Should I Quit MLM/Network Marketing If I've Spent More Money Than I Will Ever Make? My Personal Profit Revealed!
“Is MLM and Network Marketing worth it? I feel like I’ve spent more money than I’ll make back!”
If that’s not a juicy #StumpStef question, I don’t know what is!
Pros of MLM:
Simple to get into
Support and accountability
Sales and leadership practice
Cons of MLM:
It’s not yours / you don’t own it
Tiny margins after taxes, incentives, etc.
You’ve gotta be baller at sales (sorry, not sorry)
.01% of the industry makes over 6figs even if you’re hearing otherwise...
Turnover and retention often suck keeping you working... a lot...
I wouldn’t trade my 5 active years in network marketing for ANYTHING. It was the school of hard knocks, fo sho. I learned public speaking, sales, grit, hustle, hard work, how to discipline my disappointment... how to lead a huge team, how to inspire!!!!!! And, and, and.....
BUT, knowing what I know now: I would NEVER (yep, I just said never) have ALLLLLLLLL my eggs in that one basket again. In any one basket, actually. Unless it’s MY BASKET, that I weaved my dang self.
I’ve also learned there are quicker/easier ways to build a business online / work from home. And, that MLM isn’t for everyone (I’ll dare say not for most) — even though personally I was forcing it on everyone that looked at me (sorry if you were one of them but thanks for not blocking me)
Listen in to today’s episode of The Mompreneur Mastermind Show and find out how much I profited on $154,000 in sales (which was my best month) and I will break down the pros and cons of the industry.
Also, I’ll give you strategies to figure out if it’s worth it for you to keep going when you feel like you’re just spending money....
This one’s a DOOZY! If you’re in #networkmarketing or know someone who is, drop me an emoji showing me how you feel about it!!!!!!
Full transcription available at the bottom of this blog post.
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FULL EPISODE TRANSCRIPTION:
Welcome to episode number 109 of the show. This is a hashtag stumped step episode. And the question is, should I quit network marketing? I've spent so much money and I am making none. She actually is like, I don't think I could ever make this amount of money back. This episode was so baller. I ended up instead of putting it on IgE stories, putting it together as a stumped stuff episode, I hope you enjoy. And I think you're going to have a whole lot of clarity around the reality of profit margin in this industry and the percentage of people that truly quote unquote break free.
Welcome back to The Mompreneur Mastermind Show, where we choose to run insanely successful, passive income businesses that light us up while consuming iced coffee, braless and flawless, and maybe breaking it down to some gangster rap while our kids aren't looking. Did we just become best friends? Yes. Yes we did. Hey, I'm Stefanie Gass, six figure corporate exec turned top 1%. Network marketer turned podcaster. I help Christian mompreneurs just like you transform their mindset and businesses into fulfilling incredible world changing missions here on earth. I believe when we let God light our path, we experience true miracles. Welcome sister. Let's get pumped up for today's show.
So I have no idea how the audio is going to be on this quick STEM cell episode, but I'm because I'm driving. I'm actually driving to my son's field trip at the zoo. And I was going to go ahead and answer this one when I got to the zoo and I'm like, Oh my gosh, this question is so juicy. And so many people are probably wondering about this, that I should actually record a quick step-by-step episode on it, but I'm in my car. So bear with me. If the audio is kind of wonky, the content will be worth it to this, especially if you're a network marketer. And the question that came in is, is MLM worth it. I have a feeling I have spent more money then I will make in return. Oh my gosh. So juicy. All right. So let's go ahead and dig into this question.
First of all, when you join any new business, there's always an investment up front, right? There's always money that you're going to put down. And if there's not, you know, run, because that sounds like a crazy scheme to me, no money and start earning profits today. Nope. You're always going to invest. All right. And even with network marketing, you know, most companies have a buy-in between a hundred bucks and a couple thousand bucks, honestly, and it just depends on the type of starter kit that they want you to use the materials. If they want you to have stock or inventory, when you get started, all of those things go into what you buy in with. So there you go. You're already let's let's let's roll with when I started network marketing. Okay. So I'm going to say, I put in a thousand bucks to get started. Now, the second tier of investment with network marketing is the monthly purchase or the minimum auto delivery. Typically that they're going to have you do now, not a hundred percent of companies do this, but probably 80% of network marketing companies have a monthly product costs to you as a distributor. Why that's how they make them
Money, baby, it's a business. It is a business. So like it or not, this, these companies profit also off of their distributor base. So for me, we had to spend a minimum of roughly 80 to a hundred dollars a month to be active as distributors. So we've got a thousand dollars in the door we've got, let's go roll with a hundred for easy math, a hundred dollars a month investment. This is just to be open for business right now. I do challenge you to consider what other business model allows you to be in business for roughly a hundred bucks in overhead every month. Not too many, my business model now where I run my business, pretty much as a solo preneur with contractors and a VA, I could probably get away with one or 200 bucks a month, which would be my email platform hosting of my courses. If I was doing everything myself.
So you can build a business for roughly one or 200 bucks a month in overhead. If you're a solo solopreneur, it's still the same cost. Okay? But here's the difference when you're in network marketing, you are now making a commission. It is not your company. You do not get to, to determine how much of the revenue that you sell goes into your pocket. That is the company's choice. So what you have to really discern in your mind and in your heart is number one. Am I obsessed with this product or service? Okay, don't look at it. Don't get into network marketing. Like I just want to make money. I just want to be like Lula over there. Who's floating on the pink Flamingo. You guys have heard me say this. She's making a million dollars in network marketing. Okay. Because that is literally 0.01% of the entire industry.
Like I'm not going to twist it for you today. I'm going to give you straight truth about network marketing, because some of you can make it 0.01% of you. That's the truth. That's the statistics of the industry. Okay. So if you want to be that, go for it, sister, if I can make 1% in network marketing. So can you all right? It wasn't at the expense of my sanity, but I did it. That's the one pitfall of, I believe doing network marketing as your, as your sole income source is that it's not yours. And typically you're going to make roughly between 15 and 35% commission and that's on product sales dependent on what, if you have a downline as well, you can earn some commission off of what they sell, but it's typically less, I would say between one and 5%. It's different for every company, but we're just going to use that as an example.
So the next tier for you is to determine if I am obsessed with these products and services. And if you're not, I encourage you to think about what you are obsessed with. Go listen to episode 68 of my show and determine what are you obsessed with? What is your zone of genius? What is your niche? And try to branch out and create a personal brand where you can market maybe a course or something that's yours, a membership group because hello, 80 plus percent profit margin on products that are your own, which is what I help people do. If you want to break out of getting 15 to 30% profit margin hit me up and we can figure out if there's potentially a product that you can Mark it based on your giftings and your zones of genius. Okay? So back to network marketing, you have decided, Oh my gosh, I am obsessed with this product or service, boom, boom winner winner, chicken dinner sister.
The second step now is to say, at what point will I break? Even because you do not want to be operating in a negative cashflow situation, right? You want to at a minimum, be breaking even, okay. You don't want to invest money into a business where it's not yours personally, in my opinion, if you're not profiting, okay. Now granted in 90 days, I would say, it's cool if you're not profiting yet, because you're trying to figure things out. You're trying to learn how to authentically market, how you know, most of you are not salespeople when you get into network marketing and it's awkward. So you're learning the ropes. You're getting used to it. And it takes a while. Believe me, it takes a minute to like figure things out. So after that 90 day point though, I would really encourage you to say, is this for me?
Like truly. And honestly, because if you are putting in, let's even just ignore the thousand dollar investment for a second and just say, can I operate at a profit per month? If you have a hundred dollars in $100 in how much would you have to sell every single month to profit $100. Okay. So I am not that great at math on the fly, but I'm going to do my best here. So if you need a hundred dollars profit and your company, let's just say they pay out, you know, 10%. Let's just use easy math. Okay? So let's say that they profit 10%. You would need to sell thousand dollars worth of product every month to earn $100 in profit. Now, ask yourself this question. Do I realistically think between new business and repeat retention? The customers that are buying monthly from me, that I can consistently maintain $1,000 worth of sales.
So whatever your company's auto order volume is, can you hit 1000 of it every single month? That way you can be operating at a net zero that's question two. Okay. Am I obsessed with it? Yes or no. And then can I operate at a net zero, zero? That way you are not putting money in. So most companies have more than 10%. So you do the math. Now the next question would be, can I push it harder? And can I double that so that I'm now operating at a profit. Now, whether you want to just sell products services, or whether you want to build a distributor downline, you still have to do the math and then ask yourself if I'm going to build a downline, can I, can I get this downline or encourage this downline or pour into this downline with my leadership skills.
And get them to sell X amount? Yeah. Dollars per month so that we are operating at a profit. Okay. And let me tell you guys something crazy. The profit margins are not huge in network marketing. It doesn't mean it's a bad place to really invest your time. It just means the hustle and grind for your return is going to be exponentially higher than if you are making 50 to 80% profit margin on your own products, which is why I preach and push having eat products that are yours, having a brand that's your own. And I learned that the hard way you guys doesn't mean I wasn't successful in network marketing, it just means it's a fair, like you're going to bust it seriously. If anybody tells you otherwise, they're lying to you and they're probably in your upline. All right, don't stick your up line on me. Okay. You guys ask for truth. You're getting it. Here is the other thing to consider. I had been in network market just to give you a visualization of this. My company paid out the best, the best compensation plan that I know of in the industry. Okay. Still there. This company pays out exceptional commission and all of those things at my peak, at my absolute peak, okay. There was one month I sold roughly $154,000 in one month, 150, $4,000 in one month. I mean, y'all, I have over a thousand people in my organization, correct?
While driving, I did not do very good math rerecording. This portion of it sounds extra crispy clear in my best month in network marketing ever, I made 150, $4,000 in total sales that's product sales, downline sales, all encompassing volume sales. Okay. Now of that amount, I earned $17,000 that was in commissions bonuses, all of the things. So you do the profit on that all right now, but what you're not considering is that when you run your own sole proprietorship, like network marketing, you have to pay your own taxes, right? Potentially sales tax, and also federal. And so I chunked away 30% of that to save for taxes, which is $4,620 leaving me with $12,380. Also, I had to put in a little bit over 2000 bucks to hit that rank. And a lot of times people don't talk about this, but this is totally a thing.
Again, hashtag trip bombs up in here. A lot of times people are putting their own money into these businesses, running incentives, running contests, buying extra product so that they can hit the net next tier of rank or income. So that's exactly what I did leaving me with $10,380 in profit. You might be thinking, Oh my gosh, I would love to make that amount of money. Yo sister, I had to hustle over 50 hours a week full on anxiety attacks. Like you've heard my stories to make 6.7% profit margin, 6.7% profit margin. That's straight insanity to me that that is what I ended up pocketing after earning the company that much in sales. So that's the math on, on really what I took home.
That was my very best month. In five years of network marketing and I had to sell $154,000 worth of product versus today, I'm bringing in roughly 80% profit margin on my courses and on my, on what, how I make money, coaching and courses. So flipping insane. I am giving you this visualization because I don't want you to get lost in the stories, the success stories, the don't worry. It will all be worth it. The upline that's pushing you and driving you in incentivizing you, unless you want to, unless you are crystal clear on the reality of the money that you can make. Okay? I want you to know the truth. And if that truth does not sit well with you, I want you to think bigger. I want you to consider branding yourself and thinking about what are the gifts and the passions that you have.
Maybe it's the product line that you're selling today. Well, that's great. How can you expand on that? You know, how can you have a brand where you still market these products? I'm not asking you to give up network marketing, but I am asking you to consider expanding your brand where you can have something that's your own. Maybe it's a simple ebook, a workbook, a mini course. Maybe you've been called to start coaching. I don't know what that thing might be for you, but in your heart, if you're like this, can't be it. Let's talk. Let's talk. This was a STEM Steph question that I got and I thought it was extremely juicy. And I wanted to break it down for you because I will never lie to you guys. I will never lie to you. And so I'm ready if I get a bunch of opposition for this episode, because you need to know the truth.
You need to know the math. And when I was in network marketing, there was no one person that told me the truth about what I was making. And I'm smart. I'm like I have a master's degree in finance and accounting. I couldn't figure out what the heck was going on with my commissions. And they make it so confusing and convoluted. I believe because if you were to hear Holy smokes, I'm going to walk away with five to 10% profit at the end of the day, at the end of paying my own taxes and doing all of this, you would choose a different business model. Yeah. So anyway, there it is. Take it with a grain of salt. If you are interested in learning more about expanding your brand, I would start with episode number 68, which digs into figuring out your zone of genius and your niche.
I would then go and listen to, I don't remember the number, but my episode about online courses. See if maybe something triggers in your mind and your heart about a passive product that you could create and, or hit me up for a breakthrough session. We can totally do a private coaching session for one hour to kind of uncover all of these questions in your heart and mind. I am here to support you, encourage you. I want you to break free from any type of situation that you feel is no longer serving you. And if you heard this and you were like, yeah, I still love it. I'm going to go full force in network marketing. And I'm so obsessed with it. And I don't care what you say, Stephanie. Good, good. Because I want you to do the thing that you were so insanely passionate about, and I want you to do it well. And even if you do network marketing for three to five years, like I did, I still walked away with invaluable, invaluable life-changing experience, personal development
Mentorship. I learned public speaking. I had many events. I learned how to be an event planner. I learned how to invite. I learned how to sell. It was so great. As far as getting me prepared for the next phase of my journey, which is high recording of a podcast from my car right now. So regardless, you're going to learn a lot. So don't be like, I'm so mad that I joined a network marketing company. No, no, no. Not at all. Everything you do is a great stepping stone for the next thing. So I just want to leave you with a couple of words of encouragement right now. Mama, I pray over you that if you're feeling uncomfortable after hearing this episode, I think that's on purpose. And I would so encourage you to sit down before you speak to another human being, pray over the feelings that you're having, journal it out, dig into why you may be feeling that way.
I really, really encourage you to ask God to give you direction, give you clarity, give you peace in your heart, give you the next steps that you need to take to really get clear on what his mission is over your life. I pray that you are put at peace and know that no matter what, dark hard, uncomfortable situation you are feeling right now, most of the time it's on purpose or it's going to be used for great. Your test can be turned into your testimony. I promise I am an example of that. I love you. I'm sending you so much. 11 life is your life. Moms saw your mama real quick. Before you go. If you found value in today's podcast and you learn something new, take a screenshot for me, post it up in your Instagram stories and be sure to tag me because together we can empower, educate and shift the way that mom is. Look at life because sister friend, we actually can have it all let's claim it.
Lots of fancy unused education. Podcast Coach, Clarity Coach, & Top #25 Ranked Podcast Host for Christian Entrepreneurs.