MLMs (multi-level marketing), also referred to as ‘Network Marketing,’ used to be a questionable type of home-based business. This is no longer the case, as there are many that can be run successfully from your home. You can feel confident about running one if you know what to look for and what to avoid.
MLM is a home-based business that involves direct selling of a product and/or service through independent representatives. The term MLM describes a marketing structure used by some companies as part of their overall marketing strategy. The structure is designed to create a marketing model and a sales force that compensate sellers for the products and/or services they sell directly. Additionally, business owners are compensated on the sales made by other sellers they have introduced into the system, thus creating what is referred to as a ‘down-line’ of distributors. This structure is commonly visualized as multiple levels of revenue generation, which form a pyramid. But a shape alone does not a scheme make so long as there is a viable and in-demand product that is actually being sold.
MLM products and/or services are typically marketed directly to consumers and potential business partners via friends and family and/or word-of-mouth marketing. In order to safeguard the interests of its independent representatives, there are no storefronts nor are the products and/or services of the company marketed through traditional media channels.
So, how do you know if a MLM-modeled business is right for you? Quite often many leap into a MLM home-based business opportunity and quickly discover they lack the business acumen to operate a successful home-based business. In other cases, they lack the ability to sell among friends and family and have no means to create a down-line of distributors, which is what oftentimes leads to meaningful earnings in the business.
If you are self-motivated and have the drive to succeed, the first step to consider is whether you have the business acumen and the necessary skill set to operate a home-based business in the first place. It is important to understand that while getting others involved in creating your down-line of distributors is important, the key to differentiating an MLM from a pyramid scheme lies in products or services sold. Many people can’t make an appropriate assessment and therefore steer clear from MLM businesses altogether, which is unfortunate.
The tell-tale sign of a pyramid scheme is typically that there is no sale of tangible products and/or services of value. In some cases the products and/or services of a company may be represented as the express selling of an illegitimate business model itself. In the case of a true pyramid scheme, the focus is getting as many people involved to create profit with no intention of having it earn money for anyone other than the people at the very top of the pyramid. The people in the middle or at the bottom of the pyramid often struggle, only to find they’re lucky to break even. On top of this, they’ve enticed many friends and/or family members to participate.
Conversely, a legitimate MLM home-based business model is one wherein you’ll sell a product and/or service with a value that is proportional to its price. When shopping for a MLM business opportunity, you should evaluate the quality and pricing of the products and/or services being offered in an attempt to legitimize the integrity of the offering.
Now that you know the basics involved in differentiating a pyramid scheme from a legitimate MLM or network marketing opportunity, let’s talk about some advantages of getting involved in a MLM. Here are some typical advantages of a solid MLM business:
These advantages will aid and support you in building your home-based business.
One disadvantage of owning a MLM home-based business is the challenge most face trying to recruit others into the business (creating a downline). If you know you can’t recruit others it might be a good idea to reconsider another type of home-based business. Furthermore, many MLM business models have restrictions on the marketing methods you can employ to aid you in market exposure, revenue generation and development of your downline. In fact, if you are an outside-the-box thinker and tend to be creative, a MLM home-based business may not be for you. Another thing to consider with many MLM models is that there is a minimum monthly commitment in products or services that you must maintain in order to be eligible to earn money from your downline. If you have established a regular customer base to buy products and/or services, then things typically go well. However, you will have to be careful in managing your own inventory so as not to end up heavily overstocked with products you can’t personally use or sell.
In conclusion, a MLM can be an overall legitimate home-based business, but it does require a serious amount of sales effort and motivation to get started and remain consistent. MLM home-based businesses are not for everyone and you need to be prepared for lots of rejection, the failure of others, potential monetary pitfalls and programs requiring monthly minimums. Plus, you need to demonstrate strong sales and recruiting abilities. Think carefully before buying into an MLM, but know that you can really make significant potential profits with some effort and hard work.
Carpe Diem My Friends