“Gotchas” to Watch Out for
in Home-Based MLM Businesses

Suzie has worked hard at her job for many years, but there always seems to be too much month at the end of her money.

She does not see how she will ever get ahead of her debt let alone make any of her dreams for her growing family a reality.

One day, Suzie finds a home-based business that promises her wealth very quickly and the ability to work around her childkid’s schedule. She is so excited by their motivational presentation that she gives her job notice.
After a few months of investing thousands of dollars, but making almost nothing, Suzie realizes that she has made a mistake.

Unfortunately, the new company’s “buy back” policy proves to be a sham, forcing her to beg her old company for her job back (which they give her, at a lower salary).

Suzie is now worse off than when she started.

Will she learn from her mistakes, or will she give up on her dreams forever?

Home Sweet Home

A home-based business is the dream for many people working a 9 to 5 job that doesn’t make them happy.

You get to provide goods and services that people enjoy, bring home far more than any hourly wage, and do work that you love. Most of all, you can do all of that from the comfort of your own home.

What you should look for in a
home-based business?

There are many good companies and products out there, but it can be challenging to know which ones to choose. One way to tell them apart is to know what to look out for which ones to avoid.

When some people hear the term “home-based business”, they think of network marketing or multi-level (MLM) companies in which you become a distributor of their products or services. You’ll often see recruitment ads that use the words “home-based business” as part of the pitch.

Most “home-based businesses” promise of unlimited growth potential. The more product or services you sell, and the more people you recruit into your downline, the more money you make. However, some of these companies have “gotchas” built into their compensation plan to hurt the “little guy” and pass the income to the “big guys” at the top.

Here are some examples:

  • Binary Compensation Plans with a Runaway Leg. The rep continuously buys overpriced goods and services thinking that one day they will match the bigger leg and make money. It will never happen because you can’t catch up with a runaway leg. 

  • Buy-Ins: You have to buy in to have an unfair advantage. You can make more money if you pay more to join. That should be a big red flag.

  • Overpriced Products. Products should cost what the market bears. A high -end coffee should still not cost more than other high-end coffees.

  • Familiar Faces at the Top. If you’ve noticed that your MLM’s leadership is made up of people who used to be part of other MLMs that have since gone under. Instead, look for leaders who have been in their company for a while with a track record of success, or who have experience running big successful traditional companies that are still around.


A home-based business should have profit structures that work for you with, products and services that retail at a fair market price, and it should involve a sales and compensation process that doesn’t feel unethical to you.

Need some more guidance? I can help. Send me an email to set up a free consultation.

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