How To Tell If That Cool-Looking Company Is Actually An MLM

by Holly Garcia
how to tell if that company is an mlm

It starts off like any other day. You’re scrolling through Facebook minding your own business, and poof, there it is. Another day, another random inbox message from that person you went to high school with that you never really talked to.

Hey girl! I don’t know if you heard, but for the first time in years, I’m living my best life and achieving financial freedom by only working two hours a week from home! Let me know if I can help you do the same and set up your own business! There’s only a $2,000.00 initial investment fee that you’ll make back in no time!

Oh yes, you all know that email. Whether it be poorly made clothing a la LuLaRich or weight loss supplements that literally nobody needs, MLMs masquerading as business opportunities keep popping up. These days they come in all ways, shapes, and forms. We’re talking cosmetics, vitamins, shakes, tupperware… the list goes on and on. So how do you know if you’re jumping into a legit business or an MLM scheme? Well, let’s start by looking at their business model.

Spot an MLM by Their Business Model

Just to cover the basics, MLM stands for multi-level marketing. It works a little something like this: A few people at the top create a ‘business’ and recruit a few people to join their venture. How do they join? Well, you pay a fee, which includes inventory, so you’re able to sell to your own customers. Oh, but you are not only selling them your goods, but you’re also selling them an opportunity to have the work-life balance they’ve always chased.

And poof (waves hands as if they’re doing magic), they become your employees and follow the same path. Do you see how quickly this becomes problematic? First of all, you might gain an employee, but you lose a customer. So then, if you aren’t making money selling, the only way you are making commission is by enrolling more ‘employees‘. Some business model. Actually, do you know what that looks like? We’ll give you a hint it rhymes with myra-mid scheme.

Talk About a Hot Mess, But Honestly, It’s Not Your Fault

People who participate in MLMs will swear up and down that it’s not a scam, that it’s a legitimate business opportunity. Unfortunately, the reality is the only people who actually make any money are the one percent of people at the top. But, of course, they will never tell you that. Instead, they’ll put all the blame on you.

MLMs are sold as easy money. They promise a way for you to balance your life, support your family, and even achieve financial freedom (or just security). But when the going gets tough (as it’s set up to), your coaches and everyone above you will tell you it’s your fault that you’re failing. If only you bought more inventory, if only you hustled harder. But the reality is, no matter what you do and no matter how hard you try, you’re set up to fail from day one.

So if you’re considering joining that cool-looking company you saw on social, ask yourself a few questions first. What are they actually selling? Is it a product, a service, or a lifestyle that isn’t achievable? How do I make money in this business? Is it by selling the product or service, or do I have to recruit my sister, friends, and sixth cousin-twice-removed to make a profit?

There is absolutely nothing wrong with wanting to work your own hours, make your own rules, and be a part of a legitimate business. But before you jump in with both feet, do your research. No side hustle is worth straining friendships and putting an unnecessary amount of pressure on yourself to succeed in a space that wasn’t designed for you to flourish.