What Exactly Is A MLM Or Network Marketing Business?
The first question that usually comes to mind when MLM (multi-level marketing)is mentioned, is usually ‘is MLM legal’. The reason for that is that MLM otherwise known as network marketing, is often incorrectly associated with ‘pyramid selling’. For definite ‘Pyramid selling’ is illegal and for the vast majority of people who get involved, it is a complete scam that results in them losing money to people that only care about one thing; extracting money from the hapless individuals who fall for it.
A real ‘pyramid scheme’ is where money is transferred from one level of the pyramid to another but with no products or services being exchanged. In the end that means a lot of people paying out their hard earned money to very few people at the top of the pyramid. So the ones at the top make a lot of money from anyone duped into participating in the scheme and the people at the lower levels getting nothing in return, ultimately the ones at the top then disappear into the mist with their ill-gotten gains.
MLM on the other hand, full name multi-level marketing and also known as ‘network marketing’, is completely legitimate and is a process or business model through which products and or services are offered via a network marketing structure.
The first thing to do is to put the ‘pyramid selling’ ghost to rest and explain how it can be differentiated from a legitimate MLM or network marketing business model that can be considered to be a real home business opportunity.
Anyone who is involved in pyramid selling will be very aware that the practice is illegal. That is why they will often try and disguise the fact that it is actually pyramid selling by offering some token product or service. They will happily describe it as MLM in order to give it some level of legitimacy. This is often why real multi-level marketing is affected and viewed in a negative light. In a nutshell, if there are products and services involved how do you know whether it is legitimate MLM or illegal ‘pyramid selling’?
The answer is relatively simple, if the products and or services are worth the price being asked, you know how you will be paid and how much you will be paid if you meet the qualifying criteria for payments, then you can be pretty confident it is a legitimate business. If on the other hand you can’t answer these questions then perhaps it would be better left alone. Don’t forget that we are talking completely disproportionate levels here or in fact whether you will actually receive a payment at all, not slight competitive edges where you may be thinking it may or may not be reasonable costs and payments.
With that out of the way lets discuss how network marketing works and whether it a business model that would suit you.
MLM involves personal endorsement and recommendation, in other words, you buy and use a product and or service personally and then you recommend it to others.
If they purchase the product or service and join the network you receive a commission. So you are rewarded on two counts, for selling the products and for finding other people who are interested in marketing the products, hence the term network marketing. The people below you in the structure are called the down line and the people above you are called the up line. It really is as simple as that.
The best network marketing businesses will have a clear and verified method of payment that can be scrutinised. It will have an established business model with defined procedures for introducing and training new people, and probably most importantly have a support team committed to ensuring you succeed at the business and make money. The reason for the latter is obvious, you make money then they will also make money, but clearly if you are putting in the effort you need to take the larger proportion of any commision earned.
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