Multilevel Marketing (MLM)

Multilevel Marketing (MLM)
By Judith Kautz

Multi-Level Marketing (MLM) opportunities seem to be everywhere you turn these days, not only online, but in every part of your life including school and church, where fervid entrepreneurs lobby even their bible study groups to buy their product or service. Even police departments have been invaded by MLM schemes. The San Diego police department actually had an illegal pyramid scheme discovered within one of its departments!

Equally prevalent are the misconceptions of what this business is and whether it really is a legitimate business or a scam. Trying to find "truth" in this morass of information is a challenge. The appeal of a business with minimal investment and a support system in place cannot be denied. But is this for real? Let's take a look.

One of the most confusing aspects of assessing the viability of many of the business "opportunities" being hyped is the variety of terms used to describe them. MLM is also frequently called network marketing, consumer direct marketing, or seller assisted marketing and other terms continue to surface.

- Multi-Level Marketing
MLM is essentially any business where payouts occur at two or more levels. For instance, if you make a sale, both you and the person who recruited you will get a portion of the proceeds. This is the most commonly used term partly because its definition fits within the legal restrictions for this type of business.

- Network Marketing
Network Marketing means that a distributor network is needed to build the business. Usually such businesses are also MLM in nature in that payouts also occur at more than one level. The term Network Marketing is sometimes also incorrectly used to indicate that the business uses a network of product suppliers in order to offer a broader selection of products. Businesses that describe themselves this way are usually trying to differentiate themselves, suggesting that their program is superior to other programs.

- Consumer Direct Marketing
Consumer Direct Marketing is a deceptive term that labels the distribution chain as consumers rather than distributors. In such businesses the distributor must also buy the product for their personal use.

- Seller Assisted Marketing
Seller Assisted Marketing Plans is a term used by California law to describe a variety of business forms which include MLM. A minimum $500 investment must be involved to qualify as a Seller Assisted Marketing Plan.

Here is some information to help you decide if this is a good path for you.

The Legality of Multilevel Marketing

The Truth Behind the Claims

How to Find a Good Multilevel Marketing Business

Questions to Ask Before Investing

Industry Watchdogs

While no one really makes the millions promised by so many of the scams, many people find a very satisfying career in some of the multi-level marketing ventures. With the right company, you may find like-minded colleagues who are pursuing similar goals. In some ways, it can be the best of all worlds -- no boss, but a good social network and a job where hard work pays off. However, don't leap without looking carefully. There are also deep shoals that can draw you in over your head rapidly. If you tiptoe into the water carefully, checking that you have firm footing all the way, you will find yourself swimming happily into entrepreneurship.

© 2008 Small Business Notes. All rights reserved.
Comments: 0