For the self employed, navigating the topic of multi level marketing business opportunities can be a tricky one. Although many multi level marketing companies are legitimate and can be a good way to make money, there are others out there that cost you both financially and legally. How can you tell the difference? There are two major red flags to watch out for when it comes to multi level marketing, and if you can keep an eye out for them, you will be able to effectively protect yourself from the scammers.
First things first, however: what is multi level marketing? In many ways, multi level marketing is a lot like the franchise set up that many of your favorite chain restaurants operate under. The difference is that rather than being limited to a single location, representatives of a multi level company perform sales on a roving basis – they move around and sell any place they can, rather than setting up a single shop. These representatives, also often called “down stream reps,” buy products from the parent company and then sell them on to stores or private individuals. The exact nature of the financial arrangement between the parent company and the down stream rep can differ from group to group, but usually there is a profit split on a pre-determined percentage basis. There is usually also some incentive for down stream reps to recruit new down stream reps, and they often receive a percentage of the sales made by anyone they recruit.
It is this last part of multi level marketing companies that can be the first red flag. Although most multi level companies do provide this kind of recruitment incentive, some companies rely exclusively on recruitment to make money. Down stream reps recruit new representatives, and collect a joining fee from them (or collect money by selling them merchandise that they are supposed to then sell on), and then no actual selling of products happens. The whole business thrives on the recruitment of new members and the collection of membership fees. This is called a pyramid scam, and it is illegal. If you are investigating a company and it seems like you are unlikely to make any money from actual product sales, stay away.
The second red flag has to do with the product prices you get from the parent company. Some scammers set themselves up as a multi level marketing business and present products to their downstream reps at prices that would never allow them to clear a profit. If the prices you are being offered by the parent company are extremely high, and you doubt that you will be able to mark up the prices at all to resale the goods, you’ve likely stumbled on a scam. These scammers typically collect all the money they can from people – often not even delivering the goods that their “reps” purchase from them – and then they close up shop and disappear, usually reappearing under a new name a few weeks later to perpetrate the scam again. Essentially, multi level marketing is a business like any other, and if it sounds too good to be true, it probably is.
2/03/2009
1/26/2009
Can People Really Make Money Online
Can you truely make money online?
One way thousands of people are making money on-line is through multi-level marketing programs. What are they? and do they really work?
MLMs are all over the web. Simply Google “home business opportunity” and you’ll get a boatload of different websites, most of which are probably MLMs. In the on-line business industry, MLMs have their cheerleaders and their detractors, so it’s probably a good idea to do as much research as possible before signing up and sending off a check.
What exactly do MLMs do? Most MLMs are a network of people who are trying to sell a product and at the same time trying to get more people to sell that product. The more people you personally recruit, the more money theoretically you can make.
And how do you get people to sign up? Mostly through websites promoting a particular MLM. The idea is someone will visit a website and sign up for the MLM to sell a product. The owner of that website has just made a sale, and will get a commission every time people under him make a sale. It’s called the downline, in MLM language, and the bigger and more productive your downline is, the more money you can make.
There’s an entire industry devoted to helping people get better at running their MLMs, by promising to get more recruits or better recruits or by making their website have better visibility to also increase recruits.
It’s not a pyramid scheme because the main purpose of the MLMs is to sell products, not simply to sign up more recruits. However, experts caution that business owners should try to avoid those MLMs whose main purpose seems to be signing up people and not selling a product.
Successful MLM website owners are usually terrific marketers. They know how to increase their search engine optimization (get a good spot on search engine results pages), and they know how to get their website seen. They use e-mails, word-of-mouth, press releases, and blogs to sell their wares.
What do MLMs sell? Some sell software, some educational materials, weight loss supplements, viral traffic and some seems to sell nothing but a name. It does cost money to sign up, anywhere from a around $100 to thousands of dollars, depending on the MLM.
Are they legal? As long as an MLM’s main purpose is to sell a product, then it is completely legal. It is only a pyramid scam if the only purpose is to sell the MLM websites.
Federal and state agencies have been known to track MLMs and pyramid schemes in an effort to weed out the bad apples. Advocates for MLMs often say those who complain that MLMs don’t work are typically those who didn’t commit the time and effort into the business to make it successful. Those against MLMs say the businesses never followed through on promises and they made far less money than stated.
The bottom line is that MLMs can be an option to make some extra cash, but you must go into it with eyes wide open and realistic goals. And if you do invest your money, make certain to invest your time. If you still have questions, it’s always a good idea to contact the Better Business Bureau.
Host4Gain
One way thousands of people are making money on-line is through multi-level marketing programs. What are they? and do they really work?
MLMs are all over the web. Simply Google “home business opportunity” and you’ll get a boatload of different websites, most of which are probably MLMs. In the on-line business industry, MLMs have their cheerleaders and their detractors, so it’s probably a good idea to do as much research as possible before signing up and sending off a check.
What exactly do MLMs do? Most MLMs are a network of people who are trying to sell a product and at the same time trying to get more people to sell that product. The more people you personally recruit, the more money theoretically you can make.
And how do you get people to sign up? Mostly through websites promoting a particular MLM. The idea is someone will visit a website and sign up for the MLM to sell a product. The owner of that website has just made a sale, and will get a commission every time people under him make a sale. It’s called the downline, in MLM language, and the bigger and more productive your downline is, the more money you can make.
There’s an entire industry devoted to helping people get better at running their MLMs, by promising to get more recruits or better recruits or by making their website have better visibility to also increase recruits.
It’s not a pyramid scheme because the main purpose of the MLMs is to sell products, not simply to sign up more recruits. However, experts caution that business owners should try to avoid those MLMs whose main purpose seems to be signing up people and not selling a product.
Successful MLM website owners are usually terrific marketers. They know how to increase their search engine optimization (get a good spot on search engine results pages), and they know how to get their website seen. They use e-mails, word-of-mouth, press releases, and blogs to sell their wares.
What do MLMs sell? Some sell software, some educational materials, weight loss supplements, viral traffic and some seems to sell nothing but a name. It does cost money to sign up, anywhere from a around $100 to thousands of dollars, depending on the MLM.
Are they legal? As long as an MLM’s main purpose is to sell a product, then it is completely legal. It is only a pyramid scam if the only purpose is to sell the MLM websites.
Federal and state agencies have been known to track MLMs and pyramid schemes in an effort to weed out the bad apples. Advocates for MLMs often say those who complain that MLMs don’t work are typically those who didn’t commit the time and effort into the business to make it successful. Those against MLMs say the businesses never followed through on promises and they made far less money than stated.
The bottom line is that MLMs can be an option to make some extra cash, but you must go into it with eyes wide open and realistic goals. And if you do invest your money, make certain to invest your time. If you still have questions, it’s always a good idea to contact the Better Business Bureau.
Host4Gain
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