Multi-level marketing (MLM), also called “network marketing,” is a low-investment, easy-access business that can be quite difficult to operate. These businesses attract millions of people every year, but few make any real money.
Hundreds of companies operate on a multi-level basis, including such well-known names as Amway, Shaklee and Mary Kay. They usually sell consumer products: cleaning products, vitamins, cosmetics, household goods. The idea is that you not only make money by selling the products to your neighbors, but you also sign up other people to sell the products, taking a percentage of their sales, and of the sales of the people they sign up.
The promise of MLM is duplication and reduplication of your own efforts, leading to “viral” growth of your business. MLM has a basic problem, however. Since many distributors in the hierarchy have a right to certain percentages of each sale, the products, even if excellent, are often quite expensive. MLM promoters claim that the process “eliminates the middleman,” but, in fact, it actually adds a middleman at every rung of the ladder. Equivalent products are usually available for less in retail stores. Since the products are hard to sell (other than distributors buying for their own use), the income is always tentative and at risk.
MLM is also heavily associated with motivational speakers, inspirational books, audio and video materials, motivational meetings and conventions, all of which can be quite expensive. The constant “pep talks” can be fatiguing for distributors, many of whom quit after only a few months. The atmosphere of motivation tends to lead to frequent exaggeration, and that commonly leads to outright deceit.
Forget the adrenaline that rushes through your veins when someone brings you to an MLM meeting. Enter one of these businesses only with extreme care. MLM can suck up more money than might appear initially, and it is extremely difficult to make profitable
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