Some time back I posted on why you should try to stop working for other people (you can read it here). One of the reasons is that there are alternative businesses that are easier to start than traditional businesses.

One type of alternative business that you should definitely explore is Multi-Level Marketing (MLM) (I stress that I'm referring to legit MLM and not Pyramid schemes).

NOW, I know A LOT of people are anti-MLM. So was I for many years. Before you start thinking I'm promoting a particular MLM company or trying to recruit, I can tell you right now that I AM NOT.

The intention of this post is to explain what MLM is about, the reasons you should explore, and how to differentiate between the legit and the not. If you are still reading at this point, GOOD! Please read on as it will just take 5 minutes of your time.

Photo by Pixabay

As mentioned, I was anti-MLM for many years as I thought the people in it (including a few used-to-be close friends) are a bunch of greedy people looking to get rich quick. How I got into it after many years is explained in my other post.

Though I wasn't successful in it, I learned that it is a really solid business model for one's financial freedom. Here's why:

1. You Build Passive Income For What You Sowed

As you may be aware, the concept of MLM is that you get paid a certain percentage of sales made by your "downline" (subordinate in corporate terms). As you work on it and start building your network of downlines, you start to receive a percentage of their sales as commission and when your network gets bigger and deeper, you will achieve your financial freedom as your network will generate a generous income for you everyday.

2. You Have More Than 24 Hours A Day

When you work alone, you have a maximum of 24 hours a day, and minus off the 8 hours require to sleep, you can work as many as 16 hours.
Would you trade 10% of your time for 10% of multiple people? It's a no-brainer.
The advantage of MLM is that as your network grows, you are as good as having multiple people contribute 10% of their time to you, and the size of your network is the limit.

3. It Is The Best Retirement Plan

Despite what your investment fund manager and insurance agent are telling you, MLM is the best retirement plan out there. Whenever you sit down with your fund manager or insurance agent to plan for your retirement, the 2 key questions will be around:

• At what age you plan to retire?
• What type of lifestyle do you want as a retiree (and how long you think you'll live)?

You then work backwards to calculate how many years left till your preferred retirement age, and how much you'll need to save or invest every month to sustain your post-retirement lifestyle.
MLM works the other way round. You set your retirement expenditure target, and work towards building that amount of monthly passive income. Once you achieve that, you have already secured your retirement plan regardless of which year you retire or how long you think you will live.

So how do you avoid getting scammed by some Pyramid Schemes?

Photo by Pixabay

There are a few key things you'll need to look out for before deciding to explore or even invest in an MLM company:

A. History of the company

If a company is running pyramid scheme it is unlikely that it will last for decades. Look for companies with rich history.

B. Product of the company

You need to understand what products the company offers, and if their products will be sustainable. Does it fix a problem for people? Does it fill a specific need at the lower tier of the Maslow's Hierarchy of Needs (the higher the tier, the easier to forego during economic downturn)? Do they manufacture their own products and have good R&D?

C. The commission model

Some companies come up with very attractive commission models that you may find it best among all other MLM companies you've researched. DO NOT go for companies with the following attributes:

• Unlimited Depth -- The depth of your network should stop after a number of tiers. This means, you should NOT be given commission after, say, 5 levels down. Unlimited Depth = Pyramid Scheme, as the Top person will gain from everyone and anyone. It is NOT a sustainable business model.
• Limited Width -- Some models are called Binary model, where you will have only 2 lines down. The "width" of your network should NOT be limited. Width is what you need to work for, and if the width is limited, why would people still put in effort after a while? This means losing good leaders along the way and MLM CANNOT grow without good leaders.
• Commission Diluted -- There is only so much a company can payout to their business partners as commission as the company still needs money to run its business. While you should reap highest % of commission from your own sales, it's equally important that you gain reasonable % from the sales of your downlines. Some companies offer more depth than others but the % of commission reduces drastically as you move down every tier. The bulk of your income will be from your lowest tier and if it is diluted to some decimal points, it will hurt you in the long run.

D. Quality of leaders and culture of company

People often overlooked this part, but good leaders can guide you to success and help reduce your mistakes. Is the senior leadership team still active? If not, you should really take a closer look to find out WHY. The culture of the company is also a very important aspect, and you should STAY AWAY from companies that focus only on sales and not the quality of product and how they could help people.

Having said all the above, I do need to warn you that MLM is NOT for everyone!

You will need to invest a lot of time in it and there will be A LOT of rejections as majority of the society is skeptical and has a lot of misunderstandings towards MLM, thanks to the black sheep out there scamming people with pyramid schemes.

If you do decide to go into MLM in future, I wish you all the best!!

If you like the article, please help to Upvote and also follow me @cross

Do leave your feedback in the comments so that I can continue to improve. Thanks!