How Does MLM Work?

Multi level marketing is a burgeoning industry that offers the benefit of working for yourself, along with huge earning potential and now it’s easier than ever to set up your own business. Technically speaking, a multi level marketing business is a well-structured organisational model that finds success through leveraging its distribution chain. To simplify; MLM is driven by its vendors, i.e. you, who use “word of mouth” or “referrals” to create sales opportunities which lead to profit. To find out “how does MLM work?” We need to look at the business model. 

MLM Business Model

Essentially the MLM business model is that you work as a “sales rep”, you purchase stock or sell services on commission, under the brand of the overarching MLM business. Representatives who sell their stock / services will earn profit or comission. You can also earn money through “downlines”. These are people who you, as a sales rep, bring onboard into the organisation. You can therefore earn money from the products and services you sell along with additional incremental commission payments from those reps you bring to the company. 

An MLM brand generates revenue in these ways:

 

1. Selling products 

The brand’s aim is to sell products. Unlike traditional producers, they save on personnel. MLM brands do not hire employees; therefore, they save on brick-and-mortar stores. MLM business owners can earn from 5 to 95% of the product price. 

 

2. Initial investment 

New MLM business owners are required to invest in their own starter kit which will usually consist of product samples and learning materials. This investment is typically between £60 – £200, depending on which industry the brand falls under.

 

3. Membership fee 

Initial buyers of MLM products will be offered client membership for a fee, which will allow them to access special discounts and first access to new products, and other perks. 

 

4. Subscription Members 

MLM business owners who make MLM their primary source of income will need to manage a lot of client and order data. To get access to online MLM software that includes such features as CRM, training webinars, and analytics, a phone MLM brand may charge a subscription fee for these services.

How MLM Works for You

So why start an MLM business? A successful MLM manager has a ‘work from anywhere’ business and using social media for MLM effectively will help you build your business and engage your network. As an MLM business owner, you need to take your work seriously. To answer “how does MLM Work?” We can compare it to starting in any other career type. A new recruit to any business would be expected to train, work hard and achieve goals. You should be willing to push yourself just as hard as a freelancer, setting out in your long and successful career. You should only start up an MLM business if it is right for you. You need to believe fully in what you are doing, to motivate yourself and be your own boss takes dedication, any freelancer and attest to that. “Do it for the love of it” is one way to put it. We say “love what you do”. If you make a perfect fit, you can find big success with MLM. We know because we account for some of the most successful MLM businesses out there. It is a vibrant community of people, working hard and loving life. If it is right for you too then we are here to help. 

Download The Guide 

We know how tough it can be to work out what to do with your income once you have started your MLM business. That’s why we have created this handy guide that talks you through being self employed or a limited company with advantages and disadvantages for both. We explain each type in detail, the expenses you can claim and the tax implications for both types.

At MLM Accountants We Know How to Help You 

At MLM Accountants we can help you understand the best solutions for the success of your business. All you need to do is get in contact with us at MLM Accountants. Call us today 0203 237 2927 for help and guidance.