MLM or Network Marketing is undoubtedly still one of the best business opportunities available. Someone with very little money and education can make a 6- or even +7-digit income if they know what they’re doing. Unfortunately, most of them have no idea and are buying in the hype of making millions fast by simply recruiting 3 who find 3. These numbers just don’t work that way.
So let’s make sure we’re on the same page together.
I’ll start with the bad news.
Statistically, you have a 99% chance of not making any money in MLM and Network Marketing. Less than 2% ever make more than an average of $ 110 a year while spending thousands of dollars in credit card debt on product samples, flyers, CDs, DVDs, corporate websites, travel to conferences, and more.
Only the top 1% ever earn enough to actually quit their jobs and survive. And while everyone is talking excitedly about how they’re going to get 7- and 8-digit incomes, only the top 0.8% ever get these values (yes, that’s eight percent point).
By law, MLM companies are now required to share this information with you, but these numbers don’t change much from one MLM company to the next.
Despite these odds, it is very realistic to get 6 digit numbers in your first year.
While there are many components to successfully marketing your business, the first thing you need to do is take a step back and look at the simple math of building a downline that will get you the income level you want in a realistic time frame to see if it’s on the Marketing skills are the basis of your business at all.
Let’s say you think you can beat the odds. After all, everyone knows that statistics can easily be manipulated to prove something. Besides, you will not allow yourself to fail.
Good for you!
Then let’s run the numbers.
Most people want to retire with an annual income of at least $ 1 million. So we’re going to use $ 1 million to keep things simple and conservative. For example, if you want $ 2 million, just double everything here.
Many MLM companies like to say that you can retire in about 5 years of hard work. I agree … if you know what you’re doing and are in the top 0.8% (that’s point eight).
The math gets a little tricky here as products and services vary greatly from MLM company to MLM company, as well as prices, salary plans, bonuses, etc. However, using a “loose” industry average, each person typically earns approximately $ 15 to $ 40 monthly residual income from each distributor in their downline. You can enter a number that you think best fits your salary plan.
In our example, we’re only using $ 40 a month because it’s on the high end (to try and make things look good).
So we’re saying that for every distributor in your downline, you make an average of $ 40 a month, every month, forever and ever (although this is never a reality, but we’re very optimistic).
To make $ 1 million a year, you need to have roughly 2085 distributors in your downline. (If you want $ 2 million, of course, double that and so on.)
If you want to retire in 5 years, you need to hire about 417 new people a year, or about 8 new people a week.
You have to hire 1 new person per day, every day (and 2 on Saturdays) for the next 5 years, 365 days a year, with no vacation, no free time, no breaks, Nadda.
And that assumes that 100% of the people who walk in never get out (considering the “real” average dropout rate is around 50% it’s totally impossible … but remember, we are very much here optimistic).
Even if 100% of everyone you’ve talked to signed up (which will never happen) and paid in full and ordered forever and ever each month and never quit …
… is it even possible to recruit a new person every day using “warm marketing” techniques to speak to people in person or to draw them to your house parties or hotel meetings?
Also, realistically, you will likely need to speak to at least 10 people for 1 person to say yes and sign up every day for the next 5 years.
Not to mention the average dropout rate is around 50%. For every 1 that drops out, you need to set 2.
Therefore, you will need to give at least 20 new people … every single day … a presentation over the next 5 years to barely meet your minimum goal of $ 1 million annual income.
Is that even possible? In 10 years? 20 …?
Also in the “super optimistic” high-end?
By now you’re probably sharp enough to think, “But wait a minute, Mike. What about my downline recruiting? Aren’t I going to run into some superstars with these numbers?”
Good thinking, and yes you might be lucky enough to find a real superstar. Statistically, however, there is only one in around 1250 people. So you have to recruit 1250 people before you are lucky enough to find your superstar.
“Hope” and “power” and “happiness” are not solid ways of creating a business model and establishing the rest of your financial life (and retirement).
You need to make sure the business model you are working on can actually be implemented and employ a qualified mentor or trainer to teach you how to put the numbers in your favor.
Doing the math when joining an MLM company will give you a clearer idea of exactly how many people you will need to bring in to achieve your goal. Then you can target a game plan to achieve that goal in a realistic time.
Most never do, and probably nobody in your MLM company has shown you this before.
Nevertheless, many people earn a good income with this business model. If you don’t, you need to find someone in this industry who can train you on how to use these numbers in your favor.
To your success … in numbers.