of the business practices.
Not enough time starting the business
One of the primary reasons people criticize MLM firms, in my opinion, is that most people who get involved do so for a few months and then quit, then badmouth it and claim it doesn’t work. So many people want to get rich quick and MLM is not one of those industries. You need a game plan, you must work hard, and you must devote the necessary time to develop any form of profitable business.
The deceptive recruiting practices
This is very likely the industry’s most serious issue. There are a lot of people out there doing unscrupulous things in order to recruit people. You should never deceive or mislead your prospect. Taking advantage of your prospect by doing something unethical will get you nowhere in the long term. Sure, you could sponsor them right now but it will ultimately fail and worse because you can lose a friend. They will never trust you again if they discover you lied to them. And there’s a good chance they’ll learn to despise the industry as well, slandering you and the company in the process. This robs you and others of future prospects or leads. So, always do the right thing and have be professional!
(1) promising easy or fast money (get rich quick),
(2) posting your opportunity as a job listing on craigslist or some other forum, (3) be annoying and putting high pressure tactics on your friends and family to join in on your business venture, (4) telling your prospect what you think they want to hear, (5) lying about your income and about the products!
Some of the bad press is well-deserved, but most of it is inaccurate and misinformed. If you’re already in an MLM business, I challenge you to be a professional at all times. Keep in mind that you are a representative of your industry.
I believe that with effort, the MLM industry can overcome the stigmas and fears that most people have.
What process did my wife use?
Why did my wife join Posh?
My wife had been looking for a good product to use that would help with some patchy dry parts on her face. She tried probably half a dozen products, then she found POSH. It worked very well for her and she used it for a year and half. Through that time she tried several more products from them and found they all worked very well.
At the time, she was looking to make some extra money and thought maybe selling Posh would be a good way to do that.
After my wife investigated the company she decided to give it a try. She reached out to her sales person and asked about joining. Her sales person then became her sponsor.
The first thing she did was sign up for a website that is run by the company, came up with a name, then she started selling product. It was that simple. One good thing that Posh does is, they update the websites so my wife can focus on selling the product and not having to worry about updating a website every time a new product came out.
Additional Selling points for my wife!
Posh is all about pampering. Here are the two main reasons my wife chose POSH to sell.
Naturally Based
They use natural products such as butters, essential oils, fruits, nuts, flowers, and more. You won’t find fillers in their products, so a little always goes a long way.
Cruelty Free
They feature many vegan product options and use gentle animal by-products, like milk, honey, and beeswax. They have always been cruelty free.
Things my wife did to sell her product.
My wife hit the ground running. She hit her Facebook groups, her emails contacts, she threw in person parties, and had plenty of online parties. Then she started going to vendor events and every where she went she would bring up Posh to family and friends.
Some months she spent 20 hours a week working on selling Posh. That may not sound like a lot but that pace coupled with a full time job was very challenging and lasted about a year.
She learned a lot from that time. What to do and most importantly, what worked for her and our lifestyle. That pace didn’t continue into the second year but some of those months she made $1000.00.
I think had she kept that pace up she could still be making that kind of money but it proved to be to much with our lifestyle (meaning a 3 year old and full time job). So she scaled back her hours to what she does now, which is about an hour a week.
She had a couple of people join her team and that has been really nice income for passive work. Now, her income fluctuates. Below is her last months income. Its not going to make us wealthy by any stretch but its nice income to have with minimal work.
Proof of income.
My slightly biased opinion
There is no doubt in my mind that there is a fair bit of money that can be made through MLM. You have to be very careful on what company you choose to sell from.
For example, Posh doesn’t require you to have a large inventory and that is very important in our philosophy on MLMs. The inventory aspect is voluntary at Posh and depending on how many live shows you want to do, I have found a lower inventory and high marketing is the most effective way of making money for my wife.
It is very important that you purchase things that you know have a high sell rate. It is very easy to buy so much inventory that you lose money for months or even years before you start to see some decent returns. Even then, it may not be consistent. One thing my wife does now is only buys things that she really likes and uses and can sell them with passion.
Personally, I struggled early on as my wife increased her inventory. I had to be patience and believe in my wife. There were some really good months of income that my wife ended up making.
As mentioned, my wife hasn’t had a lot of time to devote to selling her products due to her fulltime job becoming more demanding but with that said, she still spends 30 minutes to an hour of work a week and brings in between 100 to 200 dollars a month. This income adds up over time and when my wife wants some extra spending cash she ramps up the marketing.
It is very important to keep in mind that in any business it takes time to gain traction and with that said, I think MLM is a great option for those who can devote the time to making connections.
Verdict: LEGIT ($)
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