In our last two blog posts, we looked at an overview of the direct sales industry, also called MLM (multi-level marketing). Then, in Part II, we looked at the many positives of owning an MLM business. In today’s article, we’ll take a look at the downside, drawbacks, or cons of owning a direct sales business.
7 Drawbacks to Owning Your Own Direct Sales (MLM) Business
Direct sales are not for everyone. Many people fall for the slick sales pitch that direct sales businesses are known for and purchase an independent business opportunity, only to realize later that the opportunity isn’t right for them. This has led to much ‘buyer’s remorse’ and poor reviews of MLM companies, which is a shame. Not all are bad. Not all buyers judged poorly. But, when taken as a whole, there does seem to be more cons or negatives to the MLM industry than there are positives.
We will focus on the top 7 drawbacks of owning your own direct sales (MLM) business.
- It’s hard work. That surprised you, didn’t it? You probably thought that an MLM business would be easier to run than a traditional business. While you do not have inventory or expensive marketing startup costs, you do need to work at your business. Sales is work. You will need to cultivate an audience for your products, update your sales materials, and work with your contacts to sell products. There are no shortcuts to riches.
- Most people make a part time income. Very few people rise to the top of the MLM profession and make a full time income from their work. Most earn a small amount monthly – perhaps, like my sister in law, enough to set aside for the family vacation but not enough to live off of. Depending on your goals, this may be fine or inadequate for your needs.
- It takes time to grow a business. Yes, you will start your business with a known brand name and products. But it takes time to grow your contact list, recruit distributors into your downline, answer inquiries and more. You have to be really passionate about what you are selling and love the opportunity to make it work, especially as a full time effort.
- Your sponsors may not be a good fit. Sponsors in MLM jargon are the people who recruit you into the company. They should act as mentors to you, helping you learn the ropes of the company, giving you advice and teaching you how to sell the products effectively. Truthfully, very few successful MLM business owners are also good sponsors, so you may not get the mentoring you want, need or desire.
- There are hidden costs. Although the company most likely advertises nationally, you will still need to pay for marketing materials. These may include mailing lists, catalogs, business cards, brochures, website hosting and more.
- Marketing is controlled by the parent company. This can be good and bad. It’s good because if you know nothing about marketing, you at least have some promotional efforts going on behind your business. However, if you disagree with how the company is advertising its products, you have no recourse – you are stuck with it. You must also use materials approved by the corporate office. This may feel constraining to some entrepreneurs.
- Get used to rejection. Like any sales business, MLM marketing involves rejection – a lot of rejection. Your friends, your mother, your sisters and brothers may be supportive but unable or unwilling to purchase products. You may lose friends who think you are being too push with the products. You may hear “no” a lot. If you have a thick skin and can take rejection, you will do fine. If you crumble when people tell you “no” you will not last in this business.
These are just a few highlights of the possible cons or drawbacks of owning a direct sales business. In our last article, we will look at MLM or direct sales scams and how to spell a legitimate opportunity from a scam. See you there!