Mlm Home Based Business

When considering a MLM home based business, a number of questions cross the potential participant's mind. An individual may wonder if the program is a legitimate business offer or just some type of fraud. How much will it cost to begin this endeavor, and will people continue to be interested in the product? Once the initial round of offering the product or service to family and friends has been exhausted, is there a market for these products? Or, as countless other people have unfortunately experienced, will this program wind up costing the person far more money than it provides? These legitimate questions deserve to be answered before investing time or money in a MLM home based business. Take a look at how a MLM home based business works. Although there is not just one way to run such a business, these ventures usually have some common features. The participant, who may be called a variety of titles (distributor, affiliate, partner, etc) agrees to represent a company and its products or services. In return, commissions are earned on the sale of the products. Bonuses or further discounts may be offered as an incentive to recruit other representatives. Additional commissions may also be earned on sales made by distributors who were recruited. (Hence the 'multi-level' aspect of these businesses.) No additional salaries are given except that which can be obtained through the two avenues of developing a large customer base or obtaining percentages of sales resulting from the endeavors of recruits.

No doubt certain familiar organizations which operate through the model of a MLM home based business can be easily recalled: Amway, Avon,...the list goes on. These types of businesses can be found in every part of the United States and in many other countries and many are legitimate. However, there are always unscrupulous individuals who seek to take advantage of another person's inexperience or vulnerability. Often people seeking to supplement their income through a MLM home based business are in need of funds and may be unaware that schemers are poised to take even more of their hard-earned cash.

There can be some difficulty in distinguishing between a legitimate business and illegal substitutes such as a pyramid or Ponzi scheme. A pyramid scheme may claim to be a MLM home based business, but there is one important difference. In a pyramid scheme, the victim is paid primarily for the amount of recruits he can assemble. New recruits may be asked to pay for training materials, or may be required to buy a substantial amount of 'starting inventory' of their own. Thus earnings are not based upon sales made to individual customers so much as on expanding the base of recruits.

On the other hand, MLM home based businesses generally follow a '70% rule', which stipulates that members must sell 70% of their previous inventory before purchasing more. This keeps members from buying products solely to qualify for bonuses or additional discounts on future purchases. However, this is not a hard and fast rule. At times, even personal purchases can go towards qualifying one for these bonuses. A pyramid scheme can still be distinguished by the fact that it involves exchanging money for enrolling others into the program, without a tangible product or service being offered. Participants are required to purchase a product which costs the company little or nothing to produce, such as an ebook or the right to sell certain information to others. Usually, the person makes one significant purchase, and is promised incredible benefits. Fake or misleading information and testimonials are often part of the presentation. Each sale brings a fee to the original seller. Money travels up the chain, and the system usually only benefits the originator and possibly a few other 'higher-ups' before it collapses. This happens because, as the scheme progresses, it takes more and more people to sustain the effort. One person needs to recruit two people. Those two need to recruit two more each. Then, those four recruit their own two, and by that time, the original manager can reap a significant reward. However, the system may stall as additional people are unable to be found, or the amount of individuals required to sustain the effort makes it likely that law enforcement officers are notified.

Ponzi schemes work in essentially the same way. Often, instead of a product, incredible interest rates are promised on certain 'investments'. Early payouts at unbelieveable interest rates encourage the victim to invest even more money and to recruit others into the program. However, often no actual investments have ever been made. Further complications result when greedy managers use false names to fill out the charts and thus end up pocketing even more of the 'investments' without ever actually contributing their own money. Either money or a desirable product is offered to the one at the top of the pyramid, who receives the benefit and then leaves the structure. By filling the top positions of the chart with false names, thieves pocket most of the money or other rewards before the scheme collapses. Bottom-level participants wind up gaining nothing, and also lose their original investment.

The Federal Trade Commission offers helpful Internet articles about these matters. Read them before investing in financial schemes which seem too good to be true. The observations offered by Solomon in Proverbs 11:19-20 seem applicable here: As righteousness tendeth to life: so he that pursueth evil pursueth it to his own death. They that are of a froward heart are abomination to the Lord: but such as are upright in their way are his delight. Simple checks outlined in the articles offer tips for distinguishing between a MLM home based business and a pyramid or Ponzi scheme. Check with the Better Business Bureau to authenticate a business' history. Beware of those who rush prospects into decisions before they can consult with a spouse or lawyer, as this is a sure sign that something is not on the level.