MLM Is A Legitimate Business Model

by Rahimah Sultan

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MLM (multi-level marketing) IS a legitimate business model. MLM is a marketing strategy in which the sales force is compensated not only for the 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.


MLMs have been around for over a century, are legitimate, and they work for some people.


In multi-level marketing, companies basically promise a chance to leave your 9-5 job, be your own boss, make lots of money, and make new friends in the process.


There is an ongoing debate as to whether these companies and programs are legitimate business opportunities or not.


The reason for most of the confusion is that multi-level marketing companies follow a concept similar to a pyramid scheme, except for two significant differences:

One being members at any level of a multi-level marketing model can theoretically make income through the company’s products and/or services without signing up any new members.

The second difference is that members of any level in a multi-level marketing plan can earn more than the people who signed them up.


Multi-level marketing companies are legal although structured almost exactly like a pyramid scheme.


A pyramid scheme is a non-sustainable business that involves the exchange of money, usually in the form of a sign-up fee, and usually has no product or service.

Following are some major indicators of a pyramid scheme.

* Programs that focus more on recruitment of new people rather than the sale of a product or service to an end-user consumer.

* Plans that claim you will make money through continued growth of your “downline” rather than through your own sales of products.

* Programs that ask distributors to purchase expensive inventory. There are horror stories of people with a basement or garage full of merchandise that no one will buy.

* Plans that ask you to sign a contract or pay money to participate in a multi-level marketing program, or any business opportunity, without taking your time and reading all of the paperwork.

Talk the opportunity over with a spouse, knowledgeable friend, accountant, or lawyer. If you feel that you are being subjected to high-pressure sales tactics or are not being given enough time to review the details, go elsewhere.

* Products or services are simply vehicles for recruitment. The products may be gimmicks and/or overpriced, but even high-quality products may serve as a cover for recruitment activities.


According to the FTC, a pyramid scheme is defined as a company that specifically pays members for recruiting purposes only.


Check the FTC’s website.


To be super-successful in network marketing, you have to recruit new members.
It doesn’t matter how good your product or service is — the real money is in the flow of new recruits.


There’s the age-old debate that standard companies are set up like a pyramid, with a CEO at the top, some more officials under them, managers at the next lower level, and the team under the managers.


MLMs are completely different from standard companies.


Most companies don’t require their new employees to pay a sign-up fee to join, or have the majority of their product sales coming from their own employees, nor do most companies allow workers to personally recruit other employees into the business. HR does that.


Once you have found a legitimate multi-level marketing company that you want to be a part of, you must put in the work to make it profitable. If you want to succeed be disciplined and treat it like a business and be willing to follow advice from others who have made it.





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