The #1 Reason I Will Never Join An MLM is Because I Am Good At Math

19 Comments

I’m a big advocate of developing multiple sources of income. I’ve never worked only one job or relied on one source to generate money for me to spend. Whether working multiple hourly jobs or investing in dividend-paying stocks, my focus is always getting more money into my bank account each month.

Naturally my entrepreneurial nature has made me an attractive target for multi-level marketing (MLM) schemes.

mlm-pyramid

source: Is Network Marketing a business opportunity or a scam?

But on the other hand, the strategy of MLMs is “ask everybody” so I’m actually not that special.

I’ve written before about how Amway is a pyramid scheme (the post still gets new comments on a regular basis, much to my amusement). Most others I come across have been less threatening. For example, I get invited to Passion Parties to celebrate stagettes or birthday parties at least once per year (I even hosted one for my own 27th birthday party). It’s hilarious that sex toy sales are the least naughty of all the MLMs — passion parties are fun, low-pressure environments where everyone is drinking and thus more likely to spend, and the products are high priced. I don’t know what the payout is, but there are worse ways to spend 2hrs of your time than pushing dildos over cocktails. (/sentences I never thought I’d write)

In the past week I’ve been approached by Mary Kay (twice!) and Arbonne representatives. In the past I’ve also been invited to Scentsy parties, though I haven’t attended (more because of scheduling conflicts, because I’m certainly open to going and receptive to buying!). It was only because I was pushed again to review the “potential” as an Arbonne consultant after previously declining that I took a look at the numbers. This is what I found:

You get a 35% profit on all the sales you make.

If your first thought was “wow over 1/3 profit for every sale! That’s not bad!” (I was told this is one of the “highest for MLMs”) you better check your math:

You’d need to sell $100,000 of makeup to scratch out $35,000.

I’ll tell you what kids, I know about 35,000 easier ways to net $35,000 than hawking mascara and blush. Don’t get me wrong, I have purchased and used Mary Kay and Arbonne products in the past and they are lovely. It is legitimately very nice cosmetics and body products. You are NOT being scammed by being sold or selling a cheap or bad product, but that doesn’t make this a good idea. However, there are some major downsides here:

When you join MLMs, you often need to pay out of pocket for things like…

  • Your annual consultant registration fees
  • Attending business conferences
  • Transportation costs to get you to and from parties or sales
  • Your unsold product

Maybe the goal isn’t $35,000 but less like $5,000 or $10,000 which would only require you to sell $15,000 to $30,000 of make up. Still, I feel like asking me to sell over $1,000/mo of makeup is asking a lot. Where am I going to find people willing to buy over $200 of products from me every week? As someone who’s pared her daily makeup down to mascara-only, this number strikes me as absurd.

But this is because joining an MLM is NOT about selling a product, it’s about getting more people on your “team”.

The more friends and acquaintances you convince to take part in your “business opportunity”, the higher your monthly income goes. You profit by their membership fees and from their sales. The only real way to succeed in an MLM is to immediately recruit a powerhouse team of ambitious sales rockstars that can both push product and get others on board. If you only manage to recruit a handful or less of lukewarm friends, you’re never going to make money.

 You should devote your entrepreneurial efforts to basically anything else. 

Because pretty much anything else will be infinitely more profitable.

Unsure of how to bring in extra income with less work than being part of an MLM? Look for endeavours that utilize unique skills and have low startup costs such as:

  • Tutoring an academic subject
  • Teaching a language or instrument
  • Making a product and selling it on Etsy
  • Monetizing a hobby, like photography or blogging
  • Purchasing and reselling collectors items
  • Completing odd jobs

In short, there’s no real easy way to make tons of extra money, but there are easier ways than MLMs.


19 Comments

  1. Thank you! One of my friends (in my hometown) is a Beachbody Coach. She’s on her way up to my current city (where she’s from) and touched base to see if I wanted to attend an event. It’s wasn’t about grabbing a coffee together, or catching up – it was that I was a target. A way for her to make more money.

    That’s my biggest issue with MLM… it generally starts on the backs of your friends. If you’re good, eventually it moves past that, but otherwise, every hang out turns into a sales pitch.

    • Bridget (Author)

      arghhh I totally forgot about the Beachbody coaches and I was HOUNDED by them on Twitter & Facebook when I was doing the Insanity program!! I love the workouts that come out of the Beachbody franchise but there’s no way I’m paying $150/mo for Shakeology or any of their other products.

    • Cynthia Anderson

      That can definitely be a downside of an MLM. I am with ItWorks because I love the products and I figured since I’m advertising for them regularly I might as well try to sell it. I make a point of not discussing ItWorks with my friends unless they bring it up (with the exception of sending a party invitation- if my friend says no, that’s the end of it and we talk about something else) and of scheduling hang out times that are not about pushing a product. Even with my friends that are interested in my products, I still wait for them to bring it up. If they don’t, I don’t say anything.

  2. Wow, I just read all the comments on your Amway post. I don’t even understand what is going on there!

    • Bridget (Author)

      Aren’t they fun? They’re real life examples of everything I mentioned in the post. Just amazing.

  3. Haha I would NEVER do one of these programs! Luckily I don’t know anyone who does either so I haven’t been hounded….yet. Definitely NOT for me, it seems like such a crappy way to make money.

  4. The piggy-backing on your friends thing is my biggest pet peeve. When I was in University, one of the totally cute mid-20s guys who worked with me at my part time job kept hanging out with me on breaks and kept telling me about these sessions he was doing and how he thought I would be a great fit. I was like “Cute older guy wants to talk to me keep talking” but after I finally looked into it, it was a ‘personal life coach’ MLM type of thing, where you train to be a life consultant and get people into your fold to make money selling books.

    SO SAD.

    • Bridget (Author)

      HAHAHA oh no that’s to worst.

      I got tricked one time when I was getting into personal finance and someone was like, “I have something that might help you with your blog” and it was some financial services seminar… as soon as I had an idea of what it was (we were out for coffee before the event) I totally bailed. I sent a pretty nasty text message too because I thought this person & I were friends and I was majorly annoyed they thought I would be interested in that BS.

  5. I feel sorry for people who get sucked into MLM schemes. The relationship they had with friends fall apart. They are constantly pressured to find new people to “join” their team. It’s hard for them to even back out of the program because once they get in peer pressure from within the system persuades them to stay and that big success will come eventually. Yet the majority of MLM members don’t make nearly enough to earn a living on. It’s also hard for them to quit because then they would have to admit to all their friends and family members that they were wrong and they don’t want their prides to get hurt. It’s kind of a sad situation to be in 🙁

  6. Melanie

    Can we touch in Isagenix for a quick minute. I’m so tired of my facebook friends posting twenty times a day about all of their “friends” and their success stories. And don’t you want to be inspired to be just like them? what are you waiting for? blah blah blah. it’s so pushy. I could never be a MLM

    • Bridget (Author)

      I haven’t heard on Isagenix! (well not yet anyway, it’s probably coming my way if they’re that aggressive)

      I agree that the pushiness is the worst part — I don’t get the inspiration or “success stories”. I’m confused how ANYONE makes money in these… maybe just the founder does?

  7. Totally agree! I also did a post about in on my blog and I DID a MLM on the side (though I did it for fun and cause I liked the discount on the stuff I sold) http://mommiesandcents.com/2014/07/03/is-multi-level-marketing-right-for-you/

  8. Great post – so many people get caught up in these things, but really they just often aren’t worth your time or effort.

  9. Kate @ Money Propeller

    I can say that it depends on the person’s capabilities. I have a friend who really makes good money because of MLM. He owns lots of properties, luxury cars and travel around the world. He kept asking me to join his team and I kept refusing him because I know I’m not good at it. 🙂

  10. The best are the fancy magazines the MLMs leave for you after the initial meeting. Page after page is full of fancy-pants rich people in their mansions and prep school kids and how if you become a member you could be just like them.

    Yes, I know this because my mom got pitched a bunch of MLM stuff when I was in high school. Luckily, never actually joined anything.

    OH! Memories are flooding back! The BEST ever was when this man asked me what kind of car was my dream car. As a 16 year old, I said I wanted to drive a Mustang. Than he said if I joined the MLM I too could drive a Mustang very, very soon. That was a great conversation I had in my teenage years.

  11. I so agree with you Bridget! Back in the day it use to be just Avon… now it’s Mary Kay, Scentsy, Arbonne, Jamberry, “Thrive”,Pampered Chef, Just Jewelry, South Hills Design, etc etc!!! the list goes on and on! Sometimes I feel bad for not buying from family members or friends – but maybe I can’t afford to buy all the time or maybe I just don’t want it! And I am sick of the promoters to.. “join my team, to thrive blah blah there success story everyday! ” it’s annoying. Some have suggested I sell things to supplement my income – I said you have to sell a ton of it constantly and consistently to make anything. As well in my area everyone sells everything, it’s way too oversatuated it would not even be worth it. Some I know have parties to sell their product – multiple parties- to same people usually! and they supply food and wine! how will you make money if your shelling out for food and wine!?

  12. I am horrible at sales and recruiting people in the first place, so I would never consider getting into this. I don’t know anyone personally who has been able to make a good living off of an MLM scheme. Sounds too good to be true.

  13. Brittany

    I just had a friend from college who’s haven’t talked to since I graduated five years ago get back in touch with me. I had to cut the call short but then we were texting and she was like “oh let me call and tell you about my awesome new job!” It was a MLM where you have to convince people to watch a video. The call ended shortly after that.