Have you ever opened a Facebook message from a friend you haven’t talked to in years? You’re excited to read their message until you notice the copy-and-paste sales pitch they used to try and rope you into their latest multilevel marketing (MLM) scheme—I mean business. Hard nope. Yeah, you had a great weekend (thanks for asking) but no, you really don’t want to join their newest venture or buy the latest and greatest magic potion to grow your eyelashes. Your eyelashes are just fine the way God made them.

When you hear “multilevel marketing,” maybe you think of essential oils, Tupperware, beauty products or even workout programs and fitness drinks. Or maybe you think of that old friend who only reaches out when they’ve got something new to sell. Bless their heart. (That’s passive-aggressive southern speak for “ugh.”) But what is MLM, and does this type of business actually make you any money? Let’s find out.

Multilevel Marketing (MLM), also known as network marketing or direct selling, is a business model where products or services are marketed and sold through a network of independent distributors. These distributors earn commissions not only from their own sales but also from the sales made by the distributors they recruit into their network, forming multiple levels of compensation.

Plenty of people are suspicious of MLM companies because of their poor reviews from customers and even distributors (distributors are the people selling the products, and they’re also known as representatives, consultants or whatever fancy name they feel like calling themselves). Now, you don’t need to write off every MLM immediately, but you should do plenty of research and be careful about which of these network marketing businesses you get involved with (if any).

Let’s look more closely at the MLM meaning, how MLMs work and why you would join one—or not.

In most MLM companies, you make money by selling the company’s products and earning commissions from the people you recruit to the business—plus any additional recruits they bring in. That’s why it’s called multilevel. MLM salespeople can do most of their selling from home. But before you can start selling products and making money, you pay to join the organization and then pay for the company’s products before you turn around and try to sell them. (Sounds like a money-making scheme already, right? For the multilevel company, at least . . .)

To be successful at a multilevel marketing business, you’ll need to spend time getting to know the products like the back of your hand. You also have to make a business strategy, determine your sales goals, and sit through companywide coaching calls. It takes a hefty investment of time (and money) up front before you start seeing any returns

Whether MLM is a good idea depends on various factors, including individual goals, skills, and circumstances. Here are some considerations to keep in mind:

Potential for High Earnings: MLM companies often promote the potential for high earnings and financial freedom. However, success in MLM requires hard work, persistence, and effective sales and recruiting skills. Many distributors may not achieve significant earnings or may even lose money.

Risk of Loss: MLM involves financial risks, including the initial investment in products or starter kits, ongoing expenses such as marketing materials or event tickets, and the possibility of not recouping these expenses if sales goals are not met.

Focus on Recruitment: Critics of MLM argue that the emphasis on recruitment and building a downline can lead to a focus on recruitment rather than genuine product sales. Some MLM companies have faced legal scrutiny or allegations of operating as pyramid schemes if they primarily rely on recruitment for revenue rather than product sales.

Product Quality and Market Saturation: The success of an MLM business often depends on the quality of the products or services offered. If the products are of low quality or face market saturation, distributors may struggle to find customers or retain them long-term.

Regulatory and Legal Considerations: MLM companies are subject to regulatory oversight and must comply with laws governing advertising, sales practices, and pyramid schemes. Before joining an MLM company, it's essential to research its reputation, track record, and compliance with regulations.

In conclusion, whether MLM is a good idea depends on individual circumstances, goals, and preferences. While some people have achieved success and financial independence through MLM, others have faced challenges or negative experiences. Before joining an MLM company, it's crucial to thoroughly research the opportunity, consider the risks and rewards, and make an informed decision based on your personal objectives and capabilities.

Have you heard of these popular MLM businesses? You may have already bought some of their products or been approached by someone who encouraged you to get involved in the business.

Amway sells nutrition, beauty, personal care and home products.

Avon markets cosmetics, fragrances and other beauty and self-care products.

Beachbody is a fitness coaching and nutrition company.

Beautycounter is a clean beauty product manufacturer and distributor.

doTerra is an essential oil company that also sells personal care products.

Isagenix sells weight management, natural beauty and nutrition and fitness products.

Mary Kay is a cosmetics and beauty company.

NéVetica is a pet brand that sells nutrition and cleaning items.

Rodan + Fields is a skincare brand founded by dermatologists.

Pyramid schemes are straight up fraudulent businesses—scams—disguised as an MLM strategy. In a pyramid scheme, it’s challenging (if not impossible) to get promoted in the organization, and there’s a big focus on recruiting other participants. It can also be difficult to sell enough inventory or recruit enough new members to make any serious money—and trying to meet these demands can quickly drain your bank accounts. Don’t be tempted by get-rich-quick promises that require hundreds (if not thousands) of your dollars to launch! Especially when all your time and resources directly benefit your recruiter. And their recruiter. And so on and so forth.