Should You Consider Multiple Level Marketing For Your Home Business?

As you are looking for a home based business, you will find many of these opportunities are built on a multiple level marketing platform.  This may cause you some concerns as this type of business structure is often greatly misunderstood.   It is my hope to give you a fair assessment of the MLM business model, so that you can make an informed decision regarding your own circumstance.

What Is Multiple Level Marketing?

The multi level marketing business model has been around for the past 60+ years.  Many household names use this type of business structure for the retailing of their products.  Some of these names include:  Avon, Mary Kay, Tupperware, Fuller Brush and Watkins Products to name a few.  At its core, MLM is a direct selling method of retail sales.  Direct selling simply means that sales are made outside of a traditional retail outlet setting.  Most generally sales are done through independent business owners called distributors, representatives or consultants.  This business structure creates an amazing opportunity for someone seeking to build a profitable home based business.

Advantages of Multiple Level Marketing

The first advantage of a multiple level marketing business is the low start up cost.  When you sign up as an MLM distributor, you are essentially starting a “micro-franchise.”  The great thing is that most MLM companies offer a start up cost of less than $200 and some are even free to join.  When you consider that most business franchises begin at $250,000 and go up from there, it is no wonder that the low start up of a network marketing business is so attractive.

The next advantage of a multi level marketing business is in the low operating costs associated with this business model.  In most MLM businesses there are no inventory requirements.  Product is shipped directly to the consumer from the manufacturer.  Additionally, most companies are set up to take customer orders directly online.  These orders are placed through a coded website, that allows the the sale to be tracked to the individual distributor.  This means that all billing and cash handling is performed by the company and that bookkeeping and accounting burden is removed from the small business owner.  At the end of the sales cycle, which is typically on a monthly basis, a commission check is issued to the distributor for the previous month’s sales.

Another advantage of the the MLM business model is the ability to build a sales team of your own.  In a multiple level marketing company, you are encouraged to recruit and train other distributors, who are then a part of your sales force.  You receive compensation in the form of overrides and bonuses on the sales production of your team members.  A tiered compensation approach is very common in most sales oriented businesses.   The difference in network marketing is the depth in which you are allowed to draw overrides and include sales production in your overall sales production totals.  Often times this depth of override is allowed through upwards of 7 to 8 generational levels.  This leverage on the production of others allows for a high earnings potential for the distributor who takes their business seriously.

These are just a few of the advantages found with an MLM business, but I also feel it is necessary to address the drawback as well.  A multi level marketing business is a business and it must be treated as such.  When a home business owner doesn’t treat their business correctly, they will be very disappointed.  Because of the low entry threshold, many people enter their businesses with a hobbyist mentality.   They lack the commitment that is necessary to make their business succeed.  If a home business owner is going to be successful they must make a commitment to invest time, energy and resources into their business as would be the case with any other model of business.  If you are unwilling to make a long term commitment to your network marketing business, you should not consider this type of home based business.

For those who are willing to make a commitment a multiple level marketing business may be the best home based business for you.


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