Multi level marketing,
or mlm businesses, are they for you?

Have you heard stories about people having amazing success with mlm businesses, and wondered if this could be the answer to supplementing your income in later life?

You may have many questions the first, perhaps, being what is mlm?

What is Multi Level Marketing or MLM?

Multi level marketing, network marketing, or MLM is a business distribution, sales and marketing model where independent sellers represent a parent company.

These sellers are divided into tiers, or hierarchal levels, of sales volume and financial input or responsibility. At an upper level, an 'owner' might appoint a small team of 'managers' who buy a product from the owner. They, in turn, might each be allowed to form their own teams of 'marketing executives' - the names or titles will vary between multi level marketing companies.

Dependent on the product and perceived sales potential, mlm businesses may involve three or more levels, with each undertaking to buy and sell a certain volume of product. These levels are often referred to as the 'up-line' and the 'down-line'.

At the lowest tier level 'executive salesmen' will market directly to consumers by means of relationship referral and direct selling. Their incentive will be directly related to sales achieved, since they will normally be required to purchase the product pre sale, at a discount on their direct selling price.

Promotion through the various levels is generally by purchase and/or distribution of substantial levels of product which are then on-sold by lower level team members.

If the product and the network marketing are good, so to will be the long term passive income opportunities. That said, those who do best are usually the people who get involved fairly early in the cycle, because it gets harder to recruit more good people further down the line.

Are mlm businesses legal?

It is not always easy to spot the difference between perfectly legal and reputable multi-level marketing and Pyramid (or Ponzi) selling which is now illegal in most countries. If participants are paid primarily from money received from new recruits, or if they are required to buy more product than they are likely to sell, the scheme is likely to be fraudulent.

You can sort out the Truth and Lies on a fascinating site owned by retired Detective Lieutenant Dennis Marlock. The Ethics of MLM - Networking are discussed by Bob Podolsky on that site - well worth viewing.

Do your research

MLM is not the easiest of concepts to explain, and it can easily be misrepresented. Before getting involved you need confidence in the company, in the product and in your personal ability to sell it on, either to a team you recruit, or directly to the public.

Financial returns will be directly affected by the level or tier you start at and the amount of stock you are required to purchase. So, think carefully about multi level marketing, take advice, meet not just with the upper level managers or owners, but also with the people who are selling at the public level. If they are happy, it says much for the product and price.

That said, many projects will be available to you for £100 ($200) or less. For your money you will get basic product stocks, marketing help and so on. That won't earn you big money but it will quickly prove to you if it's the right business for you and we would suggest that you treat that low initial cost as a total loss item - in other words, calculate the risk factor on the basis that will be the most you can lose if you try MLM and decide not to carry on with the system or product.

So, don't think that MLM is strictly for the 'Big Boys'. 'Avon Calling' is one of those catch phrases that's almost part of the English language. An Avon rep promoting and delivering cosmetics house to house, is usually assured of a welcome and - for the right person - it could prove a suitable part-time or even full-time career.

Another very well known global name in the multi level marketing game is Amway. Amway combines direct selling with a multi-level marketing strategy. Independent Business Owners (IBO's) may both market the products directly to potential customers and also recruit (sponsor) and train other people who become IBOs themselves and in turn have the same multi level marketing opportunity.

Each IBO may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline have generated.

One very positive aspect of multi level marketing is that you are likely to be working as a member of a team. If you are a team player, this may be a very real incentive. However, at the end of the day, it's still all about selling!

Mike Moran discusses his experiences of working with mlm businesses in our Business Success Stories section. If you have tried it, why not share your story also?

On the Shop to Earn page we take a look at this mlm scheme.

Home Party Plans another form of direct selling.

Other sites that you may find interesting

Online Passive Income Passion - Your total guide to online passive income opportunities. Create your own Internet marketing business and place it on a new and higher level.

Breathtaking-Network-Marketing-Secrets Here is a site focusing on the cutting edge strategies of mlm businesses that most people are unaware of...