Multi-Level Marketing: The Way Out of Debt?

First off, disclaimer:  If you are already running a successful Direct Sales or Multi-Level Marketing business, this entry probably won’t apply to you!  This is geared towards people who are considering joining a direct sales company to get out of debt or to break the paycheck to paycheck cycle.  I’m going off of some of my own experiences as well as some of those of my friends and family.  

Second disclaimer: I do not endorse or put down any of the companies that I am mentioning here!  They are being used purely as examples of specific business models!

Lots of people credit direct sales companies with getting them out of debt, becoming a second source of reliable income, or even completely replacing their full-time jobs.  Others talk about being scammed or going into debt with direct sales.  For someone struggling with debt, it can be tempting opportunity, but “tempting” isn’t always synonymous with “wise”.  Before delving into some things that my friends and I have learned from experience, let me clarify some vocabulary:

Multi-level marketing (MLM): Companies that recruit individuals to promote and sell their products, and offer bonuses and commission to those individuals for recruiting MORE individuals to promote and sell.  Some well known examples include: Mary Kay, Arbonne, Amway, Young Living, Jamberry, Home and Garden, Beachbody, Rodan and Fields, Lularoe, and many others.

Pyramid Scheme: A company that claims to be MLM but does not follow government business regulations and has an unsustainable business model.  Some people will use “MLM” and “Pyramid” interchangeably, but one is an illegal copycat of another.  Just google “pyramid scheme shut down” and you’ll find plenty of examples.

Representative/Distributor/Independent Consultant/Indendent Representative: If you sign up to sell for an MLM company, this is you!

Upline: The person who recruited you to sell for your company and receives a commission from said company for everything you buy or sell.

Downline: Anyone you recruit for the company- you receive commission off of anything they buy or sell.

Customer: Someone who buys products from an MLM company rep without starting their own business through said company.

If you are on the fence about MLM, here are some things my friends and I have learned from experience:

1. Always check into who is recruiting you. Your upline will be the person who teaches you how to build your business and make money.  If this person is lacking integrity, financial literacy, or social grace, then your business is doomed before it starts.  A trusted friend, respected acquaintance, or even a stranger who can demonstrate business success might be a great upline- a stranger who approaches you with flattery and unsolicited offers has done nothing to earn this level of trust from you!
2. Always find out what your monthly expenses will be. Even if your direct upline is new to the business themselves, someone in your line of leadership should be able to provide a list of any and all business expenses, and they should be very clear on what is recommended and what is required.  For some people, meeting minimum business volume is a simple matter of switching your buying habits, with a small or no change in budget.  But, for a single expected to do family-sized volume or someone living on minimum wage expected to shop like they make 50k, making business volume each month is a recipe for disaster.  Your upline might try to “promise” you that you can make your volume in customer sales, but the blatant truth is that you can never force anyone to buy anything from you.  If you can’t squeeze the required business volume, along with any required training materials or business fees, out of your monthly budget, than that particular company just isn’t right for you!
3. Never go into debt for an MLM business. Hearing stories of financial freedom can make potential reps want to put any and all start-up costs on a credit card and get started right away.  However, with MLM, there may be no maximum earning potential, but there is no minimum either.  Even if you do everything your upline says, reality is that you may not make any money in your business in the first month...or ever. Once you place your start-up costs or your new business-owner kit on a credit card, it’s far too easy to start putting your monthly volume on a card, too.  If you must keep a credit card, decide now that you will never, never use it in your MLM business. If your upline pressures you to do otherwise, they don’t deserve to be your upline!
4. Never sacrifice your relationships for an MLM business. Can you think of any friends you have lost or acquaintances you have cut off because they wouldn’t take no for an answer from you?  Or because they tried to make you feel insecure about something so you would buy their products (“Hey, I have this great thing that will clear your acne/help you loose that extra weight/make you look young again!”)? Have you ever had someone invite you to a party or coffee under the guise of wanting to spend time with you only to pitch an MLM opportunity at you?  Yeah, me too.  It’s annoying at best and hurtful and insulting at worst.  Remember that people aren’t assets- some else’s friendship is far more valuable than the money you can make off them.  Don’t risk hurting someone else’s feelings or wasting their time to build your business- let them try a free product or flat-out invite them to a business event instead, and accept “no,” for an answer.
5. Never sacrifice your dreams and goals for an MLM business College students are often recruited for MLM companies because they are looking for a way to make money without sacrificing their precious time to sleep and study.  This can be a great option, but it can get messy when your upline encourages you to dream of a life where your college degree doesn’t matter.  If you got into MLM to pursue another dream (paying for higher education, doing self-funded ministry or charity work, getting out of debt, etc), then keep that first dream in front of you!  Don’t start cutting classes to attend business events or let your dream of feeding hungry children become a “vision” of owning a mansion with servants.  If your business never takes off or becomes more than a side hustle, you’ve given up a dream for a fantasy and now you have nothing to show for either.  
6. Never sacrifice your spirituality for an MLM business.  Many MLM businesses claim to be ministries and they may be sincerely founded on Christian principals, but a for-profit business should never replace the role of the Church in your life.  In many “Christian” businesses, you will hear promises of wealth and prosperity if you “claim God’s promises” or “speak it into being.”  Such teaching may make you feel inspired and euphoric in the moment but they are claims with no base- while God promises to provide all our needs, He never promises material wealth- you will find some of His most faithful followers living in poverty in some corners of the world.  If a business is teaching something that doesn’t smell right to your theological nose, do your research in the Bible, in prayer, and in trusted Christian leaders outside of your business.  
7. Always make sure you like the products offered by the business. You can’t sell products you don’t like or don’t use.  If a skincare line is making your face break out or a fitness program is so unenjoyable that you can’t stick with it, YOU AREN’T GOING TO BE ABLE TO SELL IT!  A good business upline should let you test-drive some products before committing to the business.
8. Always expect your upline to respect your boundaries. Is your upline constantly springing things on you at the last minute and chiding you when you can’t come?  Or do they wait until you are halfway into an event to tell you that there was a cost to attend and they need the money right now? Are they pressuring you to “invest” in products or business materials that you have clearly stated you cannot afford at this time? Are they threatening to withhold help or mentorship if you don’t comply with their wishes? Once again, if your upline cannot respect your time, your money, your relationships and goals outside the business, or any other personal boundaries, they DON’T deserve to be your upline!
9. Never step on other people’s toes to build your business.  Recently I purchased an MLM product from a good friend.  A casual acquaintance saw me using it and immediately said, “Oh, you should have bought that from me instead!”  Umm...why?  If someone is already purchasing a product from someone on a different team, leave them be.  Go find someone who actually needs your products and be their new connection- don’t steal other people’s customers.  Would you want a good friend or family member being pressured into buying your products from someone other than you?  Even lower is trying to steal a customer from a competitor by putting down the competing product.  If I am using a product and someone comes along and tells me how awful it is, it’s an insult to my personal preferences and to my friend or family member who sells it.  It’s a way to make an enemy, not a customer.  If you want to appear to be a classy, confident business owner, be big enough to praise your competition.  
10. Enter into MLM with the mindset that you are signing up for a discount club. If an MLM product offers a solution to a problem for you, even if you never make any money off of it, at least you got a discount on a skincare line that finally cleared your face or a cleaning line that got all those toxic chemicals out of your home.  If you stayed within your budget, no money is lost and a better life is gained.  If you happened to make some money in the process, even better!

“Whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty.” ~Proverbs 28:19 (ESV)

“A stingy man hastens after wealth, and does not know that poverty will come upon him.” ~Proverbs 28:22 (ESV)

Updates:

Paycheck from tanning salon:

$242.30

Squoob:

$800

Country Club:

$392.42

$243.66

English Camp:

$649.27

Apps:

$8.01 (Pact)

Total paid off so far in 2017:

$6,961.15

Average per day: $32.84

On Track to pay off: $11,985

Happy news: I paid off my third loan!  I’m hoping to have freed my soul from Navient by the end of August!

Bummer news: I recounted my marble jars and the numbers didn’t add up- apparently I started with more debt than I realized and it’s accumulated a lot of interest.  But, the 2017 mason jar continues to empty slowly!