Why You Should Run From MLM Companies with High Overhead

If you want to create long term residual income in network marketing and have that support your desired lifestyle, avoid MLM companies with high overhead.

The more overhead an MLM company has, the less chance of success you will have in the long term, because the less commissions it can pay you for the hard work that you do as a distributor. The less commissions it pays, the more people you’ll need to sponsor.

The more you’ll need to sponsor, means your recruits will need to sponsor more as well, increasing their likelihood of quitting the business as they’ll realise little return for their efforts.

Moreover, the company will need to find more ways of creating breakage to pay for its overhead. The company will tell you to endlessly recruit rather than retail its products because it needs the sign up fees from every new recruit to keep its head above the water.

Ongoing recruiting will be written in the policies and procedures. You won’t be able to retire because the policies and procedures will say that you must continue to sponsor new people into the business, regardless of what level of achievement you get to. If you don’t continually sponsor new reps, your monthly bonus will go straight to the company.

Network marketing companies with high overhead always have long policies and procedures. They are written in legal-speak and are designed to confuse the average person. They scheme to find every little devious means to get you to violate their policies so they can steal your check. Have you read your company’s policies and procedures? How long is it? Can you understand it without having to hire a lawyer to read it?

So what are some signs of big overhead?

Easy. Beautiful big buildings, expensive toys like Lear jets, sponsoring soccer teams, sports stars and celebrities, high staff numbers, and factories are just some of the high overhead items a network marketing company can have.

Network marketing companies do not need any of that stuff. They do not need to produce their own products, they do not need big buildings and high staff numbers and they certainly do not need private Lear jets. They can source their products from existing manufacturers.

At its core, the purpose of a network marketing company is to provide you, the distributor, a vehicle to achieve a leveraged income stream. To do that, all that a network marketing company needs to do is to maintain a database of distributors, keep track of their sales, pay commissions accordingly, provide good training and provide some customer service. All of that can be done with technology.

Why do network marketing companies sponsor soccer teams and pay sports stars and celebrities millions of dollars to say “Our product is the absolute best”?

For PR right? To get their name out their and to help you, the distributor sponsor more people! Well, if only that worked, it wouldn’t be such a waste of money. Hardly anybody signs up a network marketing opportunity because they saw its logo on a soccer team’s uniform. It’s more of an ego “thing” for company executives.

Why do network marketing companies feel they need to build a big beautiful building and have private Lear jets? Again, it has to do with ego. The company executives feel they need to show off how successful the company has become by constructing a multi-million dollar building. After it’s built, they change the pay plan to make the distributors pay for the ongoing maintenance.

Don’t fall into the ego trap of an MLM company. It’s all smoke a mirrors. Do what’s best for you future by finding a company with a rewarding pay plan.

To your MLM success,

Wayne Wu
Founder, The Profitable Networker

P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.

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Tagged as: Commissions, Long Term Residual Income, Network Marketing Companies, Overhead, Policies And Procedures