BlogEntrepreneurshipMLM’s: The Good, The Bad and The FUgly

Donna King4 years ago222012 min

MLM businesses have been around for a very long time.  Both Vorwerk and Avon have been around since the 1800’s.  Yes that long! If you haven’t been approached to join an MLM (Multi-Level Marketing Company) at some point are you even in business?  Networks are either full of MLM agents or they ban them altogether.  At CNBN we neither encourage or discourage MLM’s  ……. And here’s why.

The values and culture of Connect Now is one of inclusiveness and diversity.  We want a broad mix of businesses and business owners.  We want people who are looking to help one another and to learn from each other. Now I know some people have had bad experiences with MLM’s …… really bad experiences! I myself was introduced to an MLM when I was younger and for a time turned up to the meetings and training. I’m fortunate enough to have been born into a family of business owners.  It didn’t take me long to realize the story I was being sold was far from accurate.

“Host a few parties and make enough money that your product is “virtually” free”

“10 hours per week is all you need to see steady income”

“You’ll be your own boss running a team in no time”

None of these statements are an accurate reflection of what it takes to run a successful business.  And that is what we look for at CNBN – GOOD business owners.

So let us take a look at various MLM’s business and decipher what makes them Good, Bad and straight up Fugly!

The Good

  1. There is no denying the very low barrier to entry for MLM businesses.
  • Educational requirements – practically none. The ability to understand and communicate in English is probably an asset but not necessary.
  • Experience – none required. I have yet to see an MLM require prior business experience as a prerequisite to joining their organization. Now if I’m being totally fair, you can start any business without prior experience.  However, you do usually have some experience in your field. Professionals who own an accounting practice usually worked for an accountant before branching out on their own. You get the idea, right? So this could go in the good or bad field. Somehow “I’ve worn makeup before” doesn’t feel like the right kind of experience for starting your own business.  But it does make a low barrier to entry. For now, this is in the good column.
  • Up-front costs – minimal, compared to setting up your own company. Again this could be good or bad.  It can be “too easy” to set up your MLM with little to lose.  In my experience, having something to lose can really focus a business owner.
  1. If you find an MLM business that is already in your wheelhouse, it can make a great addition to your offering.
    For example:
  • Good quality hair products being sold at the hairdressing salon.
  • Makeup products for the professional stylist/wedding stylist.
  • Supplements as an add on to a healthy diet and exercise coach.

Each of these situations can be a good use of the MLM products or business system.

The Bad

  1. I’m just going to dive right in here. Pushy sales tactics – for the love of all things holy, please give the pushy sales a rest. It’s the fastest way to get yourself removed from any reputable networking organization.
  • Lying to set up a meeting. We’ve all been there. You meet someone at a networking event and they tell you they would love to hear more about YOUR business. “We should have coffee”.  So you attend said coffee meeting and BOOM.  Out come the brochures and potential earnings guide for the MLM.    Don’t.  Do it!
  • Trying to recruit anyone to be a downline member. People who know me know that I’m not a big wearer of makeup.  I can’t be bothered putting it on and I certainly can’t be bothered taking it off. So when you come to me as a potential team member for your makeup MLM you clearly haven’t been advised on HR or time management. You have missed the mark big time on this one!
  1. False Advertising
  • Give over with the “This time next year we’ll be millionaires Rodney” or other language to that effect. No, you won’t.  Not through your 10 hours per week MLM business anyway. If you buy a lotto 649 you have as much chance as anyone and I wish you luck.  However, you don’t go from day 1 to day 365 and “all of your financial worries will be a thing of the past”. It just doesn’t happen so stop implying that it does.
  • The before and after social media pic. We know you are not comparing apples to apples when the after picture has a fresh haircut, flattering lighting and a whole new makeover.  This is not down to your product so stop implying that it is. Again for the sakes of fairness, there are many well-known companies who have shady marketing practices …… it’s just that certain MLM companies have taken it to a whole other level.

The Fugly

  1. If there is one thing that annoys me above all else with MLM companies it’s the “fineprint”.
  • The added fees that you are never warned about until it is too late, you’ve already committed and now you find out there are additional monthly fees you were not aware of. It’s underhand and I don’t like it.  Don’t get me wrong, these fees could be totally legitimate. I mean with an MLM business you do get branding and some marketing done for you. There is clearly a procurement and shipping/distribution team that needs to be covered.  I’m not complaining about the costs per se.  It’s the not being upfront about those costs that bother me.   It’s bad enough finding hidden costs as a consumer.  If I were to find I’ve been sold a business idea just to find out there are hidden costs, this isn’t a business partnership I’m interested in!
  • Withholding payout due to insufficient sales or personal volume. This one really irks me.  It doesn’t matter if my earning for the month are $12.32.  You don’t get to withhold my $12.32 because it didn’t hit your KPI of $50. You also don’t get to withhold my earnings because I didn’t personally use the amount of product you deem I should.  It’s horrible business practice and it’s Fugly!

To recap.  There are some really good reasons to join an MLM company. If the organization is a good fit for you with good practices, reasonable fine print and “pretty” business values we wish you all the best and we look forward to seeing you at one of our meetings.  If the MLM company you have signed up for fits into one of the other categories I would suggest finding one that does better…… and then we will look forward to welcoming you too.

Donna King

Donna is the CFO of Connect Now Business Network, a fourth-generation entrepreneur and financial consultant. She has worked with money or cash management for most of her career. What started out collecting fines for the legal system or collecting debts for private enterprise progressed into bookkeeping with an accounting firm. This gave her a solid understanding of what you need to run your business and what you accountant needs to prepare your year-end financials and tax returns. After many years in this field and 2 children later it was time to set up her consulting company Beyond Balanced Books. Donna has a passion for helping business owners understand their financials and how best to utilize their money to grow their business in the quickest way possible. Her unique approach focuses on not only the business cash flow but how personal cash flow affects the business growth as well. She has a way of explaining numbers that makes them less scary. Donna delivers her advice with humourous flare backed up with solid accounting practices.

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