Today, I’d like to discuss some of the most common MLM Business problems.
No business is perfect. Every business and business model has its share of pros and cons. While our industry does have some issues, I believe the pros easily outweigh the cons.
The upside of network marketing is limitless. Where else can you start a business for a few hundred dollars, work from anywhere in the world, not need employees, work hard for two to five years, and build up a long-term residual income?
On the flip side of the coin, I’ll be the first to admit that entrepreneurship and network marketing are not for everyone. Most people do not have the skills, work ethic, or mental toughness to build a long-term successful business of any kind. That’s why most people are employees.
If you decide network marketing is something you WANT to do, it’s important to understand these common problems upfront, so you can minimize them as much as possible.
Common MLM Business Problems
# 1: High Attrition
Every business in the real world loses employees AND customers. FACT. If any business stopped recruiting new customers and new employees, it would not be in business long. This includes Walmart®, the NBA®, churches, the government, etc.
One of the biggest MLM Business problems is the attrition. From personal experience, at least 80 to 90 percent of the people who join a MLM Company quit within their first year, and most of those people quit in 90-days or less.
People quit for many different reasons. It normally has nothing to do with the company or industry either. Not everyone is cut out for sales or entrepreneurship. Not everyone can manage their time effectively. Not everyone can manage their emotions or have realistic expectations.
I’d also note that all SALES type jobs have high attrition. This would include realtors, insurance agents, door to door sales, direct sales, etc. Selling is tough. It’s not for everyone.
Despite the high attrition, our industry is still quite lucrative. Even if MOST people quit, you can still build a big team and big residual income.
# 2: Low Cost of Entry
The low cost of entry is a blessing and curse in our industry. It’s a blessing because people with little or no money can start their own business. On the other hand, it’s a curse because most people who join network marketing will not treat their business seriously, because they have such a small amount of money invested.
I tell everyone on my team to act as if you wrote a check for one million dollars to start your business. Treat it like a big business. Be part-time with a full-time attitude.
When someone invests tens of thousands of dollars, even millions of dollars, to start and run their own business, they do EVERYTHING in their ability to make it successful. They make a business plan, work 80 to 100 hours per week, work nights and weekends, learn everything they can about their industry, etc.
This rarely happens in our industry. In fact, we might just be the only industry where someone “starts” a business and then does absolutely NOTHING to grow it.
If you act as if you have millions of dollars invested in your business, there is a high likelihood you will succeed in network marketing! Food for thought!
# 3: The Reputation of Our Industry
Most people you talk with are ignorant about our industry. They don’t know what they don’t know. Network marketing is not taught at schools, in college, or in most homes. To most people, it is a foreign concept. As a result, many people have preconceived notions, even misconceived notions about what our industry is all about.
Combine that with the fact that anyone can write a negative article online or create an anti-MLM website, and most prospects have a difficult time determining the difference between fact and fiction.
Now, don’t get me wrong. Some people in our industry say and do some shady things. These folks hurt EVERYONE in our great industry. We need to do a better job policing ourselves.
This is not exclusive to MLM. It happens in every industry. There are good people and bad people in every industry.
Our real job as network marketing professionals is to educate our prospects. We must say and do the right thing and teach them what network marketing is about.
# 4: Competitively Priced Products
One of the most common MLM Business problems is OVER-PRICED products.
Many companies in our industry mark up the price of their products so much that no one in their right mind would buy it!
Very few prospects will whip out $100 for a bottle of “magic” juice or $75 for a bottle of skin lotion. Some people will, but most won’t.
I tell people that if the products don’t make sense, the business doesn’t make sense. The products don’t have to be unique to the company, although that can help. The products don’t need to be the cheapest either, but they must be competitively priced to what consumers can buy online.
Before joining any MLM Company, ask yourself this question:
Would I buy the products at the suggested retail price if I weren’t promoting the business?
If you can answer yes to that question, you’ve found a good company.
# 5: Mismanaged or Greedy Companies
We have some crazy owners and mismanaged companies in our industry. That’s one of the reasons so many MLM Companies fail. They either have a good thing going and they get greedy and change the deal or they are clueless about how to start, run, and grow a successful business. Of course, there are lots of GOOD owners too.
There are few things that anger people more than building up a big team or working hard for several years to grow your business, only to have the company go belly up and shut down.
Make sure you research the company owners and management team BEFORE you join a MLM Company.
Closing Thoughts
In conclusion, these are the most common MLM Business problems, as I see it.
No industry is perfect. No company is perfect. No business is perfect. No person is perfect. Despite these common MLM Business problems, I still believe network marketing is the best industry out there for the average person to succeed. The pros easily outweigh the cons.
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.
Chuck Holmes
20+ Year Network Marketing Professional
Top Earner & Top Recruiter
Email: mrchuckholmes@gmail.com
P.S. Learn how to grow a successful network marketing business. Secret tips, training, and practical ideas. Free training delivered by email.
#3 The reputation of our industry. This I see a lot. I have had people laugh in my face, and say oh your little pyramid scheme! Over time I have learned to just laugh right back, and say yeah my little pyramid scheme…do you want more information? This definitely catches them off guard.
Posture is everything. Sometimes people just say that to see how you react. Anyone who does even a little bit of research will realize we are a legit industry doing billions and billions of dollars in sales. And our industry has been around about 100 years. When people are negative, I just move on.
Yeah there is no sense in wasting time on people with that mindset.
People fail in MLM for simple things they could avoid. If people would work their business daily for an hour or two, develop a game-plan, and follow it for a few years, more people would succeed.
I agree. At least 95% of the people I’ve worked with during the past 20 years, and probably closer to 99% do not have the mindset or work ethic to build a big business of any kind. Many join our industry HOPING they can do very little but strike it rich. However, the people that get involved, put in the work, stay focused, and persist normally make incredible incomes.
I’ve looked at several MLM Products.
In every case, you can buy a similar item cheaper on Amazon.
How would you overcome that objection when talking with a prospect, Chuck?
Yes, in many cases MLM Products are WAY overpriced. Many of these companies are out of touch with their customer base. However, some companies in our industry do a great job at offering unique products with a high value, at a fair market price.
When a MLM Product is 3x, 5x or 10x more than a similar non-MLM Product, it becomes almost impossible to sell.
Every industry has challenges. What I don’t like much about the MLM Industry is that most people beg, pressure, and chase their warm market. And they use a bunch of pressure and hype. It’s a big turn off.
Sadly, most of the people in our industry are either ignorant (they don’t know what they don’t know OR they haven’t been trained properly. On the flip side of the coin, we also have many professionals. Every industry has good and bad people, amateurs and professionals.
When reps do the things you mentioned it is a big turnoff. People in our industry should realize that everything they say and do to their prospects and team members affects everyone in our industry, not just them.
Many people in the industry don’t have the money to invest in their business, be on autoship, and advertise. It’s the truth. People join the industry so they can make money, not spend more money
Maybe so, but every business has expenses. Compared to just about any other business model I’ve seen, our startup and ongoing expenses are significantly lower than most other industries. I’d argue if they don’t have enough money to do a MLM Business, they probably don’t have enough money to run any type of business.
No business is perfect, but from the research I have done on the MLM Industry it has a lot of advantages compared to other industries.
I believe we have all the benefits of a traditional business without the headaches. We are by no means perfect, but we do have a better way.
I’m not a fan of network marketing myself. There are lots of problems. Dealing with people can be tiresome. I think it’s better to work in a business where your income is based off what you do, not what others do.
Many people leave network marketing to go back to jobs or businesses where their income is dictated by what they do. There is nothing wrong with that. To each their own.
I personally love the leverage, time freedom, and residual income our industry offers. But, I will be the first to admit that we are not for everyone.
The major problems in the MLM Industry stem from the fact that most people who join are not entrepreneurial, have no skin in the game financially, and do not take their business seriously.
Spot on. Almost everyone I’ve ever worked with has an employee mindset. That is tough to overcome when you’re trying to build a business of any type, not just network marketing.
I’m not really a fan of the industry. It has endless issues and is designed for people to fail. With all the problems you listed in this article, I’m not sure how anyone can succeed.
I personally don’t believe the issues in our industry are more or worse than any other industry. But, we’re not perfect. If people don’t like what the MLM Industry is all about, that’s okay. We don’t need everyone to participate.
All of these business problems you listed above, Chuck, have simple solutions. As an entrepreneur, you will face problems daily. Your income is dictated by how many problems you can solve and how big of a problem you can solve. Expecting everything to go smooth or be problem free is foolish.
Absolutely. Every business I’ve ever owned, whether it be MLM, my eBay business, my blogs, consulting, or something else, has had its share of problems. Two steps forward three steps back. Everything starts going well and then the unexpected happens. That’s how life works. That’s how business works. You just have to keep chugging on.
A lot of the MLM Problems come from the fact that the product prices in your industry are so out of touch with what people can buy elsewhere.
I agree. Many of the products in the MLM Industry are way too expensive. That makes it tough for reps to find real customers, people who want to buy the products but not do the business. However, if you shop around, you will find some companies that have figured it out and offer great products at fair prices. You just have to do your due diligence and evaluate several companies.