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How To Make Money In MLM – Do The Math
MLM, or network marketing, is still one of the best business opportunities available, hands down. Someone with very little money and education can generate a 6 or even +7 figure income, if they know what they are doing. Unfortunately, most are clueless and buy into the hype of making millions quickly by simply recruiting 3 who find 3. Those 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 money in MLM and Network Marketing. Less than 2% earn more than $110 on average per year, while shelling out thousands of dollars in credit card debt on product samples, flyers, CDs, DVDs, corporate websites, travel for conferences, etc.
Only the top 1% earn enough to quit their jobs and survive. And, while everyone is excited about how they’re going to earn 7- and 8-figure incomes, only the top 0.8% reach those levels (yes, that’s 8%).
By law, MLM companies must disclose this information to you now, but these numbers don’t change much from one MLM company to another.
Despite these odds, making 6 figures your freshman year is, in fact, very realistic.
While there are many components to successfully marketing your business, you must first take a step back and look at the simple math of creating a downline that will create the level of income you desire within a realistic time frame. to see if it’s even doable for you based on your marketing abilities.
Let’s say you believe you can beat the odds. After all, everyone knows that statistics can easily be manipulated to prove anything. Plus, you’re not going to afford to fail.
Good for you!
Next, let’s run the numbers.
Most people would like to retire with an annual income of at least $1 million. So we’ll use $1 million to keep it simple and conservative. If you want, say, $2 million, then double it all here.
Many MLM companies like to say that you can retire after about 5 years of hard work. I agree…if you know what you’re doing and you’re in the top 0.8% (that’s point eight).
The math gets a little sticky here because products and services vary widely from one MLM company to the next, as well as prices, compensation plans, bonuses, and more. However, using a “loose” industry average, each person typically earns around $15 to $40 in monthly residual income from each Distributor in their downline. You can enter a number that you think best matches your compensation plan.
For our example, we’ll only use $40 per month because that’s high end (to try to make things look good).
So, for every Distributor in your downline, we’ll say you’ll earn an average of $40 per month, every month, forever and ever (although that’s never the reality, but we’re super optimistic).
To earn $1 million per year, you need to have around 2085 distributors in your downline. (Of course, if you want $2 million, go ahead and double it, and so on.)
If you want to retire in 5 years, you need to recruit about 417 new people per year, or about 8 new people per week.
You need to recruit 1 new person a day, every day (and 2 on Saturdays) for the next 5 years, 365 days a year, with no holidays, no holidays, no breaks, nada.
And, that’s assuming that 100% of people who come in never quit (given that the “true” average drop-out rate is around 50%, that’s completely impossible…but, remember, we are super optimistic here).
Even though 100% of every person you spoke to signed up (which will never happen) and paid in full, and ordered every month, forever and ever, and never gave up. .
…is it even possible to recruit 1 new person every day using “warm marketing” techniques of talking to people in person or bringing them to your house parties or hotel meetings?
Plus, realistically, you’ll probably need to talk to at least 10 people to get one person to say yes and sign up…every day for the next 5 years.
Not to mention, since the average drop rate is around 50%, for every 1 that drops, you will need to recruit 2.
Therefore, you need to pitch to at least 20 new people…every DAY…for the next 5 years to barely reach your minimum goal of $1 million in annual revenue.
Is it only possible? In 10 years? 20…?
Even on the “super optimistic” high end?
Now, you’re probably quick enough to think, “But wait a minute, Mike. What about my downline recruiting?
Good thinking, and, yes, you might be lucky to find a real superstar. However, there is only one in about 1250 people, statistically. Thus, you will have to recruit 1250 people before having the chance to find your superstar.
‘Hope’, ‘power’ and ‘chance’ are not good ways to create a business model and build the rest of your financial life (and retirement).
You need to make sure the business model you’re working on is something you can actually do and leverage a qualified mentor or trainer who can teach you how to put the numbers in your favor.
Doing the math when joining an MLM business will help you get a clearer picture of exactly how many people you need to bring in to reach your goal. Then you can aim for a game plan to achieve that goal in a realistic time frame.
Most never do, and probably no one in your MLM business has shown it to you before.
Nevertheless, many people are earning big income using this business model. If you’re not, you need to find someone in this industry who can teach you how to put those numbers in your favor.
To your success… in numbers.
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