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3 Reasons Why MLM Businesses Fail

Updated: Aug 28, 2019

Posted on August 5, 2019 by dragonspitapothecary


MLM, direct marketing, direct sales and other names associated with selling a product all can have a negative connotation depending on who you ask and on which end you’ve encountered these product purchasing options. The most common encounter we have is seeing our friends host a party or talk about products we know they sell or we ourselves have embarked on selling. Both sides of this experience, the selling and being a potential consumer for direct sales can quickly become a frustrating, lonely and complex situation that is not at all fulfilling or inspiring.


No one sets out with the thought of failure when they try something new or try to build up something of their own. Sure there are risks and we on some level realize that but our desire, hope, expectation, goal, determination, stubbornness or willpower quickly brush aside the doubts and risks with the belief we can do this!


We all encounter though those doubting moments, those fleeting thoughts and frustrating dry spells when we question if it is truly worth it. Were our friends right in that this is a waste of time? Were we just fooling ourselves thinking we could do this?


Why is MLM or direct sales such an ugly word and business to be in?


Why do so many of these seemingly nice reasonable people who start their own business through direct sales fail before they even have a chance of taking off?


Is MLM really a no-win situation?


What really goes wrong to cause so many aspiring representatives to give up?


High Hopes and Dreams

When someone signs on to distribute, sell or “have a business” with a direct marketing company there is a level of anticipation, hopes and dreams that this could become something really big in their life. Often we are given this vision of being our own boss, making our own schedule and making more money than we can count all by sharing and selling these products.

If only it were that easy.


Too often however we quickly get frustrated that things are not happening as quickly or as easily as we think it should be and we give up. We start to realize we’re not making much or anything at all and it is just another responsibility taking up our time and money. We become disillusioned with this dream of making it big and end up calling it a scam, scheme or worthless investment. What we once loved about the idea of doing this and enjoying these products we found has become tainted, discouraging, deflating and impossible so we toss up our hands and walk away.


I think what happens in these situations is don’t stop to realize this is a legitimate small business we are starting up when we sign up. A direct marketing company is what I call “a business in a bag.” We fill out a sheet with our information, make a starter kit purchase and everything we need to get started comes in a cute box or bag. Boom, we are in business for ourselves.

The business in a bag is brilliant and makes it possible for literally every one to be their own boss, have their own company and call all the shots. There’s no large investment of personal funds, there’s no lawyers and a lot of the basic needs like marketing, brand recognition, location, training, and so on are handed to you or accessible easily. The rest however is truly up to you.


It is not a get rich quick strategy unless you are just an extremely lucky person who has a natural tact for drawing in oodles of people to purchase from you or you have some other secret sauce means to generate sales volume. For those of us who are not magical wizards or unicorns, it can still be quite glamorous if we make it big but there is going to be some work involved to get to that point and it’s probably going to take awhile.


Having that vision of hopes, dreams and riches is wonderful but we have to be realistic that it won’t be handed to us. Like anything worth having, you have to work for it. We have to figure it out. We have to fail at things, refine, grow, set goals, meet and fail at our goals, and generally be our own company person of one. The fun part is we get to figure that out, make the decisions for it and work it like we want to see what works and what doesn’t. That’s a fun challenge for some and others will say it sounds too much.


However, the bottom line is that signing up part and getting your business in a bag is the easy part but it’s also where the work begins. Most people don’t think about that as they’re too excited about those shiny cool products in their bag.


Friends and Family

Another big discouraging moment for many direct sales representatives is realizing our friends and family are not always the best customers. They may not even be our desired customer but regardless we instantly turn to them as fresh faced small business people anxious to make our first sales. We shout it out for all to know we have these great products and everyone needs to be using them. Our friends and family in reality may or may not be supportive of our adventure and the truth is they should really stay our friends and family.


When we think about opening a brick and mortar store on Main Street we don’t instantly think or expect our family and friends to buy from us exclusively or to be our only customers. We want and wish for their support us and stop in and do what they can but expecting them to be our sole customers and have a successful business is highly unlikely. The same is true with a direct sales business.

Where this becomes frustrating is we are often coached by those that are helping us get started in our direct sales business that we need to create a long list of everyone we know, have ever met, went to school with, interact with, sit with at church, pass by in life, that our children know and play with, who we bump into at the grocery store and anyone who breaths and use those names as a launch pad to generate prospects and customers. The theory is someone who knows us already will be more likely to buy from us. Sometimes that happens. Most of the time it doesn’t.

Hence the distaste of many who see this as a nagging “buy from me” pitch and we become clearly avoided at all points in many people talking to us.

Then to make matters worse, most of us stop at this long list of names and never realize that once that is exhausted we have no idea where to truly find prospects and customers. We annoy, bug, pester and dust off relationships that sometimes should be left well enough alone all in the interest of finding customers. We annoy others and we frustrate ourselves when those don’t pan out into sales and when that all dries up we don’t have any customers and no new prospects because no one is talking to us anymore.


When we are starting a new business, we often don’t know where to start and it can become overwhelming. Using your friends and family to learn, practice and build confidence is good but working at a great business strategy to develop an ongoing list of true prospects is the make or break point for any business. When you really define who your target market is and what that ideal customer looks like it most likely will not contain the names from play dates, family members and long lost high school friends. Failing at that we cash in our cute business in a bag and go back to normal life and hope our friends and family will one day start talking to us again.


Investment

The third biggest reason most direct marketing businesses fail is a failure to have a working budget. Yes, the foundation of the business came in a bag that contained a starter set of products, some training materials, starter support and other information but beyond that as owner of this new business we have to have a serious conversation about money. There is still operating expenses and investments we need to consider smartly how to fit into our new business strategy.

Some direct marketing companies require you to spend a certain monthly amount to earn commissions on any sales volume you have in that month. If that monthly expense is not at least what you are making in commission you are running in the red. This is where first of all it is super important to find a product you love and are actually using and that you have the family budget to make monthly purchases. If you’re not using the product and can’t afford it every month then you’re going to be left broke with a pile of stuff you don’t know what to do with.


Secondly, there should be a monetary investment into training and growth for you to develop the skills, access resources and tools that you need to build a successful business. Web sites, email marketing tools, sales training and personal development are sometimes not provided by the direct marketing company or there is a cost to accessing those. These are normal business expenses that need to be accounted. There are plenty of free resources but just like anything you need to be careful what you get whether it’s free or purchased to make sure it is quality, accurate and worthy of what you need.


Sure you can sell anything with not much at all. You don’t even need a website or fancy anything to be successful. It happened well before there was the Internet and it could be a unique niche today for the right product or service. However, most of us realize we do need things like a social media strategy, website and other modern day tools and resources. Where you can afford to delegate or leverage technology the easier it can be to focus your time on actually selling, growing your prospects and serving your customers.


Again, it’s a business and while it may not take much there’s still going to be expenses that eventually you’re going to want to see reward from.


Interested in more?

I believe there are successes in direct marketing businesses but unfortunately so many have started these endeavors with not more than a wish and prayer with their cute business in a bag and then wonder why they’re not making it rich fast. Having all the right pieces in motion and treating it like a real business doesn’t mean it still won’t fail but at least you’re going into it with the mindset of strategy, full focus and realistic view of what it is, what it could be and how to get there.


Not all direct sales companies are the same and there are large differences in products, success and support. If you have questions or would like more information about doTERRA or my business Dragonspit Apothecary & Crafts please reach out! I’m happy to help answer questions and provide information to you for the right choice and support you need.

Contact me!


If you’re ready to start your own business and are looking for the support to help you get started successfully check out our business bundle packs for training, templates, scripts and more!

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