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What Is MLM Business - The Basics That You Must Know

Feb 27, 2008
MLM stands for Multi Level Marketing, also known as network marketing. Multi Level Marketing can be considered as an effective and efficient way to deliver products and services from the manufacturers to the consumers

In a non-MLM company, before a product can reach a consumer, it has to go through several channels. These channels include advertising, retailing, employment etc. Each channel adds on to the cost of the product.

MLM is designed in such a way that all these channels are bypassed. Instead, the products are being delivered directly from the distributors to the consumers, reducing the cost of product to the consumers.

As a result, both the distributors and consumers benefit. Consumers receive products at a lower price. Companies can afford to pay their distributors a higher rate of commission.

In other words, you are paid a commission every time you sell a product. You can literally start your own business without creating your own product. You can also grow your business by recruiting new distributors into your organization.

MLM vs Pyramid Scheme

It is easy to confuse MLM with pyramid scheme due to the similarities of their structure - both look like a pyramid. But it is important to know that MLM is not a pyramid scheme!

Let's compare the two:

(1)Pyramid : The people at the top get paid. There is no way a person can earn more than his upline.
MLM : It is possible for you to earn more than your upline if you work harder and smarter than him. It is also possible for your downline to earn more than you.

(2)Pyramid : There are no legitimate products or services to sell. The only way to get paid is to recruit more people into your organization.
MLM : There are legitimate products or services to be sold. You can earn a good amount of money even if you don't recruit any distributors, provided you have a group of loyal customers.

As a guideline, before you even decide whether to join a company, ask yourself these questions:

"Are there any products or services that I can sell?"

"Will I use these products or services myself?"

"Can I still make money if I don't recruit any distributors?"

If your answer is "no" to any one of these questions, then I recommend that you run away as fast as possible.

Maybe I Should Be At The Top?

You may be thinking, "Why don't I just join a new company directly? Then I'll be at the top and stay at the top!"

Well, I don't recommend that. Even if you are at the very top, you will still need to build a strong foundation in order to earn the income you desire. You need to acquire a large group of loyal customers as well as a group of capable and dedicated distributors in your team.

You should not worry too much about joining a company late. If the MLM company is selling a legitimate product that people truly want, then you should be able to make a decent amount of money.

Of course, I do not deny that there will be a small advantage in being the pioneers of a company. However, a truly strong company will be able to stand the test of time. If not, it will eventually close down and this is the last thing that you ever want. Work hard and smart and you will definitely have a bright future in any legitimate MLM company you choose to join.
About the Author
Lubano Lim is a Netpreneur who enjoys marketing on the Internet.

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