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

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 the ultimate cult when it comes to pyramid schemes (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.