If you’re shopping for your own home-based, internet-based or other small business, there’s a good bet that you’ll come across a whole range of what would be considered network-marketing opportunities in the process. How could you not? After all, network marketing (also referred to as multi-level marketing, or MLM) companies are estimated to generate well over $100 billion per year worldwide and counting.
Given the ever-increasing success of companies of this kind, why are so many of us still so hesitant to get involved with them? The reason is simple really. They’ve gotten a bad rap―one that is, unfortunately, all too often justified. The fact is that there have been too many well-documented and highly publicized cases involving pyramid or Ponzi schemes posing as legitimate network marketing/MLM opportunities for the average informed person NOT to be skeptical. But skeptical is a good thing. Skeptical means you ask a lot of questions before you jump on board and get taken in by a slick sales pitch. It also means you take time to educate yourself, to make sure you’re informed about which companies are on the up and up and which ones are questionable.
So What Is Legit Network Marketing/MLM Anyway?
Network marketing (or MLM) describes the structure of a company that distributes its goods and services through a formal network of independent salespeople and/or distributors. This network of people earns money in two key ways: 1) selling goods and services, and 2) recruiting and supporting other salespeople who then become part of the sales organization beneath them. However, the particulars regarding the nature of this structure and how it works in order to be considered legitimate are a bit more complicated.
Perhaps the best summary of what constitutes legitimate network marketing/MLM comes from a 1998 speech by then general counsel for the U.S. Federal Trade Commission (FTC), Debra A. Valentine, who said, “…unlike pyramid or Ponzi schemes, MLMs have a real product to sell. More importantly, MLMs actually sell their product to members of the general public, without requiring these consumers to pay anything extra or join the MLM system.” She continued, “MLMs may pay commissions to a long string of distributors, but these commissions are paid for real retail sales, not for new recruits.”
Okay, so we know what network marketing/MLM is but sometimes it helps every bit as much, if not more, to know what something isn’t.
According to co-authors Zig Ziglar and John P. Hayes, Ph.D. in their book, Network Marketing for Dummies, network marketing/MLM, when it’s done right, is NOT the following:
- Illegal, fraudulent or even unethical in any way
- A get-rich-quick scheme, where you only make money off the payments of others who join your organization
- A pyramid scheme (They ARE illegal and unethical!)
- A simple mathematical equation where just a few winners reap all the profits, which does mean that a pyramid scheme is present
- An opportunity for someone else to do YOUR work and build a sales team for you
- Just for salespeople (In fact, many people from all walks of life can succeed in this arena.)
- Expensive to get into (Start-up costs are oftentimes quite low, less than $500 in many cases.)
- A way for companies to unload huge amounts of inventory on you, especially if it’s a product that nobody really wants or even uses
- License to sell anything at inflated and unreasonable prices
- For anyone who is unwilling or unable to work hard
- Suitable for anyone who can’t or won’t follow a prescribed and proven path to success and profitability.
Although network marketing/MLM may not be the right choice for just anyone, it is a potentially profitable and rewarding way for many people to make a good living. It allows you to be your own boss and enjoy a degree of flexibility and control over your career that you wouldn’t necessarily have if you were doing the nine-to-five grind.
As a business opportunity shopper, you owe it to yourself to explore every option. Don’t be afraid to explore the myriad of network marketing/MLM opportunities out there. Just make sure you don’t jump too soon. Do your due diligence when it comes to a company’s reputation, its years in business and what the Better Business Bureau and the FTC have to say about it. Take some time to tick through all the standard rules of thumb when it comes to telling a legitimate opportunity from a bad one, and you’ll be just fine. In fact, you may very well discover that overcoming your initial hesitation about network marketing/MLM, becoming informed and diving in leads you to the career you’ve always dreamed of.