MLM Success Rate: Can You Make Money with MLM?

As a former sales representative in the world of multi-level marketing (MLM), I set out on a path filled with promises of financial freedom and success. Like countless others, I was drawn in by the idea of flexible work hours and the chance to create my own business.

But my time in the MLM industry revealed a tough truth: very few people actually make it big in MLM, and most participants don’t achieve significant wealth.

In this article, I’ll share my personal experiences and dive into research on MLM success rates to reveal the reality behind the dreams and the possible downsides of getting involved in MLM.

MLM Success and Dropout Rates

Ever wondered how well people do in multi-level marketing (MLM) businesses? Well, let’s break it down into simpler terms:

  1. Short Stint: The AARP Foundation’s study confirmed nearly half, or 44%, of MLM participants call it quits in less than a year.

  2. First-Year Hurdle: According to Jon M. Taylor, Ph.D.’s research, at least half, or 50%, of MLM reps say goodbye within their first year.

  3. Five-Year Mark: When you reach the five-year mark, a whopping 90% of MLM representatives have left the scene.

  4. Decade Milestone: By the time a decade rolls around, only those at the very top stick around, meaning a staggering 95% of reps have dropped out.

Now, let’s compare these numbers to regular small businesses:

  • Survival Stats: Small businesses have a better chance. About 20% don’t make it past year one, but half of them make it to five years or more. About a third go beyond the 10-year mark.

So, you can see MLMs have a higher dropout rate compared to traditional small businesses.

Oh, and here’s a fun fact: Two-thirds of the people in The AARP Foundation’s MLM study said they wouldn’t join the same MLM if they knew what they know now.

Also, because of these low success rates and other factors, MLMs can’t get SBA loans or other small business support. Tough road, huh?

Can You Really Make Money with MLM?

So, can you actually make money in a multi-level marketing (MLM) gig? Well, here’s the deal in simpler terms:

Yes, but…

Yes, it’s possible to make money in MLM, but it’s not as rosy as they paint it at those fancy MLM meetings.

Here’s the scoop:

  • The Few Who Win Big: A tiny percentage of MLM reps actually rake in the big bucks you see in the flashy brochures. But they’re the exception, not the rule.

  • Many Earn Little or Nothing: Some folks don’t make a dime, and some even end up losing money.

  • The AARP Stats: According to the AARP Foundation:

    • Only around 25% of people they surveyed made any profit.
    • 27% just broke even.
    • About half, yes, HALF, lost money.

Now, among the winners (that 25% who made a profit), here’s how the money stacks up:

  • 14% made less than $5,000.
  • 6% made between $5,000 and $9,999.
  • 3% made between $10,000 and $24,999.
  • 3% made $25,000 or more.
  • A tiny 0.05% hit the jackpot with $100,000 or more.

But here’s a kicker: Only 40% of MLM participants even got to see the company’s income disclosure statement. And among those who did:

  • 16% said it was “very accurate.”
  • 50% found it “fairly accurate.”
  • 24% thought it was “fairly inaccurate.”
  • 9% said it was “not at all accurate.”

Now, Taylor’s research paints an even bleaker picture:

  • On average, only 1 in 545 people actually make a profit when you subtract expenses.
  • A whopping 997 out of 1,000 folks involved with an MLM end up losing money (and that doesn’t even count the time they invested).

So, while it’s technically possible to make money in MLM, it’s a rocky road, and most folks don’t find that pot of gold at the end of the rainbow.

The Costs of Getting Involved in MLM

If you’re really dedicated to making it big in an MLM company, be prepared to spend. Dr. Jon M. Taylor, who analyzed MLM for the Federal Trade Commission (FTC), found that serious MLM enthusiasts can rack up over $25,000 in a single year. This money goes into things like incentives, products, technology, advertising, and even travel.

Taylor’s Personal Experiment:

To come up with this number, Taylor decided to get hands-on. He joined a recruitment-focused MLM company and went all-in for a year. That meant he did everything they asked, from buying monthly training stuff to attending conferences.

Incentives Galore:

Now, you might wonder why MLMs shower you with incentives. Well, it’s because most folks in MLM don’t actually splash out big bucks. In fact:

  • Most people (over half) don’t go beyond spending $1,000.
  • About 24% spent between $1,000 and $4,999.
  • 11% went above and beyond, shelling out more than $5,000.
  • And 23% couldn’t even remember how much they threw in.
  • There were a few extreme cases, with four people in the study admitting to dropping over $50,000.

So, while the potential to spend a lot is there, most folks keep their wallets in check. It’s all part of the MLM game.

Should You Join an MLM?

Here’s the final question: Is MLM right for you? Let’s break it down in a simple way to figure it out:

Pros of MLM:

  • Side Hustle Earnings: If you’re looking to make some extra cash on the side, and you’re excited about selling a specific product line, MLM might suit you.

  • Social Aspect: Some people enjoy MLM because it gives them a chance to be social. Like my friend who makes $300 a month – she likes selling these products because it lets her connect with others.

  • Product Passion: If you genuinely love the product line you’d be selling, your enthusiasm can be a game-changer.

Cons of MLM:

  • No Get-Rich-Quick: Don’t bank on getting rich through MLM. While it could become a full-time gig, you might make more with a regular job that offers a steady paycheck.

  • Selling Ain’t Easy: Selling can be tough, especially when products are pricey. If you’re not comfortable with this, MLM might not be your cup of tea.

If the idea of MLM excites you, and you genuinely enjoy the product, go for it as a side gig. But remember, MLM isn’t everyone’s cup of tea. It’s not a guaranteed road to riches, and many folks end up feeling disappointed with their earnings. If that doesn’t sound appealing, there are plenty of other side hustles to explore.

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