Today, I’d like to review some of the most common MLM Disadvantages.
While I am a HUGE fan of our industry, I’ll be the first to admit that we are far from perfect. Like any industry, we have pros and cons. Although I naturally focus on the positive in things, today’s post will focus on the disadvantages of our industry.
Common MLM Disadvantages
What you will read below are things I’ve studied, seen, or personally experienced during the past 19+ years in this industry.
# 1: Your Income is Based Off Others’ Efforts
The whole purpose of doing network marketing is to get the leverage of others. As the popular quote says: “I’d rather have 1 percent of 100 people’s efforts than 100 percent of my own.”
In our industry, it really doesn’t matter how well YOU perform. If you can’t find others who duplicate you and put in the work, you will be nothing more than an underpaid salesperson.
That’s why many “talented” salespeople quit our industry and transfer to a different industry where their pay is based solely off their own performance.
It’s critical to remain realistic regarding receiving commissions from the downline. You should place a heavy focus on recruiting candidates who are as enthusiastic about the products or services as you are. If you place so much emphasis on recruiting someone, you’ll notice that the majority of the recruits you’ve signed up aren’t as committed to selling.
Source: Home Business
# 2: You Don’t Own Anything
This is one of my biggest frustrations with the industry. As a distributor, you don’t own anything. You don’t own the patents, trademarks, intellectual property, company name, buildings, or even your own downline. The company owns these things, and you are an independent contractor with the company.
As an MLM consultant, however, you have zero control over these key business decisions. You don’t choose the products or have a say in how they could be improved. The prices and compensation structure are set for you. What you say about the products and company, and how you say it, is controlled by the MLM.
# 3: You Can’t Sell It
Yes, some network marketing companies allow you to sell your business if you choose to. However, not all companies allow it. It’s vital to read your company’s policies and procedures PRIOR to joining, so you know if this is a long-term option.
# 4: You Can Be Terminated for ANY Reason
A company can terminate you for any reason they see fit. In some cases, they don’t even have to tell you why. Perhaps you got into an argument with a top rep, or a company owner, and before you know it, your account is terminated. In many cases, you don’t even have recourse or arbitration.
I have seen this happen to people in MANY different companies. Some of the terminations were justified. Others were not. The sad thing is most people did not have any type of appeal process.
# 5: Most Companies Won’t Last
While the promise of life-long residual income is VERY appealing, the truth is most MLM Companies don’t make it past the five-year mark, let alone 20 to 50-years. That means at some point in the future your residual income will dry up and go away when the company goes out of business.
According to the Federal Trade Commission, 99% of all MLM businesses fail, and in many cases, these failures come well before the companies have had a chance to turn a profit.
# 6: Negative Public Opinion
This is one of the most serious MLM Disadvantages. In general, our industry has negative public opinion. Keep in mind our industry is not taught at home or in schools. It’s a foreign concept to most people. It’s not endorsed by the media, because we don’t give them advertising dollars.
Just about everyone knows “someone” who failed in MLM. Many of your prospects will be negative about the industry, even though they know little about it. Sometimes this can be a huge challenge to overcome.
The first drawback of MLM is that there are high rejection rates. Most of the people you talk to simply won’t buy whatever you’re selling. This isn’t unique to network marketing. Most businesses consider a conversion rate of 1-2% very successful.
However, being constantly rejected for a sale or recruitment can wear on some people. It can really get you down when you hear a “no” 100 times in a row.
In order to over come this you’ll need to work hard. This level of hard work to control your own destiny leads to the next drawback of MLM companies.
Source: Budget Boost
# 7: Small Commissions on Personal Sales
If you are a superstar performer, and you are accustomed to getting paid exclusively from your own performance, the “small commissions per transaction” is one of the biggest MLM Disadvantages. In most cases, we earn anywhere from $5 to $50 per sale. These small transactions mean you need TONS of personal sales to make a big income. Compare this to a big-ticket program (or a realtor) where you can earn $1,000 to $10,000 or more per sale.
The income through Multi-Level Marketing is very low. High competition between MLM firms makes it more complicated for the participants to make profit.
Source: Lead MLM Software
In conclusion, these are the most common MLM Disadvantages, as I see it. What are your thoughts? Do you agree or disagree with me? Leave a comment below to let me know what you think. I look forward to hearing from you.
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Network Marketing Professional (21+ years)
Top Recruiter & Top Rep