Top 13 Reasons People Fail in MLM

Our industry has a huge failure rate. At least, that’s what people tell you.  I think there is a big difference between “quitting” something and “failing” in something, but that is a topic for a future article.

In the paragraphs below, I want to share the top 13 reasons I believe people fail in MLM.

# 1 Poor Cash Flow

The # 1 secret for success with any type of business is cash-flow management. If you always have more money going out than money coming in, you are doomed for failure. To succeed in this industry, you need to get a grip on your cash-flow. And you must be able to help others make a profit within their first 30-90 days. The fastest way to do that is to get a few retail customers and keep a control on your expenses.  Don’t spend money just to spend money.   Always know where you stand financially with your business.  Track your income and expenses EVERY month and have an updated profit and loss statement.

# 2 No Leads

Leads are the lifeblood of any sales business. More importantly, you need qualified leads for your network marketing business.  If you don’t have anyone to share your products or business opportunity with, you will be out of business in no time. Although there are many different ways to get leads, the best way is to generate your own leads. If you have a constant flow of 5 to 10 leads coming into your business every day, you will position yourself for success. And if you don’t have anyone to talk to, you will be out of business in no time.

# 3 No Marketing System

Making a list of everyone you know is a great way to get started in this industry.  But after you work through your list, you need a SYSTEM to help you get leads.  What you really need to succeed in MLM is a simple and standardized way for you and your team to generate leads. There are many ways to do this, such as newspaper ads, direct mail, pay per click, YouTube videos, capture pages, etc.  Your key to success is to find a system that works well for you AND to have a few options for your downline to choose from.

# 4 No Mentor

All successful entrepreneurs have a mentor. You will be no different. You need to work with someone who can teach you how to be successful, using proven techniques. This person doesn’t necessarily need to be your sponsor, but you do need to find a mentor. Most people join this industry and then get left behind by their sponsor. Your fastest way to success is to find someone who has already accomplished what you want to accomplish, and to work with them.

# 5 No Marketing Plan

People fail in MLM because they don’t have a marketing plan. Or, they have a crappy marketing plan. If your marketing plan consists of only working your warm market, cold calling leads, or promoting a company replicated website with pay-per-click advertising, you will go broke in this industry quickly. Marketing is the key ingredient for any successful business. You need a written marketing plan that outlines your target market, your unique selling proposition, your budget, and the strategies you will follow.  If you don’t have a written plan, spend a few hours and draft one up.  Help every person on your team do the same thing.

# 6 Not Enough Income Streams

To succeed in network marketing, you need at least three good income streams, preferably five. I say that because it typically takes a long time to earn a large income with a traditional network marketing company. Also, you want to diversify your income to give you long-term security. At a minimum, you want leads income, training income, a systems income, and income from your MLM Company.

# 7 No Focus

Most network marketers try five or ten different marketing or advertising strategies at once. Rather than focus on one marketing activity (and mastering it) they end up trying a bunch of different things while achieving horrible results. Pick one strategy and do nothing else until you have mastered that one strategy.  It’s also important to stay with ONE company and to focus for 18 to 24 months before you decide to try something else.

# 8 No Previous Entrepreneurial Experience

Most people who join this industry are disgruntled employees, unemployed folks or financially destitute people. Simply put, they’ve never been entrepreneurs before and don’t know a thing about sales or marketing. And they don’t realize they need to go through a learning curve to learn and develop the required sales and marketing skills. If you have an employee mindset (work and get paid for the hours you worked) you are doomed from the beginning.  You need to learn how to think like an entrepreneur and you need to learn sales and marketing.

# 9 Working with the Wrong MLM Company

Although the company you choose isn’t the most important thing, some companies are much better than others. Some companies have strict policies about how you can promote their business opportunity online. And others have crappy compensation plans. You need to find the right company, with the right policies and right compensation plan at the RIGHT TIME. You also should team up with a company that has products you are passionate about.

# 10 Unrealistic Expectations

Many people who join the industry have unrealistic expectations about what it takes to succeed in network marketing and in business. They don’t realize the amount of WORK required to succeed. They think they can sign their name to the dotted line and start making money without doing anything.  You will not succeed with a lottery mentality. No business is a GET RICH QUICK type of business.  It will probably take you a year to get profitable, a couple years to make $1,000 or more per month, and three to five years to earn $50k or more per year.  Some people will do it faster, but most folks need to go through a learning curve, especially if they’ve never owned a business before.

# 11 No Retail Customers

Another common reason for failure in MLM is that most distributors don’t acquire ANY retail customers. Let’s face it, customers are the lifeblood of any business. Without customers ordering the product month-after-month, there is no residual income. More importantly, most distributors could make a few hundred dollars per month just by having 5-10 personal retail customers.  Make sure you have 10-20 good customers.  This alone will make you profitable and give you money to grow your business.

# 12 Give Up To Soon

Another common reason that people fail in MLM is that they give up to soon. Most people quit within one to three months of joining. I’d argue that you couldn’t build any type of successful business in 1-3 months. At a minimum, you should be willing to work your business CONSISTENTLY for at least two years before you decide to give up.

# 13 Spending the Profits Too Quickly

Don’t spend your profits too quickly.  For the first couple years of a business ALL profits should be reinvested back into the business.  Take your profits and advertise so you can get more customers and distributors.  Invest in your business education so you can hone your skills.  Attend workshops and seminars to develop new skills.  If you have to draw some of the profits, don’t take more than 50% of the profits for yourself.  Your new business is like a baby.  You must nurture it and love on it until it is self-sufficient.

Final Thoughts

In conclusion, these are the top 13 reasons people fail in network marketing and MLM. Obviously, there are other reasons too. I learned a long time ago that knowledge is power. Just knowing these common reasons for failure can give you a major advantage over your peers. Make sure you study this list and evaluate yourself in each area, so you can improve.

What are your thoughts?  Why do you think people fail in MLM?  Leave a comment and let us know.

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3 thoughts on “Top 13 Reasons People Fail in MLM

  1. Greg Boudonck

    I learned about a very good book that is on the market that deals strictly with business cash flow. You mentioned it here and it can be a huge issue in businesses of all kinds, including MLM.
    Small Business Cash Flow: Strategies for Making Your Business a Financial Success by Denise O’Berry has excellent reviews and I believe it would be a great read for any business person who struggles with cash flow issues.

    Reply
  2. Ty Ross

    A mentor dedicated to your success in the MLM business is super important. MIA sponsors, are a big reason distributors quit and mars the reputation of the industry. When a distributor doesn’t feel supported by his sponsor and supposed mentor, it leaves them feeling like it’s a scam. They’ve paid their initial fee and now they’ve been left in the wind.

    Reply
  3. Ty Ross

    Working with the wrong MLM company is the kiss of death for a lot of people new to the industry. I think some recruiters focus on the numbers, not the quality of their prospects and acknowledging whether or not the potential distributor is really interested or is feeling pressured to join. Joining a particular company you aren’t interested in is a surefire way to fail in this business.

    Reply

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