MLM: The Good, The Bad and The Ugly.

Multi-level Marketing

Chain letters and pyramid schemes come disguised as Network Marketing or MLM. Because there are so many of them many people believe that all Network Marketing and MLMs are scams and therefore illegal.

This belief has, over the past 10 years or more, hindered the development and introduction of legitimate MLMs and Network Marketing plans and systems. Even large companies with existing services and products have had difficulty in introducing Network Marketing plans and systems into their products and services distribution and sales.

The false belief "That all network marketing [MLM] is an illegal scam." has hurt the industry and slowed the introduction of legitimate plans. MLM's are NOT chain letters or pyramid schemes.
Multilevel Marketing (Network Marketing) is NOT illegal, repeat NOT illegal. Network Marketing is taught in most of the major Colleges and Universities along with Sales and Marketing courses. It is a legitimate form of Marketing and Selling products and services.

Why do many people thing MLM and Network Marketing are illegal?

First, there are many schemes that pose as MLM (chain letters and pyramids) to cover their real structure and intent. They want your money - either a little bit or a substantial amount, but the bottom line is - they want money. The small cash approach gets lots of people willing to risk a few dollars and the more involved schemes contact few people willing to risk larger amounts - the end result is the same - they get your money.

MLM and Network Marketing get a bad or poor image from the people who get into a legitimate system looking for easy money and they don't work hard enough to be successful. They then bad-mouth the company, the system and the people who recruited them. The system is NOT illegal, that's just bad press. Multi-level Marketing schemes are NOT illegal.
Multi-level Marketing, MLM and Network Marketing are the most popular names for a very effective sales and marketing system. The people involved know and understand it as "People helping people to succeed." They also know that it is "Small business operating as Big business" and that if you are willing to work hard and follow the system you will be very successful in a short period of time. It's not a "Quick Buck" scam where you'll get rich in a couple of months, but you will make money right away using the system.

The people who recruited you should walk you through the actions necessary to get the business started. You should have a choice of selling products or services, or recruiting other people to do the same, or you can do both. Contacting and working with other people is the "Networking" aspect of MLM.

The world economy, including North America, was built on small business. Large corporations were and still appear to be a good idea, but they are killing small business and restricting the entrepreneur. Network Marketing is small business and is bringing back the good features of a robust economy. People have work, capital is spread around, people have more free time, society is more flexible, financial decisions are people based - not dollar based and the entrepreneurial spirit is alive and growing. The multi-level marketing concept is a good one.

However, chain letters, pyramid schemes and various illegal methods of making money come disquised as MLM or Network Marketing. These MLMs, the BAD and the UGLY, are easy to address although sometimes hard to identify. You get them daily in your email and they're everywhere on the Web. They come in many forms including chain letters and pyramids schemes. They range from a few dollars in cost to hundreds of dollars. Some are very simple and innocent in appearance while others are complex and appear to be serious businesses.

You will have investigate the product or service. If it has been around for a few years or more and you can make a living selling it by itself (without the Network Marketing system), then you probably have a winner.

You will have to distinguish between getting paid to recruit (bad idea) or getting paid to train or mentor (good idea). Some network marketing systems pay you hundreds, even thousands of dollars to train and mentor your people. This is not easy money as the people, your upline and the people you've recruited, are expecting value for their dollar and you'd better deliver according to the payment. In fact, the top people usually give considerably more value with their training and mentoring than the payment they receive.

Your upline and downline will change. Many people are in the system to make money to clear debt or to get enough capital to persue their dream and then they are out. Don't panic or think your in the wrong business - this is a feature of network marketing and many people will help you build your business before they go off and do their thing.

Inventory! Yes, but be careful. Not all companies can drop ship your products and others will have a mix of "drop shipping" and direct delivery and you may have to deliver some of the products you've sold. The questionable inventory is where you have to maintain thousands of dollars of inventory even when you're not moving that quantity in your organization. Keeping product on hand is good, having boxes of stuff that's not moving is bad. This is a judgement call on your part and you should be asking questions of people in the business to determine what they are doing. Like the "Business Sense" questions ask the following:
- Is there a real product or service?
- Can you sell the product or service and make money?
- Do you have to recruit people to make money?
- Does the scheme pay you to recruit people?
- Is there a changing list of people involved?
- Do you have to purchase and maintain inventory?
Good MLM has a legitimate service or product that has been around for more than a few years. You should be able to make a living selling it as an idividual product line or service(s).

Good Network Marketing does not pay you to recruit people and any recruiting should be an option (it's your choice). Your income is based on your own sales and an override on your downline. This is to encourage you to train and help your people, because the better they do the better you do.

Inventory is necessary where you are selling a product line, but it should be on an as required basis and not a fixed amount each month to maintain a position in the marketing system. Inventory is for customer service - a quick turn around on an order will keep customers happy.

Some systems require you to give your people formal training that is quite detailed. These systems have a qualification process for their trainers and once you're qualified you will receive compensation for your efforts. This is usually the only compensation that's not based on sales.

It takes time to develop a business and Network Marketing is not any different. You have to work to be successful and in the beginning you will have to put in that extra effort. You're in business and as it grows the work becomes easier and you'll start having fun. Good MLM or Network Marketing
- There is a legitimate service or product.
- The product or service has been around for years.
- You can make a living selling the product or service.
- You DON'T get paid for recruiting people.
- Recruiting people is an option... It's your choice.
- You get an override on their sales, but only on sales.
- You DON'T have to purchase and maintain an inventory.
- There is service or product training.
- You may be paid for training if you are or become qualified.
- You have to work. The money doesn't happen overnight.
- It will sound and feel like a business.

The questions and comments from "Business Sense" apply to valid MLM or Network Marketing businesses. The answers should be positive.

NOTE: Some companies have introduced MLM or Network Marketing into their business in order to increase growth and expansion of a valid and very sound product or service. These are the systems you want to find. They are legitimate and offer you the opportunity to own your own small business which in most cases can be home-based.

Review our Dream Business Questionaire

Terry Buchanan

| | d | | | d | | | d |

Cinch by the InchJim Rohn Weekend 20041 Year Success Plan