Markets

Why MLM Aren’t True Residual Income

 

 

MLM stands for Multi-Level Marketing, and it’s a selling dream of residual income, and everyone wants to have a piece of it.

For you to get the residual income, you have to clear all your bills, and the money you’re left with is what becomes of residual income. What’s the point of enrolling in marketing that won’t give you much of the passive income, but a scheme to defraud of your hard worked money?

The reasons why MLM is not a true residual income is because it has many flaws. I’ll be taking you through five of them.

 

5 Flaws in MLM

  • Creating Your Own Competitors

 

In MLM you have to sell products to receive some amounts of money in commission. That’s not all. You’ll need to recruit other people to sell the same products you’re selling. The more they sell, the more you’ll get a commission from their sales. The crazy part is that you need to recruit the best people in selling that product and this creates competition for you to sell the same product. You have turned your customers into competitors, and you’re required to recruit as many people as possible, implying that you’re creating more of the competition in selling the products. Also, you’ll be doing marketing and at the same time training recruits with no payments.

 

 

 

  • Conflict of Passive and Active Income

 

MLM advocates for recruiting lots of people under you to make residual income. The people you hire needs to be the best since they have to sell many products to give you lots of money in commissions. They are giving the company and you, large amounts of money without doing anything at all.

The conflict between passive and active income arises when you keep on recruiting many people instead of selling the products. You’ll find yourself concentrating more in hiring many people to get a commission (passive income) rather than making the sales (active income).

 

  • Questionable Profitability

 

When you’re in MLM, you won’t be able to realize how much you make in profits. Their startup cost is meager, and this will make you enroll with them. It’s an illusion to make you think you’ll be getting lots of profits. Another aspect of questioning is whether MLM’s products are marketable, or is it just a scheme to recruit more people by selling to them to enrich the company and its salespeople. Also, they don’t incur any costs in marketing as well as training. You as the salesperson you’ll have to pay out of your pocket.

 

 

  • Pyramid Schemes Similarities

 

MLM is considered to be a pyramid scheme invented to scam lots of people in a way that’s unnoticeable. Amway, which was the first MLM was charged by the FTC as a Ponzi scheme to defraud innocent salespeople. You’ll find some hidden meaning in their terms and conditions just like a pyramid scheme would do.

 

  • Cult-Like Indoctrination

 

The MLM shouts out that they have the best support and training. But deep down you’ll find that it’s more of brainwashing tricks to lure more people into their company. Also, the MLM leaders have the final say with no opposition, just like a cult does.

 

Conclusion

MLM is more of a scam. That’s why its recommend to always research and consult your financial advisor before taking any measures into your hands.  Don’t invest in a business venture you don’t have any reliable information about it.

 

 

 

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June 2018
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