A Few Tips About MLM

by Rahimah Sultan

There is an ongoing debate as to whether businesses and programs, that promise you a chance to leave your day job, are legitimate business opportunities or scams/pyramid schemes. Multi-level marketing (MLM) companies offer you a chance to be your own boss, make lots of money and new friends in the process.

Here are some major indicators of pyramid schemes:

* Programs that focus mainly on recruitment of new people
 

* 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
 

* Plans that ask you to sign a contract or pay money to participate in a multi-level marketing program, or any business opportunity, without letting you take time to read all of the paperwork
 

* Products or services are just vehicles for recruiting, and may be gimmicks and/or overpriced. Even high quality products may serve as a cover for recruitment activities.

Compensation Plans

A MLM company will have one of several Marketing Payment Structures. It can be a Matrix Plan, a Binary Plan, a Breakaway Plan or other.

The distinct feature of a Matrix Plan is its limited width. Unlike other MLM compensation plans, a Matrix restricts the number of distributors you can sponsor on your first level, usually to less than five. The most commonly used Matrix MLM plans are 4 x 7, 5 x 7, 3 x 9 and 2×12.

A Binary Plan is a Two-Legged (Left leg, Right Leg) structure where each new distributor or member is placed in either of the left or right subtree. One subtree is called a Power Leg or Profit Leg and the second subtree is a Profit Leg or a weak leg.

Advantages of a binary MLM plan are:

Spillover, unlimited depth, fast expansion, it’s volume driven, and there can be multiple business centers.

The Breakaway Plan, also known as the Stairstep Plan, has different status stages or steps. Once you reach a certain level you are allowed to “Breakaway” from your sponsor and run your company individually.

Advantages of the Stairstep Breakaway MLM Plan are:

The earning potential on more levels, no limit on the number of people who can be recruited into your first generation line, and there is no limitation on the number of recruits that your downline distributors are allowed to recruit.

It’s important to do your due diligence and check out all programs you may be thinking of joining. Discuss it with a spouse, a knowledgeable and experienced friend, an accountant, or lawyer. You can also check out the company with the BBB. If you feel that you are being high-pressured or that you’re not being given enough time to study and evaluate the details, look elsewhere.

Once you have found a legitimate MLM company that you want to be a part of, be prepared to put in the work to make it profitable. If you want success, be disciplined and treat it like a business and be willing to follow advice from others who have made it. Although using multi-level marketing for supplemental income can be a good plan, understand that it will take time to make it your full-time income source.

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