Some individuals want to start their own business, but lack the financial means to do so.  As a result, franchises are overlooked, as well as businesses from scratch.  Besides insufficient funds, individuals also stress over starting something on their own, for fear of failing.  Ultimately, they look into an MLM opportunity.

Multi-level marketing opportunities, also known as MLM opportunities, provide ways for individuals to join a team of people, who distribute products and services to consumers.  According to MLM Legal’s Jeffrey Babener, “This is a 90 billion dollar industry” and makes up 1% of the retail population.  The idea behind MLM opportunities is that an initial distributor sells products and services to consumers.  Then, he creates a team of distributors (his “downline”) by finding other individuals to sell the same products and services.  He receives a small percentage of the sales from the distributers he signs up and a bonus for setting up “x” amount of distributors.  Each multi-level marketing opportunity requires that the distributors purchase the products or services each month as well.  Typically, there is no limit to how many distributors can be part of a “downline.”

Many individuals who join MLMs enjoy the low cost, initial investment and the fact that they don’t have to brainstorm ideas for products or services.  Much like buying a franchise, MLMs already have a business plan.  Furthermore, MLM distributors like having the team aspect, where they can turn to for support and answers.  These opportunities often supplement household incomes and some individuals do this full-time.

Some drawbacks to MLMs are that they often pattern pyramid schemes.  These types of companies pay their “upline,” while the “downline” receives nothing.  Once these “downlines” bottom out, the pyramid collapses.

The biggest differences between multi-level marketing opportunities and pyramids is that pyramids often require large set-up fees to become distributors of the business and promote sign-ups with large sums of money in bonuses.  The focus is primarily on signing up as many distributors as possible; on the flip side, MLMs focus on selling the products and services.  Because distributors must purchase large amounts of inventory to sell to customers, MLMs often offer a reasonable payback amount, if some things go unsold.  Pyramids typically do not, because they are not interested in selling the products.

When getting into an MLM, it is imperative that a consumer does his research.  Babener says, “All MLMs are going to have some sort of pyramid structure and walk a thin line as a result.”  Some wise questions might be:  What are the company’s platforms and goals?  Is more emphasis on recruiting distributors or distributing products through recruits?  Are the products and services useful?  Is there a market for them?  Do consumers really want to purchase them?  How long has the company existed?  Have is it had any legal issues?  Is a large investment or inventory charge required?  Does the company offer good buyback rates for unsold inventory?  How long and how hard will I have to work before receiving a paycheck?  Is the pay structure going to benefit me as a distributor or am I simply the “downline,” intended to help the top-level distributors?  Each of these questions can aid a consumer in his decision to join an MLM and in figuring out the legitimacy of the opportunity.

Not all MLMs scam consumers.  In fact, many individuals support themselves through employment of multi-level marketing opportunities.  ACN, Melaleuca, Pampered Chef, Usborne Books, and many more offer viable, honest products and services.  Do some research and decide if an MLM opportunity is right for you.

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