Are Multi Level Marketing “MLM” business opportunities a pyramid scheme or a legitimate way to earn stratospheric income. Everyone pursuing a home based business on the internet or through classified ads has seen the outrageous claims of instant riches with little or no effort.
Not too long ago MLM was a legitimate business which provided a way for companies to get their products to customers in small towns and rural areas which had no access to their goods. The MLM structure gave flexibility to distributors with little or no paid advertising. Companies such as Amway and Herbalife utilized recruits to sell to friends, family members, coworkers and anyone else they could find to buy the product. Inherent with this system is the need to gather a large group of recruits or a “downline” to purchase the goods and continue to this process. This is where the pyramid aspect of MLM originated.
Who Profits?
As in most bottom heavy organizations only the top 2-3% are going to profit. The drop out rate is astronomical. Over 90% of recruits quit within the first 30 days. For MLM programs or recruiters to be successful in today’s market they must constantly recruit. Recruits will buy the product with hopes of realizing incredible gains only to end up filling up their garage with product they cannot move.
One weapon that has increased the ability to add recruits is the power of the Internet. After recruits have exhausted or alienated their circle of close friends and acquaintances, they need to find more bodies. All MLM programs provide recruits the ability to buy leads. However, most people dislike calling prospects and soon lose more money on this process. The next frontier for distributors is to mine for prospects by advertising on the Internet. While this is a viable alternative to offline advertising, there is a great potential to lose more and more money without the proper training.
What is the answer?
As in any venture one must do their due diligence and thoroughly research the MLM opportunity. There are many legitimate MLM companies that have built great publically traded companies that provide employment opportunities and income for many people. However, ask yourself, why should I have to purchase then resell this Product? If you are advertising and selling the product shouldn’t a legitimate company facilitate this for you? Yes they should and it’s called “Direct Sales”. In a legitimate Multi Level Marketing organization, commissions are earned on sales of services or products not from recruiting associates.
In the end it all comes down to finding the right opportunity. Fraudulent MLM companies will require exorbitant start up fees and require the recruit to buy expensive amounts of product. Seek transparency and filter out the losers. Do your homework, find your comfort level for losses in the beginning and be prepared for the long haul. Anything that promises instant riches and very little work is looking to profit from a weak and unknowledgeable prospect.
Christopher Benoit
http://www.OnlineHomeBusinessSite.com
My name is Christopher Benoit and I am involved in an Online Home Based Business. I have over 25 years of experience in Finance and the Hospitality industry. My goal is to enlighten Investors and Entrepreneurs to the possibilities and power of working from Home and on the Internet.
To change your financial future and learn how to start your own Home Based Business, please visit my Blog @ http://chrisgbenoit.wordpress.com to obtain the knowledge and tools to prosper in the new Economy.