$3,000/Month Passive Income with MLM [Beginner Guide]

MLM, or Multi-level marketing, is a well-known source of passive or residual income. By leveraging the power of networking, MLM offers you the opportunity to make money by enabling other people to sell more. The more money your peers make, the more you will make.

Is MLM illegal? MLM (Multi Level Marketing) is not illegal if it is not based on a pyramid scheme. A pyramid scheme is a business model that, instead of selling products or services, is based on recruiting other members with compensation based on the promise of payments or services. This business model is recognised as illegal in most countries. Whereas, MLM is a marketing strategy based on selling products or services.

With MLM, there is an opportunity to make passive income in a couple of years. Of course, you need to work hard to get there and convince a lot of people to work with you. The main difference between MLM and any other type of passive income opportunities is that it is crucial to sell a product or service you believe in. Advertising and selling are key to having success in MLM. You also need to have strong persuasion, sales and coaching skills in order to succeed. Let’s take a look at some of the practical steps involved in making passive income with multi-level marketing as a beginner.

1. Is MLM a Scam? Understanding How it Works

The first thing you need if you want to be successful with MLM is to grasp this concept. MLM is not a pyramid scheme, where people only get money by recruiting other people. While a pyramid scheme is a deceptive method of passive income. Conversely, a legal MLM company allows you to sell legitimate products or services to people who are genuinely interested in buying them.

Let’s take Herbalife for instance. All of their products are super high-quality and can successfully be used to shed off extra pounds and pack on muscle. With just shakes and pills, people can live a healthier lifestyle and get that dream body they’ve always wanted to have. Even if the products are slightly overpriced, Herbalife represents a legit MLM business opportunity that has existed since the 1980’s. This brings us to the importance of choosing the right company.

2. Choosing the Right MLM Company for You

This is probably the most important aspect about making passive income with MLM. The products or services you sell are the main criterion for determining if you’ll have success or not. Thus, you need to be 100% sure that you are choosing a reputable MLM company to work with, one that offers you all the support needed to succeed.

Do not get caught in the hype of so many companies, but sift through all the information you receive. Look for a stable company that has been in business for a long time and has a proven track record of success. Some of the top MLM companies include Amway, Avon, Herbalife, Mary Kay or Tupperware. Each company is unique and offers a certain revenue plan, so you need to choose one that meets your needs and interests.

Investigate the integrity of the company you want to work with and see if their products are appealing to you. You want to sell products that you love, because you’ll never have success trying to get others to purchase products if you are not excited about them. Ultimately, research the compensation plan and try to see how much and how long it would take you to get to a level where you get 100% passive income.

3. Understanding The Passive Income Opportunity

You are here because you are interested in making passive income, so make sure that the MLM you are considering actually offers that opportunity. If you cannot eventually make passive income from the MLM, it may not be for you. Some MLMs offer the opportunity to make passive income with:

  • Direct Sales / Retail
  • Wholesale
  • Commissions from recruiting
  • Commissions on team member sales
  • Production Bonuses
  • Special promotions
  • Royalties
 

Here are some income values of people working for some of the most famous MLM companies in the world. According to Paysa, Avon Sales Representatives make an average of $3,900/month (source), Mary Kay Cosmetics Recruiters make an average of $6,000/month (source), and Herbalife Recruiters make an average of $8,500/month (source). However, this source does not state how long it took these people to achieve such numbers or how passive the income is. Take note that these numbers are subject to change over time so click on the links and check out more websites offering estimates in your area for more info.

Make your financial plan before you get started to evaluate if you can financially sustain yourself while you are starting up your MLM business. Should you keep your 9-5 job, or can you afford the risk of quitting? Do you have enough money saved to sustain yourself while possibly not making any income for six to eight months? How much money do you want to make from MLM? Are you willing to work for five to ten years to build this active income stream into a completely passive one? We will talk more about income and your personal business plan below. Learn more about how much passive income can make you rich in the article on our blog (opens in new window).

4. Becoming a Master Recruiter, Trainer & Sales Manager

Working for an MLM requires key social skills including selling, coaching and training. The YouTube video below offers a very honest review of the skills MLM entails. It also covers the income you can make depending on dedication, motivation and personal investment.

“You don't accidentally part-time turn a multi-level thing into a million dollars. It’s not like you just show up and you go get three of your friends in this thing and it turns into a million dollars. It's seven to ten years of very hard work as a Master Recruiter Trainer and Manager of Sales People. Those are the people that make seven figures. I've got several friends that make a million dollars a year. And I've got a like a thousand or two thousand or ten thousand people that I've met that we're in it for three months that are not anymore. Okay, but I actually know more than five people in network marketing they make that have made a million dollars a year at one time or another, but they didn't do that part-time, and they didn't do that part-time for three years and then full-time for two years. They became professional motivators, professional sales trainers, professional managers and hires or sales people, and they have Rhino thick skin because people come and go every 20 minutes. And they don't get their feelings hurt when everybody's mad and turning they just go get another one. They just go get another one. And that's that business. There's nothing evil or wrong with the business. But if you think you're going to hire three people and they're all three going to be with you ten years from now you are kidding yourself.”

Dave Ramsey, YouTube

Once you are part of the business, it is essential to learn as much as possible and get better at these key skills. You need to be ready to earn nothing for the first few months. You’ll probably make no sales and you’ll earn nothing. However, you’ll invest plenty of time in learning all the tricks of the MLM business you joined. You’ll test products and learn the best techniques for approaching prospects.

During this process, you need to start creating your personal and business strategy. Identify your target market and understand who the people more likely to buy from you are. How much do they earn a year? What are their hobbies and interests? What problems do they face? How can your products or services solve their problems and exceed their expectations? How will you reach these people? Also train yourself to become a better salesperson, trainer and coach. Learn about online marketing and hosting events. YouTube can be a great place to learn more about selling, marketing and training others.

5. Marketing Your Products

You can make passive income from MLM online and/or offline. If you are selling physical products, you probably want to meet with your prospects face to face and show them how the product looks and works in reality. However, if you sell a digital product, you can transform this source of income into an online method of passive income. You can basically stay in front of your laptop and convince people to join your business, and then sell your products online using social media and other digital channels.

Depending on the MLM you join, a variety of marketing techniques may be applicable. You can host home parties, host team events, attend trade shows, send envelopes with promotional material, send greeting cards, interview people on the street, speak at civic group events & business meetings, go strong on social media by creating a YouTube channel and Instagram account, create a blog and leverage the power of cold calling. If blogging interests you, we highly recommend this blogging course.

While you want to sell your products and get revenue, it’s also crucial to build a strong downline. This means you need to create a strong network of people eager to sell these products themselves. The bigger the network and the more successful it is, the more passive income you’ll make.

6. Standing Out on the Market

To be highly successful, you will need to continue innovating. Find new approaches to grow your network and to find new customers. Do not be content with just the information you receive at training sessions, but go above and beyond and try to experiment by yourself. Enable people to choose you over all other representatives by offering extra perks and benefits to your clients and network. You can do that by offering personalized services, creating your own reward program or giving out something of great value if that is allowed in your MLM.

7. Supporting New Members

Ultimately, you’ll grow more and more until you can start focusing solely on mentoring. You need to support all your new members and enable them to achieve success in this business. Don’t forget, their success is your success. If you offer them high-quality support (yourself or through an assistant), you’ll grow a powerful network of people who will ensure your success for years to come, and provide you excellent passive income.

How Passive is MLM?

MLM has the potential to be very passive. You need to make sure you choose a reputable company that allows you to create a strong network of people that can actually generate passive income before joining if that is your main goal. Take note that it may take years to turn this very active method of making income, to a passive one.

Startup Costs

You will probably need to invest money in the beginning. Many MLMs offer paid training materials or products/starter packages that can cost upwards $2,000. However, businesses like Amway or Herbalife can be cheaper to start depending on what you choose. You can start with just $200 and then make profit right from the start by promoting products to your family members and friends. The startup costs vary from one MLM company to the next so look into this before joining.

Difficulty

Becoming successful with an MLM business is quite complex and could prove to be harder than most other passive income methods. In addition to the immense amount of time and energy you need to dedicate to your business, there is always the risk of failure. An MLM involves using all of your marketing, sales and management skills together in order to attain success. This may not be for everyone, especially if selling, marketing and training people are not in your skillset, and if you are not interested in learning these skills.

Time

In terms of time involvement, you need to dedicate hours and hours for many years to turn an MLM opportunity into passive income. During the first few weeks or months, you might need to spend entire days discovering all the products and learning how to promote them. And you may not make any income during that time. The great news is that once you get to a point where you make money only from your downline, you can spend a few hours a week to grow your business, or even less. However, this may take years to build.

Risk

An MLM is a high-risk high-reward passive business opportunity. It costs money and a lot of time to start, to build, launch and maintain. Think twice before venturing into one if risk is not for you.

Seasonality

You can start your own MLM business anytime, in any season. Most businesses work all-year round and sell products that can be used every single day of the year.

Return on Investment

If you build a successful MLM team, you can gain a precious source of passive income. While in the beginning the ROI from what you sell is low, once you have a team your ROI will increase. This means you are only investing a few hundred dollars and you gain hundreds of thousands of dollars back. However, to get to that point, you need to work hard for several years and never give up.

Related Questions

Can I make passive income from MLM? You can make passive income from MLM, however it will take time to transform an active MLM business into a passive one. Some ways to do so include recruiting a larger sales team and focusing on more residual income such as commissions, royalties and bonuses.

How much can you make working for an MLM? According to Paysa, Avon Sales Representatives make an average of $3,900/month (source), Mary Kay Cosmetics Recruiters make an average of $6,000/month (source), and Herbalife Recruiters make an average of $8,500/month (source). However, these numbers are subject to change over time so click on the links and check out more websites offering estimates in your area for more info.

Disclaimer: The information contained on this Website and the resources available for download through this website are for educational and informational purposes only and are not intended as, and shall not be understood or construed as, professional advice. Results mentioned are not guaranteed. Starting a business or an online business always involves risk and demands a lot of time. The success of your (internet) business depends on your hard work and skill. We do not guarantee any business or income. It is also imperative that you consult a tax and/or legal professional in your area to ensure you comply with local, or nation-wide rules and regulations that pertain to your area before you join a peer-to-peer platform or start a business with the purpose of making money. Consult our Disclaimers page for more information.

Beginners Passive Income

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This blog does not provide legal, financial or tax advice and does not create an attorney-client or client relationship. We are not trained or certified financial advisors, and we are not your financial advisor. For legal, financial or tax advice, please contact a qualified professional in your area.We do not guarantee any business or income. Consult our Disclaimers page for more information.

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