Multilevel Marketing (MLM) – is it a Worthwhile Home Based Business Opportunity?

Multilevel marketing is no small thing… by the early nineties, more than 100 billion dollars worth of products and services had been moved because of it. Multilevel marketing (MLM), also known as “network” or “referral” marketing, offers you a commission for the products you sell and also for the sales of those you recruit or refer to the program. Multilevel marketing isn’t for everyone. If you’re not a natural networker, or even a little on the shy side, it probably isn’t the best choice for you.

Here’s how it works: After making an initial investment, you receive the marketing materials and/or products necessary to sell start selling. In many cases, the products are nutritional or healthcare related including vitamins and weight loss supplements. Every time you sell something you get a commission, as does the person who recruited or referred you. In addition to selling the product, you need to refer or recruit others to the program, and then you’ll earn money from what is sold by people you’ve recruited into the program. In fact, multilevel marketing probably puts more emphasis on the recruiting part than the selling part. The more people you bring into the program, the more money you’re likely to earn through their commissions.

If you’ve done any looking into home based businesses and even if you haven’t, you’ve probably read articles and seen news programs warning you to stay away from multilevel marketing programs. While it’s true that many of the multilevel marketing opportunities aren’t really what the promise to be, not every multilevel marketing opportunity is a scam. What the news programs and articles warn you against is not really multilevel marketing, but a pyramid scheme. Pyramid schemes focus only on recruiting distributors, not selling a substantive product to make money.

The new participants pay a fee to participate and hope to profit by recruiting others into the system. No products ever really get sold as they’re just a front for the pyramid scheme, so as to appear as a legitimate MLM business. Most areas have laws banning pyramid schemes that pay commissions for recruitment, not sales of products. However, most MLM companies still typically structure their payment plan so that recruiting is more profitable than selling. With the right company, multilevel marketing is a legitimate, moral way to make money.

The thing about MLM is that is almost always requires you to make an initial investment, and often even a more substantial investment for additional training or marketing materials. The most successful companies usually have the most advanced educational programs which cover everything from marketing and sales, to leadership and money management.

The failure rate with multilevel marketing is very high. The main reason being that most people give up after a month or two because they haven’t made the fortune they thought they would. It usually takes longer than that for the sales and commissions to start to roll in at a significant rate. When joining an MLM program, you need to first make the decision as to whether it is worth it to work hard for possibly a long period of time without much of anything to show for it.

Some MLM companies have opportunity meetings or training seminars. The hidden agenda is usually to get you hyped up and purchase an advanced training package, or additional materials. Don’t ever sign a contract at one of these high pressure events. Insist on taking your time to think over any decisions. Talk it over with your spouse or a knowledgeable friend or peer first to be sure you’re making the right decision.

One last consideration before you decide to get into MLM is that many people see it as a scam. Because of this, you might have trouble recruiting others to join you in the program, and thus making a financially rewarding go of it. If you are interested in investing in a multilevel marketing program, you’d be well advised to research the company and product thoroughly. Do some research on the net first and check with the Better Business Bureau. There are a lot of scams out there, and if you’re not careful, you could become part of one of them.

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