If it hasn’t happened already, there will come a time when a friend or family member will want to share “an exciting opportunity” with you. When you hear those words, there’s a good chance they’re about to try to recruit you into a multi-level marketing business. Whether it’s old-school Amway or Tupperware or newer businesses, such as Lula Roe, Stella & Dot or the countless other companies who recruit heavily on social media, multi-level marketing or ‘MLM’, (also referred to as network marketing) is having a major moment.
With promises of big money for just a few hours’ work per week, these offers can be tempting. But there’s almost always more to the story. Ask these questions before committing to any MLM business:
What Are the Up-front Costs?
Most MLM businesses require you to purchase a starter kit of products for hosting parties and demonstrations. Costs can range from a few hundred to a few thousand dollars. Additionally, you may be required to pay for training classes or attending out-of-state events. Get a solid quote on the total start-up investment before agreeing to anything.
Are You Comfortable Selling?
The only way you’re going to make money in an MLM business is by selling your product (a LOT of your product). If you’re not comfortable speaking to groups or you’re more than happy to take no for an answer, you’ll have a hard time making your sales numbers. Recruiting new reps will be challenging, too.
Do You Believe in the Product?
Have you tried and loved the company’s products or services yourself? If not, it’s going to be hard to convince others why they should buy from you. If you’re going to pursue an MLM opportunity, make sure it’s a product you believe in. It also helps to develop a sincere, succinct sales pitch.
Do You Have a Network You Can Sell to?
Because multi-level marketing companies rely on referrals and recruitment, your immediate circles of influence, such as family, friends or fellow church members, may already be saturated with other people involved in the same business. You need to have the connections and resources to move outside your usual circles to really be successful. If you live in smaller town or only interact with a small number of people, you will find it challenging to meet sales and recruitment goals.
Will You Be Able to Recruit Others?
While it’s possible to be profitable in MLM by simply selling your product, many consultants find the real money comes when they focus on recruiting new distributors and begin collecting a percentage of their sales, too. Again, you’ll need to have people outside your immediate family and friends to recruit, and you’ll want to develop a well-prepared, persuasive pitch to get others to commit to trying the business.
While it’s possible to make a profit in MLM, it’s by no means guaranteed. You can find many stories of consultants who barely break even, or worse, go into debt and never recover their start-up costs. If you want to bring in some extra cash, consider other flexible alternatives, including mystery shopping or starting an independent side hustle.