So if you know me or follow me on facebook, three things are obvious. I have a family, I'm a chiropractor, and I use essential oils. I actually have two businesses. I have owned Abundant Life Chiropractic for 7 years and I have been an independent distributor with Young Living for 2 years (but only started treating it like a business since January of this year.) A question I hear all the time is "Isn't Young Living Multilevel Marketing? I don't like MLM's."
I used to sort of feel the same way. I used to think that the products of any MLM were overpriced because they had to pay their representatives commissions. But then I started thinking a lot about MLM's and Young Living specifically, and comparing it to my chiropractic practice. I'm going to lay out some common concerns and address them.
1. Isn't Young Living (and other MLM's) a pyramid scheme?
No. Not at all. Pyramid schemes are illegal. Multilevel marketing is a legitimate business structure, and 100% legal. In a pyramid scheme, there are no goods or services exchanged, so there is nothing of value that you are paying for. There is one person at the top that gets the money. In multilevel marketing, there are goods and services provided for the money paid. If you build a business in the company, there is no limit to your success. You do not have to be at the "top" to get paid. In fact, there are several people in my sponsor's team in Young Living that have actually achieved a higher rank than her, even though they are "under her" which simply means she enrolled them or one of her team members enrolled them.
2. The prices of the products are jacked way up because the company has to pay commissions.
YL doesn't have to pay for marketing because they have us as representatives doing that. Also, any company has payroll and marketing expenses. I own a chiropractic practice. My payroll and marketing expenses are a little high right now, at about 50% of my monthly budget. I pay a practice representative to do my marketing, so her pay kind of crosses over into the marketing budget, since that is what she does. That's not unlike what we do for YL. I think I just read that YL gives back 40% to its members in pay and incentives, and that is actually very generous among the MLM companies. That is not out of range from a regular business, therefore it would have nothing to do with jacking up the costs of the products. You get what you pay for. Things that do raise the price? Not buying land that has been farmed on in the past 50 years so that there are no trace of pesticides or antibiotic or hormone residues from farm animal waste. Testing all of your products to meet standards, including paying for third party testing. Paying employees to weed by hand so as to not use herbicides. These are just a few of the things Young Living commits to in order to keep their oils pure and maintain the best quality possible. Young Living (and many MLM products of other companies) cost more because of the quality. And on that note, there are other companies whose oils cost the same or more without those same standards. Here's an excerpt from a small business page that falls in line with what I've learned about appropriate payroll and marketing costs:
General Ranges
Limiting your payroll expenses to between 15 and 30 percent of your gross income can help to keep your business in good financial standing. It’s normal, however, for certain industries to spend much more on payroll. If you are in the retail or manufacturing business, for example, you can likely to keep your payroll cost below 30 percent. This is because you would spend more on goods, merchandise or equipment than you would on wages. If you are in the service industry, however, your payroll expenses could run up to 50 percent or slightly more. This is because you would spend more money on your employees’ labor than you would on goods or merchandise. (source)
3. I have to sell stuff.
First of all, in Young Living, 93% of members are just product users. You have the option of building a business, but are never pressured or expected to. I have chosen to do the business side this year. I have never been encouraged to be pushy or sales-y. I keep my classes very educational, as did my sponsor, and I tell people how to get the oils. If they want to sign up for an account, great. If not, I'm here for you if you have questions or change your mind. The end. I'm not into stalking people and annoying them. It's the same with my chiropractic practice. We market. I recommend treatment plans and things that will help patients. It's up to them to decide to follow through. Marketing is not unique to MLM's, and you can be as sales-y as you want to be. But that is not the business model I was shown.
4. You don't really have your own business. If the company fails, so do you.
This is where research comes in, and having a rainy day fund. I can speak to Young Living concerning this. They have been in business for over 20 years. They are debt free, bringing even more stability to their business. I have owned my own business for 7 years, and am not yet debt free. I consider my practice fairly stable, but Young Living is waaaaaaayyyyyy more stable than my little chiropractic practice. It is still up to me to do the work to build MY Young Living business. It is also up to me, whether I am employed by someone, have my own business, or am and independent distributor for a company, to have a good sized emergency fund in case the unlikely thing happens and the company takes a hit and it affects my business. How long has the company you work for been in business? What if they fail? This again is not a concern limited to an MLM company.
5. You have to spend a lot of money up front.
This is in the eye of the beholder. "A lot" is defined differently for different people. Again, I can really only speak to Young Living on this, but I will say that their best deal for membership is their premium starter kit, which retails for $300. When you go to Costco, you have to pay them $55 just for a membership. You don't even get anything for that. You get a membership with Young Living, which gives you 24% off retail prices and an amazing starter kit with 11 of their most common oils and a diffuser for $150. Many people easily spend that in a day on clothes, shoes or a date night! Every company treats their membership differently. I'm sure there are companies out there that require more spending up front or require one to spend a certain amount per month to stay active. That was another draw for me to Young Living. To stay active, you have to spend $50 per YEAR. There is no monthly requirement. They have additional rewards for people that choose to do a monthly autoship, but this is completely optional.
There are many benefits to a multilevel marketing company that having your own business or working for someone else don't have. My income in my practice, although will grow as I grow, is limited to my ability to grow the practice. I have a limited number of team members. In my Young Living business, I have an unlimited number of team members and my income is not limited by what only I can do. My team members' growth benefits me, and me helping them grow benefits them. They are also not limited by my limitations. They can take their business as far as they want to, regardless of how well I succeed. That is not true with my chiropractic practice. I have very hard working employees, but I cannot give them more bonuses than what I do until the practice grows. Their personal growth and work will help my office grow, but in the end they are still limited by how far I have come with my business growth. For an employee of a company, you might get raises, but a receptionist, for example, will never make a 6 figure income per month. Receptionists earn what is normal for the market. There is some variation, but there is a range, and there is a limit. I don't say all this to say that everyone should quit their job or give up their business to join a multilevel marketing company. I just say it to point out that the income limitations are not there the way they are with other professions.
There are also some things that need to be made clear. If you want a six figure income in an MLM company, you have to be a six figure professional and put the six figure work in. I don't believe that people should mislead others into thinking they can "make their own hours" and devote only a few hours per week to their business and have it take over their day job income. That is not going to happen. You also have to be a great leader and team builder. You do need a strong team and support that strong team to be successful. It's not just about selling a few products. I think people need to have realistic expectations about the amount of work needed to launch a successful business. Again though, this is required with any business.
Let me know if you have concerns about multilevel marketing, or if you've had success with a company and what you tell people to alleviate concerns! Here is my link to my Young Living site, and to my Abundant Life Chiropractic website!
