“It’s a pyramid, it’s a sect, it’s illegal”
Does this sound familiar?
Why Ever Not?
Why The Suspicious Look When It Comes To Network Marketing?
I believe part of the reason why MLM is regarded suspiciously is simply that there’s a lot of confusion about what MLM really is.
Many people seem to think that MLM and pyramid schemes are one and the same thing. But, they’re not. One can easily take one for the other, but it is actually very easy to know if you are dealing with a pyramid scheme or a legal firm that relies on network marketing.
Another reason I think some people don’t trust the MLM world is that they go in with unrealistic goals. They feel that they can get rich overnight. I don’t blame some people for thinking that either. If you look around you see time and time again ads stating that you can make instant riches and quit your job today! If an opportunity seems to good to be true, it probably is. That is why it is very important to do your homework and to check if an MLM opportunity is a scam or not.
But let me get back to the subject : MLM is a perfectly legitimate business model. Not perfect, but then what is? =)
Now, some fraudulent companies may hide behind a so-called MLM model to actually hide a pyramid scheme. BUT don’t allow the actions of a few (or even many) to rob you of the chance to participate in something that may ultimately lead you to legitimate home business success. With this in mind, I recommend before you join any MLM company to :
- Do some research on the internet and on reliable websites, not just forums where you will read one thing and its opposite
- Ask around (family, friends, colleagues…)
- Take the time to gather information, don’t rush
- Make sure a real product is being offered. If there is no product and you pay money to enter the MLM business then be cautious
- Watch out for “Get Rich Quick” Ads. If you really want to build a business that will hold in to the long term and eventually make you rich, mark my words, you will not get rich overnight!
- Please check out the company’s record. Do they have a clean record? Has there been many complaints about them? It’s better to be safe than sorry when it comes to starting your own business!
- Make sure the company that you’re interested in has been in business for a least a few years and has established a good reputation. It doesn’t mean that a startup is automatically going to be a scam, but just do some research, write the founders of the company, gather information…. =)
- Choose an MLM company that produces products that you would use yourself. If you have used the product and enjoy it, it will be that much easier for you to sell! I speak from experience and can take the example of the ItWorks products that I sell. I would never be able to talk about the products if I didn’t love them and used them.
- Choose an MLM company that uses the internet as a marketing tool. Not only will you have a huge customer base to sell to, but the MLM company should provide you with a site and various online tools to use as well. If you are given a site, it may be in your best interest to build your own site because then it will be unique and will separate you from the other sites. If you don’t know how to build a website you can check out an article that I wrote on the subject here!
Why Network Marketing Is Not The Same As A Pyramid Scheme
A multi-level marketing program is NOT a pyramid scheme. Of course, the sponsor/enroller receives a proportion of the sales generated by their downline, but a legitimate MLM program will involve the sale of products and services with a value proportionate to the amount invested.
A pyramid scheme, on the other hand, is merely the transfer of money from one level of the pyramid to a higher level. There is nothing of value the person making the payment gets in return for their money other than the right to collect money from those lower down the pyramid. Pyramid schemes are illegal for this reason. They are nothing more than an unproductive transfer of wealth from the lower levels of the pyramid to the higher levels. Notoriously, only the highest levels of the pyramid receive significant amounts of money. The pyramid inevitably collapses in on itself before the lower levels can reap their share of the harvest.
A good way to know you are not in a pyramid scheme is when you are able to earn more money than the person above you (the person who enrolled you). This is my case with ItWorks. I make more money than my dear friend and enroller lol, because I sell more products and have a bigger network. It’s as simple as that.
What Is Network Marketing Then?
Here’s how wikipedia defines Network Marketing (also known as MLM, multi level marketing) :
“Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation.”
And the below definition is from the entrepreneur.com’ :
” Network marketing is a type of business opportunity that is very popular with people looking for part-time, flexible businesses. Some of the best-known companies in America, including Avon, Mary Kay Cosmetics, Tupperware and ItWorks, fall under the network marketing umbrella.”
To sum it up, network marketing or MLM simply involves direct selling of products and services via the personal recommendation and endorsement of independent representatives. In return for your personal recommendation and endorsement, as an independent representative, you receive a commission on the sale. It’s different from a normal business in that it doesn’t have a store-front and you generally won’t see the product or service being advertised in the mainstream media.
I say generally because I, for instance, have some ItWorks stock at home to sale from hand to hand ! =)
If you want to see what a legitimate MLM website looks like you can take a look at my ItWorks website !
Why Does Network Marketing Appeal To People?
- Most people (including myself) see MLM as an attractive opportunity to make ends meet. In France we have a saying for that, it goes : “to add butter to your spinach” lol. (put butter on your bread?) Anyway… MLM has become an alluring option with the increasing of layoffs or for the people who are trying to start their home-based business.
- Some people turn out to love the products of a company so much that they want to share it with others (Like I said above, it is my case. I find it much easier to “sell” a product that I am fond of. I wouldn’t “sell” them if I didn’t love them. I’m really not a salesperson. What I can do, on the other hand, is talk about something I know and love! And the subject will naturally pop in a conversation : if someone is talking about their skin problem or how they would love to get rid of their stretch marks or anything skincare/weight loss-related, I will just genuinely show my enthusiasm about the products. Most of the time, people want to feel as excited as me and become customers as a result.)
- Many people (again, me included…) imagine that MLM is a quick and low-cost way to get rich. It’s not exactly true, but it depends on people and on many factors : what goals you have set, how much time you are willing to put into your business, your connections, your determination…
In other words – and I speak from experience – we tend to be lazy and to hope that we’ll get anything we want effortlessly. It’s human nature, I suppose. Not all of us are like that of course, but I’m pretty sure that if we were all told “hey! you can become a millionaire without doing anything” we’d all say “ok!!!” =)
I’m no different, honestly. The first reason why I started MLM was because I was naive enough to think that getting rich would be easy and quick! I was a bit desperate, I needed money and I hated having a boss so I got drawn to MLM, naturally.
Do not misunderstand me, I am not saying that MLM can’t help you get rich, but it won’t be easy or quick. =). Success takes time and above all, success is the result of many small actions and the succession of both failures and achievements.
Now, I will give my personal “pros and cons” on MLM, based on my 6 years experience with it and that of my close friends who have also had experience (successes and failures) with MLM.
What Are The Cons Of Network Marketing?
Alienation of your “warm market” : you can potentially alienate your “warm market’. MLM programs generally have you start by marketing to your so-called “warm market”. Your warm market is basically everyone you know : friends, family, colleagues, advisers, teachers, doctor, lawyer, neighbors, acquaintances …
Your sponsor will probably ask you to make a list of 200 or so of these people and have you contact each and every one of them about your MLM program.
Reactions to such an approach will vary. Close friends and family will probably humor you even if they have no intention whatsoever of joining your program. Others who don’t know you well may be dismissive or even downright hostile to your approaches. Some MLMers have reported people crossing the street to avoid them when they see them coming! So you need a thick hide in this business. But the best way to avoid this is to pick a company that will make you feel proud. Products that you will love and not feel ashamed to sell. If your company has a good reputation, then so will you. Mostly =) Hey nothing’s perfect.
I personally think that you simply don’t have to deal with your “warm market” at all. You can establish and run your business exclusively online instead. As a matter of fact, my warm marker has been more of a disaster or a least of very low interest compared to my online market.
- Competition : you may be competing with thousands of other representatives in your local area. This may be a problem. Look for an MLM company that has few sellers in your local area. If you have found a great MLM company to join and it does have a lot of sellers in your area, don’t despair. Be creative, be different and stand out from the crowd and that way you will still succeed no matter what! It’s all about determination and commitment.
- Easier said than done ! Running an online MLM business is not easy. You will work just as hard running your business online as you would offline. Perhaps even harder because you will realize that hours don’t matter. And sometimes you need to work 12 hours a day to get what people would call a really small success. Because an MLM business offers most of the things you need to succeed such as : a website, products, promotional material, some people may expect unrealistic things. Because it seems easy, you may think that all you have to do is sit back and an avalanche of money will come pouring in. I don’t think so. Not for me at least. I tried that but then I realized I had to go out there and WORK hard
- Financial commitment : it is most likely that you will have to commit to purchasing a certain volume of product each month to remain eligible to participate in the program. Be sure you understand your monthly financial commitment going in. And, while you’re at it, make sure that what you’ll be buying is a quality product that you have a genuine interest in purchasing. If you’re just going to stash it away in a cupboard somewhere, look around until you find a product that you actually want and will use.
- It takes effort, energy and motivation (but again so does building any business !) : not only must you actively recruit your own direct downline, you must stay on top of them to ensure that they are actively recruiting and supporting THEIR downline. Remember, this is the way you make money in this industry. It’s all about leveraged income. It’s all in the referrals.
This is a business that will require real effort on your part. And sustained effort at that. But what in life that’s worthwhile doesn’t, right?
Also, plan to have to motivate yourself. Ideally, you should be being “worked” by your upline to keep you on track but motivating yourself is YOUR job. Don’t expect someone to do it for you. They won’t. There are too many other motivated people out there for your sponsor to be working with.
- Rejection : if you can’t handle rejection then you may be in for a tough time. Not everyone who shows interest in your MLM products will act. In fact, most won’t. If you can handle rejection and carry on with promoting your business you will be fine.
What Are The Pros Of Network Marketing?
- Flexible hours : You can work the hours you choose. If you have a full-time job, you can work your MLM business in the evenings and on weekends. If you’re a stay-at-home mom, you can run it when the kids are at school. You can still take vacations and if your child gets sick you can take a day off. Because of the leveraged and residual income nature of MLM, good money can be made running an MLM business properly only part-time.
- Leverage income : “Leveraged” simply means you receive a continuing benefit from a single initial effort. Because you’re earning commissions on sales generated by your downline as well as your own sales, you will continue to make an income as long as your downline works hard. Your job as sponsor is to develop your self-motivated downline so this actually happens. Note, it is NOT your job to actually motivate your downline – that’s their job. You want to work with self-motivated people, not those you have to drag across the finish line (or the starting line for that matter!).
- MLM is a very egalitarian industry to get into. It doesn’t have any pretentious entry requirements, you don’t need a college degree, nor do you need any particular experience.
- Online marketing and promotional tools will be available for you to use. No need to reinvent the wheel to make this MLM business work for you! Pre existing business and marketing plans are already at your hands: You don’t need to come up with your own business or marketing plans. These are taken care of by the company.
- Personal growth and development : the nature of the form of selling you will be doing in this business puts you in contact with many and varied individuals. Over time, your leadership and developmental skills will become ever more finely honed. You will derive a great deal of personal satisfaction from helping others make a success of their businesses.
- Start-up costs are minimal. You will likely need to pay for some form of advertising, but how much you spend is entirely up to you. And in most jurisdictions, if you register as a business you can write off your business expenses come tax time.
Financially, MLM generally has relatively low set-up costs compared to other small business/franchise start-ups. Actual costs will vary by program. Some may require a substantial monthly investment in the products or services that form the substance of the business so be sure you understand exactly what will be required of you before you join.
Fortunately, there are also plenty of programs out there that only require a modest financial investment to get started. If you are new to MLM, start with one of these.
- You will likely be placed on a team and will receive valuable training and support from them as you build your business. You will learn from their mistakes and become a success. Similarly, you don’t need to reinvent the wheel when it comes to systems for recruiting, developing and training your downline. These are pre-established by the MLM company you are representing. This means you can hit the ground running and start making money quickly.
- You do not have to harass friends and family about your product or business opportunity. Instead, you will have a huge targeted audience on the internet already interested in starting their own home business. Running your business on the internet will allow you to tap into an ever-expanding market of people who are searching for a work at home business.
- You will learn the skills needed to operate a business : selling, managing time and keeping yourself motivated in the face of rejection. In this sense, network marketing can be a training experience with the help of your upline.
- You can be at home with your family ! You don’t need a corporate office for this sort of business.
- You have a product that is already established. In other words, you don’t have to pay to develop and manufacture your own product. MLM company manufactures and drop-ships the products : you are selling an already manufactured product and the company will drop-ship the product to your customer. This means you don’t need to worry about anything but making the sale. I personnally like to build a relationship of trust with my customers. By that I mean sending them a welcome email and updates on their anniversary, etc
How Do You Know Network Marketing Is For You?
It should be obvious from what I’ve said above that in order to be successful in MLM, you have to be someone who’s a self-starter and is able to lead others. If, on the other hand, you’re someone who needs someone else to poke you into action when it comes to work or business, MLM is probably not for you.
You need to be an active recruiter and, once you have a downline, you need to be in touch with them constantly to provide support, assistance, guidance … leadership, in other words.
Of course, if you’re going to take on this role, you will need to be comfortable dealing with people. This doesn’t mean face to face, of course. If you’re running your business exclusively on the Internet, you will probably never meet most of those you work with on a day to day basis. But you must be able to communicate effectively.
Common sense suggests that the more outgoing and sociable you are, the more you are going to enjoy this sort of role and the better you will be at it as a result. If you’re more of a recluse than a social butterfly, it’s unlikely you’re going to be able to walk the talk and get out there and do what has to be done to keep your downline on track and productive.
Finally, MLM is a very personal way of selling. You must exercise your own powers of persuasion and influence to encourage others to come on board with you. It is imperative, therefore, that you are 100% behind the program you are promoting. Do NOT lend your name or endorsement to something that you are not genuinely committed to. Although you may fool your downline for a while, you won’t be able to keep it up for long enough to enjoy long-term financial success with your program.
But even more importantly, don’t compromise your own self- respect by promoting something you just don’t believe in. Not only will you be lying to your downline and prospective downline, you will also be lying to yourself. In the long-run, no amount of money can buy back your self-respect once you’ve sold it down the river.
If you’d like to meet like-minded people and get instant access to loads of information on how to build a successful business online, you can meet me on Wealthy Affiliate, a free online community for entrepreneurs! I’m BelieveIt on there and I’d be happy to show you around this amazing platform!
The good thing about MLM or network marketing is that it really does work.
If you have real goals and a strategy, then MLM can truly be incredible. There’s a proven business model already in place and all you have to do is follow it, leaving out the guess work and risk taking that other business might encounter.
Having an MLM business on the side is also a great source of income that you are in control of.
Plus, an MLM is considered to be a small business, hence giving you many tax benefits.
My favorite pro about MLM network marketing companies is that you meet the most motivated and passionate people. It’s always a good thing when successful, rich mentors, who have gone through the entire process to get where they are, give amazing advice to help you reach your own goals.
Also a pro is that you are rewarded by what you put in; if you’re willing to work hard, you have the ability to reach your goals of financial success in just a few years. Being your own boss is another big plus because you control how much time and effort you want to put in, meaning you control how much you make.
I hope this article has helped you decide whether or not you are made to do MLM or even helped you made up your mind on a particular mlm company.
If you have a question or had any experience with MLM before (good or bad= ) ) please feel free to leave a comment below ; I will be more than happy to connect !