Last Updated January 28th, 2019

Are MLM Opportunities Worth The Risk?

Are MLM Opportunities Worth The Risk?

One of the most popular ways to earn money from home is to join a multi-level marketing (MLM) company. It sounds great. You sell products you believe in to friends, family, and anyone else who cares to buy from you. It’s flexible, perfect for busy moms and dads who want to earn an income while raising their family.

But are MLM opportunities worth the risk?

Make no mistake, there are risks when you join an MLM. Some involve more risk than others. And the risks aren’t only financial.

Personally, I’ve never been a huge fan of MLMs. The selling style has never appealed to me, nor has the level of risk.

MLM Risk: The Cost Of Joining

The cost to join an MLM varies significantly by company. Many are quite affordable to join, under $100. Other, such as Lularoe, can be several thousand dollars.

People trying to recruit you into an opportunity can make the cost sound entirely reasonable and recoverable. They have an incentive to do so, of course – it helps them to make money. It shouldn’t be their primary means of earning money, as that’s a sign of a pyramid scheme, but recruiting always has some kind of benefit in MLM.

The cost of entry isn’t the only one you will face. With most companies, you’ll face a push to attend special conferences and events at an additional cost. These events can be quite educational and motivating, but they’re also expensive.

The pressure to attend these events can be huge. I have a friend who has tried several different MLM opportunities who tried starting a GoFundMe to attend a conference, stating that while she didn’t have the money on her own, she wanted to know that her friends and family had that much faith in her ability to succeed in her new business.

Then there are the costs of finding customers and building a downline. Sure, you start with your friends and family, but for many people, that won’t be enough. So you sign up for online training, that being cheaper than attending a conference, and keep trying to build. You might even try paid advertising.

All these costs add up. If you don’t succeed in making sales and recruiting a downline pretty quickly, your new business isn’t going to work out for you.

MLM money suitcase

MLM Risk: Few People Succeed In MLM

While most MLM companies love to brag about their success stories, these truly are the outliers, not the average.

In 2006, the Direct Selling Association (DSA) testified to the FTC that the median annual gross income from direct selling is about $2,400 per year and that 59% of direct sellers earn under $10,000 per year.

TruthInAdvertising.org reviewed the income disclosures of 32 direct sales companies and found that more than 80% of distributors in those companies earned less than $1,200 annually (less than $100 per month!).

All in all, not a terribly promising proposition, is it?

Yes, some people make serious bucks and an amazing living in MLM. You can hope that you’ll be one of them. Just be aware of the odds against it and be ready to work hard toward that goal if that’s what you decide to do.

If you want even more information, check out this list of MLM Income Disclosures. It’s only for certain companies, but what you’ll quickly see is how little money is earned by the people at the bottom of the list, and how much the very, very few at the top get.

Pay attention to how they disclose income. Some companies look pretty good until you realize that the income table only includes top earners, while lower earners averages are hidden in the paragraphs of text above or below. They have to share that information, but that doesn’t mean some won’t try to hide it a little.

MLM Risk: The Company Goes Out Of Business

When you join an MLM, the life of your business is connected to the life of theirs. If they go out of business, you’re out of luck.

While this happens only rarely with older MLMs, it’s not all that uncommon with younger companies. Some just never manage to get sales going well enough. Others are shut down as pyramid schemes.

essential oils

MLM Risk: Too Much Competition In Your Area

A popular MLM opportunity can sound hugely appealing. It has some name recognition, which could make it easier to find customers.

It can also mean there’s too much competition in your area.

If you have several friends doing the same MLM opportunity, for example, where are you going to find a customer base of your own? Odds are that they’ve already contacted many of the people you would target.

The other problem is that you create your own competition as you recruit a downline. Sure, you make money from their sales, but not as much as if you made those sales yourself.

Worse, they were probably one of your customers to begin with. Will your sales to them be the same after? It’s hard to say.

A significant downline is vital to success in MLM, as it’s hard to find all those customers yourself, but when that downline reaches people you would have liked to have customers sooner than you

MLM Risk: Your Friendships

Have you ever had an old friend (or even a current one) contact you out of the blue, wanting to reconnect? It’s a pretty special feeling, right up until you realize all they want to do is recruit you into their downline.

The Washington Post shared an article recently on how MLMs hurt female friendships. A part of the problem is that recruiting efforts have gone beyond inviting people to join a downline at an event they know is about MLM to bringing it up under the guise of renewing a friendship or starting a new one. When the recruiting effort fails, the interest in friendship disappears.

It doesn’t make the person recruiting look good. It makes them look deceptive and damages the relationship. How can you be friends if they only care about you if you sign up under them?

friends talking mlm

MLM Risk: What If It’s A Pyramid Scheme?

MLMs are in the form of a pyramid, that’s their nature. Each person recruits people below them, who recruit people below them, and so on. It can’t be helped.

But that doesn’t mean most are pyramid schemes.

One of the key signs of a MLM being a pyramid scheme is that you have to buy a large inventory of products. Having to buy some products is reasonable – being forced to carry a large inventory is not.

Another sign is that recruiting new people is more beneficial to you than selling to the public. A legitimate business opportunity should make most of its money from sales to other people, not to recruits.

Is LuLaRoe A Pyramid Scheme?

LuLaRoe was an extremely popular MLM company a few years ago. You probably saw several people online selling it if you were on Facebook. There were groups everywhere, and people bragging about the money they made from it.

Things don’t look so great with them now.

The Washington Attorney General has filed suit against LuLaRoe, accusing it of being a pyramid scheme. They accuse the company of making misleading income claims and pushing consultants to focus more on recruitment than on sales.

The company often promised high profits and that a full time income could be made through part time work. The included disclaimers may not have been adequate.

Over time, they also had problems with product quality and returns. Consultants found that the company was steadily less willing to allow them to return products as promised.

Is LuLaRoe a pyramid scheme? That’s for the courts to decide, but it’s a great example of a company that was hugely popular that may have been one.

But the Washington lawsuit isn’t the only one LuLaRoe is facing. They’ve been sued by many consultants over their business practices.

What you should learn from the LuLaRoe example is that popularity does not mean a company is not a pyramid scheme, or that it’s safe to join. Take your time to ensure that you really understand what you’re getting into with any home business opportunity. Not just MLMs, but all opportunities.

How Can You Investigate The Risks?

No matter how much you trust the person recruiting you into a MLM opportunity, you should take the time to do your own investigation of it. The FTC has some great tips to help you get started on checking out an MLM opportunity. These are some of the tips:

  • Consider the products
    • Is the pricing reasonable?
    • Are they safe?
    • How good is the quality?
    • Can claims be backed up?
  • Investigate the company
    • How long has the company been around?
    • Does the company have a good reputation?
    • Has the company been sued for deceptive business practices?
  • Consider your potential earnings
    • How do you earn money?
    • How much does the average distributor earn?
    • What expenses should you expect?
makeup brush

How Else Can I Earn Money At Home?

If you’ve read much at all here, you know there are lots of ways to earn money from home. Some are flexible, some aren’t.

Work at home jobs have the advantage if you want to know how much you’ll earn for the work you do. The pay may be hourly, salary or based on production, but you know what to expect from your paycheck. Depending on whether you’re a regular employee or an independent contractor you may have to provide your own equipment. Some also require training that you would get on your own before applying or require that you pay for a background check during the application process, but otherwise, have few costs.

Home businesses have all kinds of opportunities and risks. What I love most about starting a home business is that you can decide exactly what you want to do, and figure out how to make it happen. You can blog, freelance, sell crafts, cook, design apps or whatever suits your skills and interests.

Home businesses, no matter how affordable, are not without risk, but that’s okay. The fact that there is a risk is a part of what makes the reward so worthwhile. Even when the learning curve is difficult, you know you’re building something that is yours. About 50% of small businesses fail in the first 5 years, which is much better odds than you get with an MLM.

Even though I’ve met someone who had significant success in MLM, I just can’t say that MLM opportunities are worth the risk. Too few people succeed in them. I know quite a few more who have failed in MLM, some multiple times. If you decide to join an MLM opportunity regardless, do so with your eyes open to the risks so that you don’t get caught off guard.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

Last Updated July 1st, 2013

Do Network Marketing Companies Allow You To Have Your Own Website?

Do Network Marketing Companies Allow You To Have Your Own Website?

One of the best things you can do for your home business in most cases is have your own website. Someplace where you can be you, a place to stand out. That’s not something you can do much of if you just use the basic website most network companies offer their consultants. If you want to do better, you need to put your own personal stamp on your own website. Will your network marketing company allow you to do that?

That depends, and it’s something worth checking on. Some companies absolutely do not want consultants to run their own, separate website about their products. Too many liability issues. Others are fine with it, just pay attention to the rules.

What I mean by your own website, of course, is your very own domain name and control of all content you put on it, not the basic yourname.thecompanysname.com that so many opportunities give you. The control you have over such sites is minimal, and you aren’t going to have much luck getting search engine traffic to such a website. It’s too much like every other free page the company has given every other consultant.

What Do You Put On Your Own Website?

If you can have your own website, don’t just imitate the pages of the free company sites you can have. The whole point of having your own website is to stand out – not just by the domain name, but by the content.

Start by reviewing company rules for individually owned websites. You don’t want to get kicked out of your business.

You should be able to talk about yourself at the very least. Give people reasons to like you as a consultant.

Hopefully you can also discuss the products. Share how you really use products. Be careful, however, in the claims that you make. Keep them real, things that can be proven. Don’t claim to cure things your product hasn’t been proven to cure.

Be careful with your disclaimers – do some research and figure out what you need to say. It may take a lawyer to get it just right, depending on the kinds of claims you’re making or information you’re sharing. At the very least, make your association with the company very clear, and that you make money on sales. Don’t hide it in the footer or in small print – these things need to be clearly visible.

Get Social

Check company rules on social media use as well. You may or may not be able to start a Facebook page for your business, for example, but you may be able to promote your business by posting a link to your site on your timeline or profile.

When you’re getting social about your business, remember to keep it interesting. Think about why people have friended or followed you. If it wasn’t specifically about your business, don’t post just about your business. Be the person you usually are, just with a business.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

Last Updated March 7th, 2011

Can You Make Money From Home Without Going Into Direct Sales?

Joining a direct sales opportunity is one of the classic ways to start earning money from home. Lots of people venture into one such opportunity or another when they get started. It sounds so appealing after all, to build a business with great products and a downline to help you earn even when you don’t make the sale yourself.

There are a number of great direct sales companies you can join too. Some have been around almost since the time direct sales was a possibility, while new companies start every year. Companies come and companies go, making it vital that you choose a good one if this is how you want to make money from home. Losing your business because the company you order products from disappeared is hard, to say the least.

This isn’t the path everyone wants to take when they consider earning money from home. The sales aspect certainly doesn’t appeal to everyone, as most such opportunities have a significant aspect of selling in person as you get started, through holding home parties or by recommending products to people you meet. Many allow for an online aspect these days as well, but it’s not the focus for most. But many people wonder if there’s any other way to legitimately earn money from home.

There are many ways, of course. Some have been done pretty much forever, while others came about because of the internet, for example, daycare, writing, website designing, affiliate marketing, making and selling crafts, graphic design, selling photos, mystery shopping, customer service over the phone, telemarketing, data entry, working as a virtual assistant, technical support, computer programming, blogging, transcription, selling on eBay and other auction sites, running errands, bookkeeping, teaching… the list goes on.

The key here is to figure out what it is you want to do and what you can make money doing. From there you can figure out how to make it work.

You won’t always have to start your own business, of course. There are companies that hire people to work from home, and some of the jobs offer pretty good pay. They aren’t always easy, and they do require you to be professional in your work. If you aren’t visible to anyone else, that means being professional when you speak to people and doing quick, accurate work. Most work at home jobs pay on production in one form or another, so the better and more quickly you do your work, the better off you are. Just don’t sacrifice accuracy because there’s always a high demand for quality.

Running a home business whether online or in person means you must be willing to take the risk of never earning anything. Many fail, but if you succeed you may have a lot more flexibility, depending on the type of business you run. A home daycare operator is not going to have the same flexibility as an affiliate marketer, but one may be more suited to the type of work you’d like to do than the other.

Research Is a Key to Success

If you want to earn money from home successfully, research is the key to any chance you have of success with it. You have to know what you need to do. You can guess and throw yourself into the first opportunity that strikes your fancy, but you’re more likely to fall into a scam than wander into success. That goes whether you’re starting a business or searching for a work at home job.

There must be a match with your skills and interests. There must be a demand for whatever you’re going to do. You must know how you’re going to get things going.

Research also helps to keep your expectations realistic. That’s when you find out that no matter the promises made, you aren’t going to be earning six figures within months. It’s when you realize how much work is really involved. It’s also probably when some of your dreams are dashed by reality. If you had wild dreams of easy success, that’s probably a good thing.

The first thing to check in your research is how to get a start in whatever you’re going to do without getting scammed. Scams outnumber legitimate opportunities when it comes to earning money from home. It’s easy to fall for one. Pay attention and learn what you should be looking for to avoid the scams. Some of the basic signs include the promise of easy money, earning from recruiting rather than selling products, an unclear source of income, a fee for to apply for a job (businesses and information on running one usually cost money; applying for a job should not). When in doubt, ask around and see what others say.

You can avoid a lot of the usual scams if you start your own completely independent business. It’s not a scam to start a business writing for others or designing websites. You do, however, need to figure out how to get clients and make sure they pay you. There are a lot of great people running all kinds of businesses from home and you have to learn to deal with your customers and the competition.

Keep Trying

No matter what it is you choose to do to earn money from home, you’re probably going to have to work at it a while to see results. Just because you can, theoretically, work in your pajamas doesn’t mean it’s easy. You have to really put in the effort to get the results.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

Last Updated January 25th, 2010

What Online Businesses Are Flexible Enough for Stay at Home Moms?

Despite being home pretty much all day, the one thing a stay at home mom needs from a home business opportunity is flexibility. Being home doesn’t mean lounging about watching soap operas and eating bonbons, after all. It more likely means chasing after kids, taking them places and keeping house. It can get pretty hectic.

Starting a home business is a good idea for stay at home moms. It helps to keep skills up. It can bring money in if the efforts are successful. It’s often fun. It’s a good example for the children.

So how do you find something that can cope with all the demands of a stay at home mom’s daily routine? Especially if that routine changes every few months, as it does for so many moms?

Here are some online business ideas and what makes them flexible:

Network Marketing/Direct Sales

Pretty much the classic! Stay at home moms have been getting into network marketing for a long time now, and it shows no signs of disappearing.

There are a lot of things you can do now in network marketing that you couldn’t do in the past, however. The internet has really increased your options. It’s not all about begging your family and friends to join your opportunity anymore.

Check out the 7 Great Lies of Network Marketing to learn more about how network marketing has changed with the internet. And check my direct sales/network marketing opportunity directory to see if any appeal to you.

Blogging

You can’t get much more flexible, although it can be quite demanding if you want to earn a living from blogging.

You can write at whatever time of the day or night, and most blogging software will let you schedule the posts you’ve written as far out as you’d like. You can start for free to see if you’d like it, but I strongly recommend getting your own hosting and installing WordPress if you’re going to treat it as a serious business in the long run.

You’ll still need to learn how to promote your blog, which can include tactics such as commenting on other people’s blogs, guest posting, article marketing, pay per click and much more.

Virtual Assistant

If you have a lot of office skills, being a virtual assistant can be a pretty good business. You decide which of your skills you want to offer, such as writing, customer service, data entry and so on.

There can be some time specific demands, however, especially if you promise to handle customer issues within a certain time frame or if you need to speak to people on the telephone.

Selling Products Online

This is a huge category. You can sell products you made yourself on Etsy, for example. You can sell products on eBay. You can do drop shipping.

Each of these has its own challenges, but what’s right for one person may not be right for the next.

Selling your own products means you’ll have to get to the post office or otherwise ship products out promptly. You’ll of course have much of the day to handle that, but it’s not something that can wait until the kids go to bed for the night.

Affiliate Marketing

Why sell your own products and deal with customers when you can sell someone else’s? That’s pretty much the idea for many affiliates.

Affiliate marketing can be a lot of fun as well as a lot of work. You can use blogging to sell products, or pay per click advertising, or article marketing, or create a product comparison website, or….

There are a lot of options out there.

The challenge is in finding the profitable niches. They’re out there but it’s not always easy to pick the right one, and it can take time to figure out what works. But you can work any time day or night, and that’s a pretty nice advantage.

Of course, you can succeed or fail in any home business, and there are other flexible options out there. Just because it’s flexible enough to fit your schedule and you enjoy it doesn’t mean you’ll make a living doing it. But it’s better to try than to say it can’t be done.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

Last Updated April 16th, 2008

Should You Use the Internet to Promote Your Network Marketing Opportunity?

Network marketing has been around a long time. There’s plenty of advice going around about how best to build a downline and a customer base to help you succeed. But not everyone takes advantage of the Internet.

trying to earn money

Sometimes it’s due to lack of comfort with it. If you don’t think you can make a good website, you’re probably not even going to try. If you assume that it’s beyond you, it will be…

At least until you give it a try.

Now the first thing you have to do is find out what the company’s rules are regarding marketing on the Internet. Some have very strict rules surrounding what you can do. You may not even be able to mention the company’s name. Others provide you with a website you can sell through.

But even if they provide you with a website you need to build one of your own. Replicated websites don’t attract their own traffic. They also don’t allow you to show your personality, yet your personality should be one of the key factors to recruiting a downline. You want people to want to work with you.

Fortunately there are many ways to create a quality website even if you haven’t tried it before. Blogging is very popular, with WordPress being the most popular software. Once you have a theme selected, all you have to do is write your posts.

Well, that and market your site.

It may seem that you’re adding to your work by adding a site. Now you have a business opportunity and a website to promote. However, since the one promotes the other it’s not as bad as it may seem.

There are lots of opportunities to promote your website. Twitter is getting very popular with marketers. You have 140 characters to express yourself in. You can’t just market your business and expect people to follow you, but if you’re interesting people will take a look at those times you include links.

You can market on forums, write articles, pay for ads, whatever suits your style, just so long as you know when to sell and when to offer advice.

The beauty of it is that you can interact with people all around the world, rather than being limited by the number of people you interact with each day. You have a much better chance of finding people who might be interested in your opportunity.

Better yet is that some of them will be looking specifically for it.

A big part of network marketing is that you can choose to sell something you are really passionate about. Let that show in your Internet marketing activities and you improve your chances of building a really great business.

There’s a lot more you can learn about what you’re doing right and wrong with your network marketing opportunity. Read The 7  Great Lies of Network Marketing and think about where you can take your business.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

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Disclosure: Home with the Kids is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com. I also review or mention products for which I may receive compensation from other sources. All opinions are my own.