MLM - Network Marketing Companies - are They a Scam?

Network Marketing and MLM companies are believed by many people to be scams, but that is just a myth. There are legitimate companies and there are the "bad apples" that give everyone a bad name. They are just like any other corporation out there, there are good ones and bad ones.

What is MLM or Network Marketing? We will keep it simple: It is a method of marketing products and services through independent representatives who refer customers to the Company they represent. Then those customers can have their own business and get paid for referring others to the products the company provides.

Here are a few "truths" about MLM - Network Marketing:

1) Do people make money?

Yes, many people make part time and full time incomes, while others make 6 figure incomes in this type of business. It is also true that usually around 5% of the people make money and the rest fade away for a variety of reasons. The most common reason is the majority of people do not treat it like a business, but rather like a hobby. Sometimes their sponsor disappears and they do not have a mentor to guide them in the right direction. Another common reason is their belief in themselves and their abilities stops their progress.

(Note: you can let a prospect know that a 6 figure income is possible but then talk to them about things they can relate to, maybe pay off their credit card debts, pay their car payment because for the average person those are goals they can work toward in the short term and they will not become discouraged when they don't make a 6 figure income in 6 months. Your organization will crumble if you base all of your marketing efforts on making a 6 figure income.)

2) Does a "best" compensation plan exist?

Yes, but it depends on who you ask. Some are better than others. An over all rule is the more simple a compensation plan is the better it is for your entire organization because people will not be afraid of all the compensation plan details. At the same time it must be lucrative so it attracts people to the business. This is a hard combination to find but they are out there.

3) How long has the MLM - Network Marketing business industry been around?

You could say right around 60-70 years. In the early 1940's a company by the name of California Vitamins recognized that all their new sales representatives coming aboard were friends and family of their existing sales force. They discovered that it was easier to create a sales force with a high number of people who each sold a small amount of product than it was to find a few top producers who could sell a large amount of products.

When they took a closer look at this they decided to combine these two ideas and design a sales compensation plan that encouraged their salespeople to invite their customers to become representatives for the company. Most of these new representatives were family and friends, who each had the same right to offer the product to others just as the person who sold the product to them did, which allowed the sales force to grow exponentially. The company rewarded them for the sales produced by their entire organization of sales representatives. A new business sector was just created and it was called Network Marketing or Multi Level Marketing!

4) Your valuable time is required to be successful in any MLM - Network Marketing business.

Most people make the mistake of not treating their business as a real business. They do not dedicate their valuable time into building it into a profitable home based business. It is just like any other brick and mortar business. You would not open up a McDonald's and then not set any business hours would you? Of course not, but many people do just that for their home based business and then call the company a scam. You must devote a certain amount of your time every day to your business if you expect to be successful. (Important note: to be successful in this business it is of the utmost importance to work with a person you respect and trust.)

This industry is alive and well. You can make a lot of money in it if you do your due diligence by researching the company and understanding that you must treat it like a real business and not a hobby. Ultimately, in most cases, you are the success or failure of your business and not the MLM - Network Marketing company.