Multi-level companies (MLMs)–people tend to have strong opinions about them. You either love ’em or hate ’em.
MLMs are a good opportunity to create a growing income stream while developing sales and leadership skills. Robert Kioyaski, businessman and author of Rich Dad, Poor Dad, praises MLMs for these very reasons, asserting they can be a valuable for creating income-producing assets and for honing personal marketing abilities.
Unfortunately, MLMs, which are often also known as “network marketing” businesses, have gotten a bad reputation due to their association with pyramid schemes. The sad truth is that a lot of multi-level opportunities are, in fact, nothing more than pyramid operating under the guise of a product that no one would really want to buy. The true product is the recruitment of new salesman and their purchase of starter kits, inventory, and motivational literature.
Although the Federal Trade Commission (FTC) cracks down on MLMs that are actually pyramids schemes, its limitations doesn’t allow it to realistically go after everyone, meaning a lot of scams fly under the radar.
Nevertheless, multi-level doesn’t have to imply scam; many companies run sound businesses while using MLM as an effective recruitment model. The key is to sift out the good from the bad.
Often, discerning a pyramid scheme is easy. As the FTC itself states, you should avoid companies that pay commissions for recruiting new distributors (the MLM term for salespeople) and that overall make more money by recruiting new distributors than by selling products to non-MLM consumers. This means you should steer clear of businesses in which commissions are paid on products ordered by other distributors.
So, if you want to select a legitimate MLM opportunity, start off by making sure your given candidate has a reasonable, viable product people want to (and do) buy. Not $45 bottles of juice. Or overpriced drugstore-quality cosmetics.
The following are the MLSs operating on a solid business model. They’re well-known companies with products people like. Any one of them would make a good choice to get into business for yourself and make a good income. The companies are listed in no particular order.
Net Income: $214.4 million (2014)
Products: Convenient containers for storing and preparing food.
Who doesn’t know Tupperware? What you may not know is that Tupperware is the pioneer in direct sales (the underlying sales method in MLMs in which distributors sell directly to consumers (often people in their personal network).
Tupperware got big in the 1950s thanks to “Tupperware parties,” social gatherings whose aim is to introduce guests to merchandise, enticing them to either buy or become part of the organization. The party method is still strong in many parts of the world, though perhaps less so in the US. Nevertheless, Tupperware continues to be a great way to make money as a distributor.
When you work with Tupperware, you can earn between 25 and 35 percent commission on sales and 7 percent commission on your referral’s referrals (the maximum point of the downline). They also offer cars, vacations, and cash bonuses to top sellers.
Net Income: $308.7 million (2014)
Products: Nutrition and weight management drinks, along with other health supplements.
If you want to get involved with a product people are crazy about, Herbalife is for you. I’m talking from personal experience with friends and acquaintances when I say that people become religious about taking Herbalife health drinks. Although you’re supposed to drink the set of three beverages at least once a day, lots of people with have it around three times a day. Just imagine how much you (and your referrals) can make in sales.
Herbalife products tap into people’s natural desire to be healthier and more attractive. Moreover, a very strong community tends to form around Herbalife use. Parties and Herbalife-centered health clubs are very effective, in large part due to the social element; people go drink the health beverages to socialize, much like they would with go for a beer.
Net Income: $189.18 million (2014)
Products: Personal care products, dietary supplements.
Nu Skin offers a very wide array of products, which is great because it gives you lots of ammo for enticing clients. You can choose between facial gels, skin hydrators, shampoos, toothpastes, and more.
Nu Skin doesn’t depend entirely on its direct marketing division. It also uses call centers, including a massive facility in Provo, Utah. This adds to the company’s legitimacy and stability.
Net Income: Undisclosed (Revenue of 11 billion for 2014)
Products: Laundry detergent, dish soap, water filters, Nutrilite dietary supplements
Amway is a subsidiary of Alticor that sells the products of its parent company. You earn with your own sales plus bonuses based on the sales volume and downline of your referrals.
Net Income: Undisclosed (Revenue of $700 million for 2013)
Products: Electricity, television, VOIP, internet service
ACN just goes to show that you can apply an MLM structure to just about any industry. Since the deregulation of the energy sector, ACN and its “Independent Business Owners” (IBOs) have been working tirelessly to give consumers an alternative to the energy monopolies.
For many of its services, ACN buys and resells service from big names like AT&T. Its own services include VOIP and videophone.
Net Income: Undisclosed ($2.5 billion revenue 2010)
Products: Aloe vera and beehive based products, including drinks, gel, vitamins, and skin products.
Forever Living Products has been around since the 70s. They’re based out of Scottsdale, Arizona. Like a couple of other companies on this list, they specialize in health products, which goes to show how much consumers are drawn to that industry.
Forever Living is active in 150 counties and has been featured on Forbes’ list of the largest privately-owned companies.
Net Income: Undisclosed
Products: Prepaid legal services
LegalShield is an ingenious service that basically puts the services of a law firm within reach of people who otherwise wouldn’t be able to afford legal services. A person pays a recurring membership fee and has access to a lawyer and related services when needed. It ends up being cheaper than paying $250 an hour for a lawyer’s help under regular conditions.
The MLM division is one component of the company’s marketing, which also includes a B2B channel.
Legal services are something that people can really end up needing, and the service presents an economically viable solution for many consumers.
National Motor Club
Net Income: Undisclosed
Products: Roadside assistance
The company offers towing, fuel delivery, battery jumps, locked-out help, and other forms of roadside assistance. Their are five tiers of coverage. They even reimburse clients $300 for emergency medical expenses incurred on the road.
Net Income: $383.9 million (2014)
Products: Cosmetics and personal care.
Avon is the biggest company on this list in terms of income. Door-to-door is a common sales tactic. The company provides extensive training to distributors.
The Avon brand is widely respected and is the second largest cosmetics brand in the world. People are familiar with its trusted products and willing to buy when you market to the right market.
As you can see, the world of MLMS isn’t all shady schemes. There are real opportunities for making money with respectable companies. Becoming a distributor with these businesses can help you become an entrepreneur and obtain a sense of financial independence.