Disadvantages Of An MLM Business Model

Most Multi-level Marketing (MLM) business models involve selling to close family, friends & business colleagues and recruiting them in your downline. You pay a small sum of money to join and then make money both from your own sales and the sales of the people that you have recruited.

Initially your friends will humour you and take time out to listen but in the longer term they will slowly start to keep their distance or even become downright intolerant of your attempts to treat them as a cash cow.

What happens when you do manage to persuade a close friend to join your MLM programme? Most of the time that person will have no business experience and chances are that they will fail; up to 80% of new start-ups fail within the first five years. This could lead to you losing your best friend.

Another problem with the MLM business model (which is legal) is that it is hard to distinguish from a pyramid scheme that is illegal.

The main difference between a legitimate MLM business model and a pyramid scheme is that in MLM, real products are being sold to real people whilst in a pyramid scheme you make all of your money from the people that you recruit; your downline.

What has happened is that because pyramid schemes have been outlawed, many have come back disguised as MLM. This has created an intense feeling of distaste and hatred due to the fact that so many people have now lost money participating in such programmes.

In reality most MLM programmes are just pyramid schemes in disguise. When you attend the initial seminar you are presented with a picture of huge potential based on your downline. In reality only the people at the top of the pyramid stand a chance of making any serious money. The rest will pay their joining fee to find that there is no market for their products and be faced with trying to either enrol new recruits or lose their joining fee.

If you remove the product from an MLM scheme all you are left with is a pyramid business model which is definitely going to collapse at some point leaving only the very few that joined in the beginning with any chance of making money.

Let us examine the mathematics of a downline. Say I am at the top and I recruit 5 people. Each of those 5 people recruit 5 more. The new 5 then recruit 5 more. This is classified as 3 levels deep.

How many levels can the entire population of the UK sustain? By the time you reach 12 levels… the entire population of the UK is now involved in the pyramid scheme! This is never going to happen in reality but you can see that if there are only 3 or 4 people above you in your upline, then chances are that you are now entering at the very point of collapse.

Be very wary of any scheme whereby you make most of your money from recruiting other people. If you do not understand the mathematics speak to someone that does.

Advantages And Disadvantages Of Running A Home Based Business

Working from home is an activity that does not spell success for each and everyone. As a matter of fact, there are those who will try it for a while only to give up and instead once again enter the workforce. When asked, they will be honest in stating that the idea of a home based business sounded nice in the beginning, but in the end, the disadvantages outweighed the advantages, and they find that they are happening in a more traditional work environment. On the flipside of this coin are those what throw off the shackles of the nine to five jobs and practically soar professionally with their home based business. These individuals cannot imagine themselves ever going back to working a traditional job.

For those workers who have families, and especially young children, a home based business is a dream come true simply for the fact that they will be able to spend a lot of time at home being available to the children when they are at home, and working when the kids are in school. Yet those who find that their normally free time is eaten up by work demands of a home business, a traditional job with set business hours is a better solution. Similarly, if you do not have the energy to work after hours, such as when the children are in bed, you will find that a home based business will indeed begin to cut in on your available family time. In a few cases the fact that a person is always home – at first with the kids and then with work – also adds up to a sizeable disadvantage.

Counteracting this disadvantage is the advantage of being your own boss, calling the shots, and no longer having to kowtow to someone else’s idea of how things should be run – especially if you are highly skilled in your field and know what needs to be done and how to do it. Without lengthy commuting time, you will have more time to devote to your skill, and thus more ability to make a profit for your home based business. A distinct advantage in many fields, especially real estate and marketing, there are some disadvantages to being your own boss, namely the need to accept certain distractions by ancillary activities, such as accounting and tax preparation, which normally are left to the boss. Similarly, if you are not a self starter but rely on the motivation from a boss or supervisor, you will soon find that being your own boss is more of a disadvantage to you, since you will have nobody holding you accountable on progress and overall productivity.

Consider also if you find that going to an office each and every day is an advantage to you or a disadvantage. Lacking this interaction with other workers for many is negligible, but for some it is a vital component of daily life, and thus will be sorely missed once gone. By honestly assessing the advantages and disadvantages of running a home based business, you will be certain to make the right choice when deciding whether or not you wish to give it a try!