Each company will have a different startup cost, which is a fee that new distributors must pay to begin distributing. Companies with high startup costs are more likely to be recruitment-centric MLMs. MLMs that focus on recruitment are generally called pyramid schemes, or schemes designed only to tie down new recruits instead of selling quality products to interested customers.
This article was really informative and honest! I’m not presently involved in an MLM and I don’t ever plan to be especially after reading this article and the comments below. Why? Well because of EXACTLY the kind of “networking” and “recruiting” that these companies and many of the people commenting on here are advocating. I have been bombarded on my facebook, and other social media from people I haven’t spoken to or seen in years. Its becoming constant, and I am not on social media to make money. Roden and Fields, shakeology, some girl I went to high school with is now trying to get me to buy leggins from her. I have a cousin that I actively avoid now because he is constantly steering every single conversation to Herbellife and why I NEED it to be healthy. Jesus. Its just enough already. I’m all for empowering people, and I love the idea of earning an additional income to take care of your family or yourself. But I could not imagine alienating or even just annoying friends and family in order to make an extra dollar. What I dislike most is that many of those that are recruiting make it seem as if they recruiting you simply because they want to “help” you or provide you with an opportunity. They make it seem as if they are doing this out of the goodness of their hearts, when really the actual motivation is line their own pockets with more money, because the more people you recruit for your team, the more money you make. That feels dishonest and slimy to me. Unless I’m asking for “help” or an “opportunity” I wish people would assume that I don’t need and am not interested in one!
As with any business venture, it’s important to manage your expectations when signing on with an MLM. Marketing materials may sell you the idea of making good money without leaving your house, but business ventures like these take time to deliver a return on investment. Not every sales agent will be making $100,000 per year right away or even five years down the line. Be realistic about how much you’re likely to sell and how much you’re likely to earn.
First, Elliot, thank you for this article. Your sense of truly wanting to help comes through and it’s refreshing. Like MommyFinance, I too have suffered PTSD from previous runs at MLM but I have been looking for legitimate ways of making extra income and seems I’m being directed toward trying MLM again. Your article gave me hope that there are some good ones out there. What you said about finding the one that fits me and leaving a legacy for family really turned on a light for me and I greatly appreciate that. A wine business is not quite up my alley but I will certainly direct those who might be interested your way.
So to make it possible, you structured a kind of “payplan” or ways how you are going to pay your neigbors and relatives based on the number of people they’ve brought in or the group sales they’ve made. And by applying some MLM principle, you were able to plot a system that traces all sales from person to person down the line. Therefore, giving credit and commission also to the first person who initiated the effort.