Is Multi-Level Marketing A Good Small Business For You?

Posted on 14. May, 2009 by Dan Mitchell in MLM Blog News, Network Marketing - MLM, Network Marketing News, Small Business


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This from Rhonda Abrams at USA Today:

If you're an adult and you're breathing, there's a pretty good chance that sooner or later, a friend or acquaintance will approach you with a chance to "start your own business," "be your own boss," "become an independent distributor."

What you'll get is a pitch for a type of business referred to as multi-level marketing (MLM) – although it may be called by other names, including network, direct, affiliate, or matrix marketing. (Because these schemes get such a bad reputation, the companies change names to make them more attractive.)

Should you try it? After all, you may not have a lot of other choices, especially if you're out of work. And your friend is very persuasive. They tell you how much they love the products or services they sell, how supportive the people in the program are, that they've made thousands of dollars. They'll offer you a chance to start your own business for less than $199.

It's going to sound really good. You're going to be tempted. Should you give in to temptation?

In a word: NO. Stop and read this first!

Let me explain how MLM or network marketing works and how it differs from regular sales or a regular business.

•Single-level sales: You go out and sell a product or service and you either get paid for your time, or more typically, get a commission on the amount of product or services you sell directly to customers.

•Multi-level programs: You go out and recruit other participants. You make money not only on the sales you make but on the sales of those you recruit.

Sounds great, right? In reality, MLM programs rank high on the list of fraud schemes, and the Federal Trade Commission (FTC) and most states' attorney general have warnings and multiple lawsuits against many MLM programs.

That's one of the reasons that it's so cheap to get in: Many states regulate "business opportunities" requiring more than $200-$500 initial investment. To stay under the radar, most MLM programs keep under that threshold.

Here's what the FTC advises: "If a plan offers to pay commissions for recruiting new distributors, watch out! Most states outlaw this practice, which is known as 'pyramiding.' State laws against pyramiding say that a multilevel marketing plan should only pay commissions for retail sales of goods or services, not for recruiting new distributors."

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2 Responses to “Is Multi-Level Marketing A Good Small Business For You?”

  1. Bob Firestone

    14. May, 2009

    Great another blowhard with a Harvard MBA proving how little they actually know about network marketing.

    I guess the more people who choose MLM instead of starting a home business from scratch the less people there will be to buy her books.

    I am going to support my pro-MLM opinion with Charles King who has a Harvard Phd. Last time I checked a Phd trumped a mba.

    [Reply]

  2. law offices of paul j lucas

    15. May, 2009

    I greatly enjoyed looking through your blog and found some informative posts. Thanks.

    LLC

    [Reply]

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