Multilevel Marketing - Benefits & Drawbacks
By Charles Hopkins
Published 04/20/2006 | Home Based Business
If youve ever dreamed of running your own business from home, whether on a full or part-time basis...and are good with people but have very little business knowledge, then Multilevel Marketing (MLM) may be for you. This is especially true if you have a minimal amount of start-up cash.
MLM companies provide a product or service to the consumer via a network of independent distributors, who usually work from their home.
Reputable MLM companies also provide a low start-up cost, all the training you need, advertising in one form or another, and supply you with a product line-up or service to sell. They also allow you to recruit other distributors and make commissions on their total sales.
The United States Federal Trade Commission, however, cautions anyone from joining a MLM company that pays you for each distributor you recruit, as opposed to only paying a commission on the total sales they generate. This is called Pyramiding and is illegal.
The U.S. FTC also encourages you to thoroughly research a MLM company before signing on the dotted line, and not to sign anything under pressure, but instead, take time to consider all the details. You can check out their Multilevel Marketing Caution Web Page at: http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.htm
. On this page, they also list seven checks you should do before making your decision whether to join or not.
Research is always an important component of any business venture and considering a distributorship with a MLM company is no exception.
Searching the Internet under Multilevel Marketing returns a recipe of results. These range from government agencies, general information web sites, encyclopedia type sites to a host of disgruntled, former MLM distributors. People who are pro MLM dont write web sites on the topic because theyre usually too busy building their network.
THE GOOD SIDE
Here are some of the benefits of finding a reputable MLM company:
- They have an established and very marketable product line or service, and strive to improve or add to the existing line-up.
- Recruiting new distributors will be a streamlined process, and the company will not be involved in Pyramiding.
- As a company, they will have a solid track record and good work ethics.
- No experience will be required. A good MLM company will provide one-on-one training, as well as motivational seminars and a full compliment of training materials. After all, in Multilevel marketing, when one succeeds all succeed.
- A reputable MLM company will be Family rated, meaning that crude conduct is not tolerated.
- They will provide an excellent bonus plan with many incentives for those who excel.
- Well-established MLM companies should be able to provide you with resource material to aid you in not only product sales but in recruiting.
- They will have minimal start-up fees.
- A strong support system.
- You will be led by example.
- Healthy team competition.
- There will be a successful business and marketing plan in place that can be successfully duplicated by others, assuming they apply themselves to the plan and are motivated to succeed.
- There exists the possibility of full-time or part-time commitment.
These attributes would definitely belong to an ideal Multilevel Marketing Company, however not all reputable companies excel in all these areas. Some companies will be better in certain areas than others. Do research on the company. Dont just accept the motivational hype used by most MLM companies in order to recruit.
Some MLM distributors are so highly trained that they have a come-back for almost every statement you make or concern you have. This would be considered a high-pressure invitation to join. Always take time away to cool off especially if youre excited by what you heard. Sit on your decision for a while and do research. If the company is good, they will still be there when you wake up tomorrow; and yes, you will get a follow-up phone call.
While the MLM model can be a great tool to achieve what you want in life, it would be remiss not to mention the downside.
- It is easy to get taken by a disreputable MLM company. Do your research.
- If you plan on developing a network a downline it will cost you more money than you realize and take you longer than you think although this is slight compared to the cost and time required to start up a traditional business. You will spend a lot on resource and training materials that you will end up giving away to prospects and to your downline distributors.
- You might spend a lot of money on fuel for your vehicle, meals out, hotel rooms or neck surgery from sleeping in your car.
- Some companies insist on a minimum monthly order to maintain your distributorship.
- Some companies only pay you for recruiting other distributors and not on their total sales volume. Beware, as this is called Pyramiding and is illegal in most countries.
- While you may initially be led to believe that the products sell themselves and that you can make a lot of money with little effort, beware. Most businesses, whether they are traditional, online, or MLM, take a lot of energy and effort to make them successful. Consider a rocket: 60 80% of the fuel is used just to raise it a few inches off the ground.
- Be ready for a lot of rejection. Approximately 80% of the people you contact will turn you down.
- It is easy to get caught up in the dream and overspend because, Winners always find a way. It is also easy to be pressured into willingly spending beyond your means.
- It could very easily become your lifes vocation, with everything centered on it. Some distributors even refuse to attend family weddings etc., because it falls on the same date as their MLM seminar.
- Also, like most businesses, when you begin you will be spending much more than you make.
The final judgment: Most business entrepreneurs face the question, How much am I able and willing to lose if it doesnt work? That is the question you have to ask yourself before you get into Multilevel Marketing.
And of course, what do you want from life and what are you willing to do to get it?
If you enjoy helping others succeed so that you can succeed, are willing to take the risks associated with being in business for yourself, even on a part-time basis, and are willing to put in long days, then Multilevel Marketing may just be the tool you are looking for to achieve your business and life goals.
Heres to success!