What is Leverage in an MLM Business

The term “leverage” is often used when explaining the benefits of the MLM business model.

In traditional sales, one person only has so many hours in a day to sell their products or services. This obviously puts limits on potential income.

In MLM you can get paid for all the sales your team makes based on the rules that define your companies compensation plan. Income is usually shared by the person who makes the sale and their upline. There are a variety of MLM compensation plans. How compensation is shared and how many levels up it is shared varies from one company or compensation plan to the next.

Since the compensation is shared in MLM the commision to the person making the sale is generally going to be considerably less than a similar sale in the traditional sales model. So one would ask why would I want to share my commission and make less?

The answer is “Leverage”. By building a team (downline) you will get paid small amounts on the efforts of many. Those small amounts can add up to many times what you could earn by yourself.  Remember your time limits you to how many people YOU can touch in a day. A growing team can reach an unlimited number of people.

The top income earners in most companies don’t sponsor that many people or have that many personal customers. For example it there are leaders making over 6 figures a month in an MLM’ with less than 20 personally sponsored distributors. Those 20 turn into thousands down x levels. That is Leverage!

The other advantage of creating leverage by building a team is that your team will continue to work when you don’t or can’t! If you are in a traditional sales position and get sick, go on vacation or retire you are no longer making sales or earning commissions. If you have built an MLM team and get sick, go on vacation or retire your team will continue to make sales and you will continue to earn.