Ask 1099 Mom: What is an MLM?

Many of the jobs geared towards "work at home moms" are, in fact, MLM businesses.  MLM, or multi-level marketing plans, rely on the small business "owners" to sign up other owners beneath them to earn referral bonuses and affiliate revenue.

Many bloggers are already doing something similar with some current blog revenue programs; maybe you've joined an ad network where you really aren't making much on the ads themselves, but you are making quite a bit from everyone who signs up for the same program with your trackable link.  This is very much how MLM works.

There are hundreds (if not thousands) of MLM companies on the market today.  They range from some of the classic programs for toys, makeup, books, and health supplements, to the more exotic (adult "toys" and sexual aides are an example.)  But is an MLM for you?  In order to determine this, you must ask yourself a few very honest questions:


1.  Would I use and buy this product?  If you wouldn't do both, stop right here.  You should never get into an MLM where you don't believe in the products 150%.  You will be selling these with conviction, and probably buying a starter kit that requires you to have a good amount in your home.  If you can't stand behind the products, you likely won't do well at all.

2.  Do I know of anyone to sell to?  This is not the same as "do I know anyone?"  I was a "consultant" for an educational toy company a few years back, and it was a total flop.  I had lots of friends and family, but none of them had money to spare.  In this economy, you may find that the same people you rely on to attend your demos and receive your catalogs are also the same people who have just lost their job or home.  If you don't feel like you can approach this group in good conscience and sell them a product, you need to think of someone else to sell to.  In short, the more connected you are, the better chance you have at making MLM a profitable endeavor.

3.  Am I prepared to wait on profits?  If you need money now, MLM is not your thing.  In addition to the intro packages that many require you buy (priced between $25 and $150 for most), you won't actually make a dime until you've sold something or signed up someone else to the program.  Then, you likely will have to wait for orders to be processed and shipped before your payment is addressed.  It could take 30-60 days to see that first penny, provided you sell right out of the gate.


4.  Can I fully commit to this business?  MLM is not something you do lightly, like setting up a lemonade stand or having a garage sale one weekend a month.  You need to research, market, and push product constantly.  You need to have a leg up on the thousands of competitors and always be selling.  I remember being in line at a store recently and having the nicest woman compliment me on my kids; after talking for 15 minutes, she handed me a business card for a popular makeup company.  I don't  know that I could have done that, but it's necessary in this biz.

If you're sold on the idea of getting into MLM, be sure to research beforehand.  There are many sites dedicated to debunking the myth of MLM businesses.  There are many disgruntled associates ready to dish on what they hated.  Take this info and balance it with the info you are getting from testimonies on MLM sites and from those who are getting paid to sign you up.  Also, remember that the best companies are upfront about fees, product, and the company behind the brand.  (Many sites geared towards MOM are very vague.  You don't even know what the opportunity is until you get hooked into an hour long at-home seminar.)  If a company can't tell you in the first minute what they sell, you might want to reconsider.


Have you participated in a MLM? What has been your experience?

(A colleague of mine has a site that lists many MLM's and the cost to join, as well as the commitment to maintain active status.)


*Photo by Jorg Weingrill via Flickr.