I am so tired of hearing this about MLM’s. There are over 2,000 active MLM’s and many over 20 years old. A properly run MLM is not only a sound business model, but the educational structures they possess are often the best there is outside of paid education. The people who are in MLM’s are self-employed and are passionate about the product they use and sell to support their family.
What is an MLM?
MLM means multi-level marketing, and it’s often called network marketing. Because it focuses on your
network of family, and friends. It’s simply a business model where people can sign up to sell or distribute a product. If other people are interested in selling the product too, they can contact the distributor who will “sponsor” them into the opportunity. As the new seller sells a product, the distributor gets a small percentage. It’s no different than buying a product in large quantities and selling it at retail. Even retail stores buy the product from their distribution centers. Using technology the companies now can decentralize the selling process and share some of the profit. It’s like outsourcing the distribution process.
What is a Pyramid Scheme?
Many people who talk about pyramid schemes have no idea what they even are. A pyramid scheme is a business designed for selling other people into the business and giving the money the people above them. There is no product, just a simple fact that as you convince others to get into the pyramid, you make money. It’s a con job at best, and I can’t believe that people ever thought this idea was ok. Simply if the company tells you that through duplication we can bring more people into the company to sell more, and the company doesn’t focus on selling the product, odds have it it’s a Pyramid. Of course, the company will deny that it is a Pyramid scheme because they don’t want people to report them to authorities.
3 Signs that the company is a pyramid
One> You can often tell a pyramid scheme because they encourage you to buy enough product to become a “supervisor.”, And go on automatic order, but don’t encourage you to sell the products, only by them.
2> The meeting talks about how much money you can make, but you only ever see the distributors buying the product. They show you huge checks by the top producers in their groups with secretive training meetings. They present a get rich quick presentation.
3> The sales training is just hyping how great the product is, but it doesn’t give lessons how to sell the products. They keep telling people how amazing the products are to reinforce peoples decisions and overcome consumer dissonance.
The Pros and Cons
The advantages to MLM are many. It doesn’t cost allot to buy in and become a distributor. This is called a low barrier to entry. Most legitimate companies don’t require any inventory as you can 
drop ship the product. The qualities of the products sold tend to be much higher. It’s a legitimate product that you sell not just consume. There is usually extensive training and support throughout the career of the distribution relationship. In the current socioeconomic climate, there are many advantages to having a product that you use every day delivered to your house automatically. Many people will gladly pay for the convenience of the product being shipped to them. Surprisingly they are also more attached to the quality of the product then the price.
Now on the dark side… LOL… Some people get caught up in the hype. It’s quick and easy side money. It doesn’t take long just ask your friends and relatives. With this simple technique after just a couple of MLM’s you have no friends and your relatives aren’t answering your calls. There is no get rich quick. You must pace yourself and be prepared to work for years to make money. If you have never run your own business, you must learn the skills and discipline of going weeks and sometimes months with no income, and other times to get large quantities of money seemingly thrown at you without any clear understanding how it happened. Large organizations have fallen prey to this activity, and the government has fined and restructured these companies to adjust for this.
Product-focused business model
Be sure that if you decide to join an MLM, their goal is to sell product not just sign people under you, or to convince you to buy a bunch of product up front. Before you buy any quantities of products, you must be sure you have some idea how to sell the product. After all, the person who signed you up already knows how to sell the product that’s why you are buying and using it yourself. I recommend trying the product for at least a few months to make sure it’s something you would use on a regular basis. Then if you decide to resell the product, you can start small and work your way up.
The biggest confusion is that everyone will want what you have to sell. Ironically often not everyone is ready to buy every product all of the time. Moreover, overweight people may not be ready to buy a diet product right at this point. You must overcome biases and personal beliefs in brands. For example, if you love to cook, you may not like to buy a green smoothie product. If you don’t like grape juice, you may not wish to buy a product based on grape juice. Moreover, if you don’t like vanilla, chocolate, and strawberry every day, you may wish to explore a more practical opportunity.
MLM’s often get a bad reputation as a scam or a pyramid scheme, but actually, they are sound and profitable business models. If one just takes the time to understand the purpose is to create a decentralized distribution system for creating sales to reduce marketing cost and increase coverage while selling a product that is more expensive than that which is normally found in a retail establishment. I believe the real confusion is that people now understand that stores make 25-50% and more “profit” after they pay their expenses of rent, electricity, and manpower and the thought of it going to the person that is selling the product are somehow seen as immoral.