Being a military spouse isnât an easy job. Non-enlisted spouses deal with difficult realities that many Americans donât understand, from frequent relocation to defacto single parenting during deployment periods. That makes earning an income while caring for a family â especially one with young children â extremely difficult.
With challenges like these, itâs no wonder the unemployment rate among military spouses is 13%. Thatâs more than three times as high as the unemployment rate among civilian men and women.
Enter multilevel marketing businesses, or MLMs for short, that promote the opportunity to make money selling products directly to others. On the surface, their flexibility and built-in community may seem like a godsend to military spouses looking to bring in some extra cash. But are they all theyâre cracked up to be?
Besides selling your own products, MLMs involve recruiting others to join your team and sell products to the people in their circles as well. With most MLMs, you get a portion of your team memberâs profits when someone joins your sales network. As the process repeats itself and your team members recruit sales networks of their own, you may continue to get a piece of the profit from everyone who signs up underneath you.
You can probably name several MLMs, also called network marketing companies, off the top of your head. There are the classics, like Tupperware, Amway, Avon and Mary Kay, along with newcomers like Beachbody, LuLaRoe and Rodan + Fields.
Yet although MLMs have been around for decades (or centuries â Avon was founded in 1886), theyâre often a poor investment of your time and money. An AARP Foundation study reveals that 74% of people reported making no money or losing money as a result of their involvement with an MLM. (Investing your cash in a high-yield online savings account would actually be a safer bet, statistically.)
Military families in particular are often targeted by direct-selling consultants. Sometimes, this comes from a genuine desire to help military families that are looking for an additional source of income, suggested Anthony Kirlew, financial coach at Fiscally Sound.
Yet others believe the intentions of MLM recruiters may be more sinister. âMilitary wives are an easy target [for MLMs],â said Melissa Blevins, founder of Perfection Hangover, a small business website geared toward women, âbecause theyâre seeking community, purpose and ways to stay busy and make money while their husbands are deployed.â
MLM recruiters often approach women (military wives or otherwise) with promises to solve the problems theyâre facing. For example, a recruiter may show you a flexible way to earn extra cash (often lots of it) with a work schedule that fits your busy life. Plus, if you move, you donât have to start over. You can take your direct-selling business with you.
The targeting of military families has a lot to do with the transient nature of military service, said Peter Marinello, vice president of the Direct Selling Self-Regulatory Council for Better Business Bureau (BBB) National Programs. âI think the military community is very vulnerable to direct-selling opportunities and a lot of different kinds of scams.â
This frequent relocation can also lead to loneliness among military spouses, and MLMs offer to help those who are seeking new friendships. But Blevins, who had her own negative experience selling for Beachbody, warned the friendships you make when you join an MLM may not last once you stop participating, and you run the risk of losing your existing friends if you start bombarding them with sales pitches.
Youâll find people who are superfans of multilevel marketing programs and others who despise MLMs as a whole. Perhaps the truth lies somewhere between these two extremes.
Marinello confirmed, âThere are a lot of good MLM opportunities out there. They are not all scams.â But they require due diligence before signing up. To properly vet an MLM, Marinello suggests reading income disclosures to âsee whoâs making money [and] at what level.â You should also review compensation plans and rely on outside resources to help shape your decision.
If you want to learn more about a specific direct selling organization, the following ideas may help:
Some MLMs are pyramid schemes in disguise. A pyramid scheme may look like a legitimate network marketing opportunity on the outside. But there are key distinctions that could waste both your time and your money if you fall for it.
The reality doesnât always live up to the hype where MLMs are concerned. Some MLM participants are quick to over-promise your chances of success in an effort to add a new team member to their network.
In reality, most people who join MLMs donât earn the enormous sums of money often advertised by salespeople. AARPâs study found that nearly 21 million Americans have participated in an MLM. Yet only 7% earned over $10,000. Fewer than 1% earned more than $100,000.
Even those who do manage to make some money through MLMs may have to work much harder to earn that income when compared with other jobs. A MagnifyMoney survey finds that the vast majority of multilevel marketing participants earn less than 70 cents an hour.
Kirlew also advised approaching MLMs with the right mindset. âWhile MLMâs are pitched as a great way to earn extra income, people should know itâs not like a part-time job, but rather a part-time business.â
âIf someone has a need for immediate income,â he continued, âI would recommend a part-time job and not an MLM.â
Most businesses donât succeed â including MLMs â Kirlew pointed out. âThe extra added pressure of trying to meet short-term financial goals is usually not a good combination with starting a new business.â
If youâre already in debt because of an MLM investment or other financial missteps, there are a number of tools you can use to improve your situation. This guide detailing financial resources for veterans in debt is a great place to start.
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