If you've been around the internet looking for a top home based business even for a short while, you have probably heard of MLM, or multi-level marketing. It's also called network marketing, and involves often complex payment scales that allow people to make a commission off the team they or others below them recruit. MLM opportunities are strongly advertised to those looking to start a home based business, and who have little or no experience in running one online. Yet the irony about these ‘opportunities’ is that the people who are usually successful are those that have experience in running an online business in the first place.
In my mind, MLM has inherent problems that make it a poor first choice for would-be entrepreneurs. There are more than 2 reasons for this, but here they are to get you started!
1. Expensive Autoship or Qualifying Monthly Payment
Network marketing usually requires distributors to sign up for a monthly autoship program in order to qualify for any commissions. This can run anywhere from $20 to $100 or more. - And that is before you even factor in the cost of shipping if it is a physical product. The shipping costs can really add up for overseas distributors.
But even if you are fortunate to find a program that you like with a low monthly fee, the fact remains that you are paying an amount monthly that is effectively dead money in terms of your business. It is not going to earn you anything. This is effectively a personal consumption expense, probably for something you wouldn't buy anyway. You still have all your other business expenses to factor in, and you would be better off truly investing that money into something that is essential to the running of your online business - like an autoresponder service, webhosting, or something similar.
No matter how the company sells that expense, it is still unproductive in business terms.
2. The Tools Provided Are Not Differentiated Or Unique
If you are provided with any online tools, they usually consist of a cookie cutter website that every single distributor gets. Now, if you have any online business savvy, you'd essentially ignore it, or just use it to get your warm leads (that you have generated) to sign up through it. You would not send any prospects there to start with. You certainly wouldn't buy leads and send them there. You'd have (or develop) your own website and profit funnel.
The lure and the promise of these tools is that it is easy, anyone can do it, that you don't need to go through the learning curve. It would be nice if that were true. But the 95% who try, spend money, months of time, and fail, have quite a different story to tell. Undifferentiated, cookie-cutter tools, don't work - at least not after the initial run of those who got in first.
And even if you sign a few people up through them, there is a very high rate of attrition because long term, these tools just don't work.
Network marketing has broad appeal to the inexperienced. The lure of the internet combined with it can prove irresistable, and the arguments put foward by the companies marketing these opportunities persuasive. Whilst it is true that the online business learning curve can be shortened, if you have the right information, it cannot be circumvented, or avoided. That is a key reason why so many people fail with MLM.
Want to go beyond MLM and find your own niche online ? Check out these home based business ideas .