What You Really Want To Know About Multi-Level Marketing

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(Editor’s Note: Once again, I’d like to welcome my lovely significant other, Mrs. PIMD, to the stage. She previously made an appearance in her post, Making Passive Income as Doctor Mom.) 

Multi-level Marketing (aka Direct Sales or Network Marketing) is a business model in which an independent consultant or distributor can earn an income by selling a service or products and/or by recruiting other business partners to do the same. I see it like a personal or virtual franchise, without the headache of a brick and mortar store to upkeep.  

You’ve probably seen these on your social media feeds: your college friend selling jewelry or skincare, your cousin posting about a travel club, or a coworker offering coaching sessions. If you feel like you’re seeing these more frequently, I agree!

Multi-level marketing companies (MLMs) have definitely become increasingly mainstream over the past several years because more and more people are embracing the flexibility these companies offer – being able to work from home (or really from anywhere) and possibly making a full-time salary on part-time hours (with no proverbial ceiling or salary cap).

In fact, I know many physicians who have jumped into these businesses in response to the brutal demands of the current practice of medicine and have been quite successful. I mean, Warren Buffett, one of the most well-known and respected investors in the world (or so my husband tells me) owns three MLM companies himself.

Something that has come up frequently since I’ve taken up this business: Are these pyramid schemes? No, MLMs are not pyramid schemes. Pyramid schemes involve recruiting participants and taking their “invested” money (that then filter up the pyramid) without any product or service in exchange. These are illegal. MLMs do encourage recruiting, but they should also offer a legitimate and good product or service – this is the key difference.  

To be completely honest, however, I have heard of some MLMs getting into trouble for “pushing” recruitment over products, making them function very much like pyramids schemes – so, as always, it is important to do your research.

Having been involved with our MLM company for almost 2 years now, I am 100% confident that this is a genius and potentially lucrative business model. And while I do feel anyone can do this type of business, of course it’s not for everyone.  

Things you want to consider:

1) What product/service are you interested in selling/sharing about? (You may want to consider the market and growth potential, as well.)

2) What company do you want to align yourself with? (Look at their founders, mission, and the business model, including the issues I discussed above about pyramid schemes.)

3) Which team/leader would you like to join and work with? (Your experience can vary widely depending on who your direct teammates are)

4) Are you willing to step out of your comfort zone? (For the majority of us, business and sales do not come naturally, so you will need to be coachable and get comfortable with being uncomfortable, at least at the beginning.  If this is something you are not willing to do, then this may not be the business opportunity for you.)

Some downsides:

1) As mentioned above, if you are not comfortable stepping outside your comfort zone, putting yourself out there, or rebranding yourself, maybe this is not the avenue for you. Notice that I did not say, “if you are not a salesperson,” because none of these companies expect you to be a salesperson. That’s the beauty of this model – if they wanted salespeople, they would have just hired them. The whole point is to find people passionate about the product, service, and business model (which you naturally will be once you experience the benefits and achieve success).

2) Taking your work home. At your office or hospital job, it may be possible to leave work at work, so that you can focus on your family and friends. MLMs do blur this line a bit since you are tapping into your everyday network. It may be hard to “switch off” MLM work mode (which some friends might interpret as “pushy”) but managing it is all part of the learning process.

3) This will take time. Team members in my company refer to it as the “3-5 year retirement plan,” though it may take longer for many. MLMs are not overnight “get rich quick” plans, so you will have to budget in the time and commitment.

Our ideal family time.

As you may have gleaned from this post, my husband and I are big believers in this business model done correctly. We’ve seen many people’s lives changed as a result of having their own small businesses through multi-level marketing. These are real people – people we’ve known for years, people we’ve gone on vacations with, and people we were in residency with.

Interestingly, if you had told us we’d be involved in something like this a few years ago, we wouldn’t have believed you and may have even scoffed at the mere idea of getting “tangled up in a pyramid scheme scam” (which may or may not have been my very words to him when we first discussed this opportunity). But after doing our research and due diligence, we are obviously glad we gave it a try.

In the following post, I’ll go into my day to day, and how it’s impacted our lives.

Could this be something for you? Anyone care to share their experience or thoughts?

 

11 COMMENTS

  1. Very interesting article. I think most of my views around MLM have been negative due to the pushiness, scam-like qualities and cult like characteristics around some of the more popular MLM. This gives me a more rounded view of the system, thank you for sharing!

    • Well there are some bad apples, just like in any profession, although perhaps the system lends itself to things like this a bit more. We felt the same way until a few physician friends started working with a company that was created by physicians. That compelled us to at least dig a little deeper.

  2. I totally agree with you and have posted a similar article. It is all about the person and their needs, willingness to learn, and earn. There are many different ways to earn passive income, some have very little startup costs, which makes it available to the everyday person without savings or capital to invest. Thanks for putting this out there.

  3. Not a fan.

    Do you have any idea how many Longaberger baskets my Mom bought out of a perceived obligation? Or overpriced Tupperware products? Mary Kay make-up? And don’t get me started on the positively pro-emetic Herbalife magic potion drops we had to take one summer because her friend sold her several bottles.

    That was thirty years ago, and it’s only gotten worse. My wife, being a doctor’s wife, is now a target. Frequent invites to “parties” with “no pressure” to buy anything. Norwex, 31, Pampered Chef, and more. And if I see one more before & after picture from a Rodan & Fields “non-salesperson,” in my Facebook feed, I might just unfriend them all.

    Best,
    -PoF

    • Pretty soon we’ll probably only have two options: buy from Amazon or buy from friends. The only brick and mortars left will be experiential in some way, like restaurants or entertainment. If Amazon ever buys Disney then it’s all over.

      Thought it was important to address the subject because there are a good number of physicians who are running MLM businesses and actually finding a sustainable work-life balance because of them. Looking at the bigger picture, a good number of physicians are close to the burnout point and looking for ways to support their families without putting in extra hours at the hospital. This just happens to be an option and hopefully they carefully choose who to align themselves with.

      Thanks for sharing your thoughts!

  4. I’m a HUGE fan of this site, but I fail to see the dichotomy you predict. That sounds like a dystopian nightmare, unless you’re talking about friends selling friends their spare goods.

    Retail may shrink, but isn’t disappearing anytime soon, and second-hand will only become stronger as people shy away from paying full retail in stores.

    When buying from friends doesn’t involve price gouging at the potential expense of said friendship, I’ll listen.

    I completely agree on the fact that physicians are burning out and there’s got to be a better way, but if you’re making more off MLM than the $200 an hour that can be earned doing honest work, you’ve lost me.

    Best,
    -PoF

    • Sorry, I was being a little facetious with the Amazon or friends comment. I was playing on the doomsday scenario that a lot of articles depict in the wake of the Amazon / Whole Foods merger and Amazon’s new wardrobe play. Things are definitely changing, but just how fast, who knows?

    • This has been great commentary and I totally agree with your points. There are some sleazy folks out there, ripping honest hard working folks off. Then you have your friends pushing the latest cream, vitamin, etc. Yes, many of these seem overpriced, and typically the setup is some form of auto-ship, where you get more than you actually use. I can’t tell you the number of supplements that have been discarded from my pantry. These situations have really given a crap colored stain to the industry.

      Then you hear the stories of the single parent who was able to put their kids through college. Or the individual who lost his job of 25 years to outsourcing, downsizing, etc and he has been able to replace his income. The immigrant who left their country for a better life for their family. There are thousands of stories like this in network marketing. And you know that network marketing can be a good way for the everyday person to “make it”. If there is a chance for someone to make a better life for themselves, then I will at least listen. I may actually already be buying what they are selling.

      For me, the piéce de résistance is when the marketing model is based upon actually saving people money on something they already use, and the startup fees are nominal, this is when you have magic.

      Thanks for putting this out there, talking to the elephant in the room.

      Larry

  5. Oh Lord. I fell asleep reading this yesterday and dreamt I had freaking left a comment already!

    I don’t like MLM because one of my former (former!) friends was into it and she tried to sell me products exhaustively when she knew I was a broke college kid. She went to some huge convention and couldn’t shut up about it either. I’m not sure what happened to her but I know she stopped doing it.

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