What are the Advantages and Disadvantages of MLM Business?


Updated on Apr 6th, 2023
10 Mins Read
What are the Advantages and Disadvantages of MLM Business?

Multi-level marketing (MLM) is a prevalent business model millions of people embrace worldwide, and why shouldn't they? It's the oldest and trusted method to earn passive income. The only requirement for this business is knowing the customer and convincing them to buy the product or service. If you've got such skills, the sky's the limit for you in terms of financial growth.

But as George Eliot says, "It's well known there's always two sides, if not more." In the same way, there won't always be advantages of network marketing. There will be some cons too, that most of us aren't aware of. However, in the rain of monetary benefits of network marketing, we often neglect the latter side of a particular profession. But that's not good practice because ignoring negatives can significantly impact the long run.

But if everyone else ignores the facts, that doesn't mean you should turn a blind eye. So, delve into this comprehensive guide of advantages and disadvantages of network marketing to avoid making mistakes that others may make.

Pros and Cons of Network Marketing

According to AARP Foundation Report, 65% of MLM participants say, "They wouldn't have joined a networking business company if they knew what they know now." Therefore, knowing both sides of network marketing becomes crucial to save yourself from being in the 65%. So, read the pros and cons carefully before joining MLM companies.

Benefits of Network Marketing

1.Low Start-Up Costs

Unlike other business models, the start-up cost of MLM business is low. You don't have to invest millions in setting up a retail building and creating marketing strategies. Instead, you must purchase a starter kit that usually costs less than Nike Air Jordan shoes. The starter kit has some sample products and marketing tools that you'll be using to lure people into buying.

Plus, you can buy products for yourself as a customer, and once you make enough sales to be eligible as a distributor, you can start selling them to others. What's even better is you can also let others join your network. Thus, you can build the perfect network pyramid you need for a successful MLM business without spending hefty money.

2. Flexibility

Who doesn't want to be their boss, right? In the MLM business, nobody will force you to push extra efforts. Earning money will be your only motivation here. That means you can work whenever and wherever you want. If you like, you can go to coffee shops and sprinkle marketing magic to lure customers.

Or, if you wish, you can work from the comforts of your home and entice people to make purchases through social media. All in all, you will have complete control over your work regime. You can design and follow your working strategies based on your goals.

3. Money Factor

The prime reason you'll want to join an MLM business is more money. It's true that this is one of the best ways to earn passive income. As you'll have the freedom to sell products wherever you please, there are good chances to make some extra bucks whenever you meet someone.

Additionally, the money will still travel to your pocket even when you don't sell a product yourself. With time you'll form a triangle of subordinate distributors selling products or services. The money you'll receive will be the downside commission and bonuses that you may earn when your subordinates meet the expected goals.

4. Skill Development

MLM business requires skills that are not simple to master. The ability to analyze needs and pitch them face-to-face to generate leads for your MLM business requires confidence. But what if you don't have that confidence and lack communication skills? It will become tough to get clients, right?

But when you join the MLM business, your downside fades over time. You learn the skill of communicating from the masters, which is too practical. There will be seminars and training sessions in the MLM community where you can hone these skills. So, think of network marketing as earning money and skills simultaneously.

5. Leadership

It's true that you won't be leading from day one in network marketing. But sooner or later, yes, you will be. And during this shift from being someone's subordinate to managing your subordinate, you'll have much to learn from your mentors. They'll teach you how to lead the men on the way to making profits.

Stella & Dot is an excellent example. They not only help their associates with a passive income source, but also encourage them to launch their own outlets. All associates have access to a training program that lets them learn the necessary skills to operate their own beauty business.

Disadvantages of Network Marketing

1. Scams

The most significant con will be the constant fear of getting scammed by an MLM company. Not every company is a fraud, but there have been instances in the past where people have suffered significant losses. Therefore, you must pick a company once you've researched it adequately. Never take the words of someone as a guarantee; always believe in facts and figures.

2. High Turnover Rate

As you may have heard, "grass looks greener on the other side." The same applies to network marketing. You may think it's the easiest way to earn extra cash, but nobody will tell you the hard work it requires. As there won't be any boss in your head, you'll need to find constant inspiration to sell products. Some can do that, but others take this as a sign of burden and quit within months.

3. Rejections

Even if you run a legitimate network marketing business, there are people who shall remain skeptical of your venture. They would immediately assume it to be another pyramid scheme, and fail to observe the various benefits it might bring. So, be prepared to listen to comments like, “No, I’m good”, “I’m sorry, it’s just not for me”, and “I just don’t have time for this.”

4. Slow Success rate

It takes time for an MLM business to start making some profits. Nobody can predict exactly when the business can take off. Further, it takes time for people to believe in the products. Consistent efforts are required to make presentations and impress people. Plus, people are not guaranteed to say yes to the plan. Therefore, building a strategy, team, and business that runs successfully and provides exceptional profits takes time.

Final Thoughts

So, now you know the advantages and disadvantages of network marketing, and why it is important to weigh both before investing time and money. The pros can easily lure you into dragging your feet into it but don't do it until you've understood the cons perfectly. Therefore, thorough research and due diligence are important before joining an MLM company. However, with the right mindset, dedication, and effort, MLM can be a good side hustle for those willing to do the work and build their team.

Also Read: Everything You Need to Know about Sou Sou Plan


1. Is MLM a good side hustle?

MLM can be a good side hustle for people who are keen to put in the work and effort required to build their businesses. MLM offers a flexible schedule, low start-up costs, and the potential for passive income, making it a pleasing option for people who want to start their own businesses without investing much money. However, it is important to remember that MLM requires hard work, patience, and dedication. It is not a get-rich-quick scheme, and success in MLM is not guaranteed.

2. What is the difference between MLM and pyramid scheme?

An MLM business is product-based and doesn't earn money just by making others join the network. The participants of MLM purchase the products themselves and sell the same products to others and earn from the commission. However, pyramid schemes are fraudulent and don't have any product-based income stream. Their only way to make money is by recruiting new people into the program.

3. What is the good side of MLM?

The good side of MLM is that there's low start-up investment, and you can work flexibly and earn passive income. Unlike the 9 to 5 hustle, you can devote as much time and effort as you want to your business. Plus, you earn even when not selling through the commissions you receive from the sales of your subordinates.

4. What is the monthly income of MLM?

The monthly income of MLM or network marketing can vary widely. It depends on different aspects, such as the company, the compensation plan, the products or services being sold, the level of effort put in, and the number of subordinates. Some people can earn a few hundred dollars a month, while others can earn thousands.

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