What You Really Want To Know About Multi-Level Marketing - Passive Income

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What You Really Want To Know About Multi-Level Marketing

June 20, 2017 • 5 Min Read

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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.

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Disclaimer: The topic presented in this article is provided as general information and for educational purposes. It is not a substitute for professional advice. Accordingly, before taking action, consult with your team of professionals.

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