The one thing every MLM recruit should do right now to avoid losing money

Business

If you’re already in an MLM or have just joined one, here’s one simple thing you should start doing right now to avoid losing money.

Right now, MLMs are enjoying a mini boom. While the world reels from the Coronavirus pandemic and the financial implications of the lockdown, MLMs have been on a frantic recruitment drive.

Their targets? People (particularly women) who have lost jobs and work thanks to COVID-19. Many are openly, and cynically, calling for hairdressers and nail technicians – two professions particularly baldy impacted – to get in touch with them.

And who can blame people for being seduced by income claims like this (by a Forever Living rep in this case, though other companies are making similar claims) when they’re desperate for money?

The problem with income claims like these is twofold. Firstly, they’re violating the DSA Code of Business Practice and the CAP Code. And secondly, and most importantly, they’re a blatant lie.

Why? Because research published by the Federal Trade Commission (FTC) shows that 99.6% of MLM participants, on average, will LOSE money when business expenses are taken into account:

This has been corroborated by research since, and indeed by the income disclosure statements of MLM companies themselves. For example, Forever Living’s own figures show that, for a rep to make even £200 a month (before expenses), they need to be in the top 3% of all members of the company.

And if you want to be in the top end of this rep’s advertised income band of £2,000+ a month you’d need to be in the top 1% of the company.

Incidentally, this particular person claims to be an independent business owner, but is actually a salaried employee of the business – something they fail to declare when boasting about what an amazing opportunity it is. Yet another lie (by omission) these people will happily tell to reel in victims.

How to tell if you’re making or (more likely) losing money in an MLM

Sadly, as we mentioned, lies like these are working right now, and people who are already desperate for money are signing up to these businesses.

And when they do, they’ll be love bombed and lied to by their new team. And if they start to express doubts about whether they’re earning money, they’ll be subjected to toxic positivity or told they’re not working hard enough – the classic MLM shame-making lie.

What they WON’T be told is to implement basic good business practice, and track their sales and expenses to genuinely see whether they’re actually earning money. Nor will they be advised to record any time they spend on their business, and calculate their earnings per hour.

If they did, then like Elle Beau, they’d very quickly see through the lies and discover how much they were losing:

Start filling in this sheet NOW if you’re in an MLM

So we’ve decided to do what MLM companies apparently fail to do – make it easy for MLM reps to track their business sales, expenses and time.

Our MLM monthly account sheet makes it really quick and simple for MLM reps to track how much they are spending and earning each month – and how much time they are spending on their business. They can then easily work out whether the business is financially viable.

In the expenses column you need to add ALL expenses associated with your business. This includes the coffees you buy when meeting potential customers or recruits (when you’re allowed to safely meet!) and the petrol or public transport costs for getting there.

It also includes any postage or other delivery costs, plus stationery and – importantly – any products you buy for personal use or to stay active. Most MLMs encourage you to ‘be a product of the product’ or even require you to personally buy a minimum quantity a month.

As we demonstrated here, MLM products are usually more expensive than high street alternatives. And while reps may try to tell themselves they love the products and are buying them because they’re brilliant, the reality is that most wouldn’t buy, at least in the quantity they do, unless they were trying to make the business work. So these are a business expense.

In the time column you also need to be completely honest with yourself, and include ALL time you work on your business. This includes:

  • Time messaging people you hope will buy or join
  • Time posting and engaging on social media for your MLM
  • Time processing orders
  • Time chatting to or meeting people
  • Time spent on personal development and training
  • Time spent travelling to meet people or deliver products
  • Time spent talking to your upline or team
  • ‘Pockets of time’ you squeeze in work

Basically ANY time you are working your business needs to go on the sheet to get an accurate picture of your earnings. Just like you would do for any business.

Get your own free copy of our MLM monthly account sheet

You can get your own copy of our MLM monthly account sheet by clicking on this link and choosing ‘File’ and then ‘Make a copy’ from the drop down menu:

The file has formulas in so it will automatically update when you start filling in your expenses, sales and time – and tell you at a glance how much you are making (or losing) and what you are earning per hour.

If you are in an MLM we recommend starting this today. And if you have a friend or family member in one, send them a copy and urge them to start filling it in.

You have nothing to lose. You should be doing this anyway as good business practice. And if it proves you are earning good money, great! But if it shows an uncomfortable truth then it’s far better to know.

After all, wouldn’t you rather know you were losing money (if indeed you are), so you can stop? Or would you prefer to keep making a loss month on month?

If your MLM team tells you not to fill in this sheet – ask why

And if you tell your MLM company or team about this sheet and they recommend you don’t do it – ask yourself why that is. If there is nothing to hide about the business, and if you genuinely do make money, wouldn’t they want you to know that?

As mentioned, there is nothing unusual about this sheet. We use a sheet like this in our own business, and update it daily. Any day of the month we know exactly how much money we have earned, which part of our business is the most profitable, and how much it costs our business to run.

Indeed, even if you’re not in an MLM, we recommend keeping a spreadsheet like this. You are welcome to copy and adapt our sheet if you don’t have your own.

What if you find you’re losing money?

So what happens if you start using this sheet and discover that you’re losing money in your MLM? The first thing we want to emphasise is that it’s NOT YOUR FAULT.

Jon Taylor, the author of the research on MLMs published by the FTC describes the business model as “a mathematical trick played on the unwary.”

He also calculates that the odds of winning from a single spin of a roulette wheel in Las Vegas are 286 times as great as the odds of profiting with Amway, and 48 times as great as the odds of profiting as a Nu Skin distributor.

Numbers published by MLM companies confirm that only a tiny fraction of their recruits earn good money – and again that’s before business expenses are deducted. It may comfort you to know that even some of Forever Living’s top reps are hiding loans, debts and even bankruptcy.

So the fact that you have not earned money is not your fault. It’s NOT because you didn’t work hard enough, give it long enough or want it enough – or whatever other rubbish you might be told.

Don’t let anyone talk you into staying, let alone invest any time or money in extra training to help you make a success of it. Many MLM reps are fond of bombarding their downlines with ‘free brainwashing training’. (Often this takes place early morning and late at night – eating into your free/family time.)

Your upline doesn’t care about you – they care about their commission

If anyone tries to convince you to stay or give it another chance, stay strong. Even better – don’t allow yourself to be drawn into a conversation with them.

If it helps, remind yourself that they want you to stay because they earn money from your sales and your personal purchases, and they will need a minimum number of sales and people in their downline to maintain their own bonuses and pay structure, including a car plan, if they have one.

So any love bombing or shame they subject you to is not about you and your needs or shortcomings – it’s just about themselves. Don’t let them emotionally blackmail you into staying.

Get out and find another way to earn money, if you can. As the research shows, you’d be financially better off earning minimum wage. You’d even be better off not earning any money at all. At least you aren’t getting into debt, as many MLM reps sadly do.

Read more about MLMs

We’ve published a number of articles on MLMs. If you’d like to learn more about the industry, here are some of our income investigations:

And here:

And you can learn more about how the MLM industry works here:

Photo by Sincerely Media