According to Wikipedia, the free encyclopedia "Multi-level
marketing (MLM) businesses (also known as "network" or
"matrix" marketing) function by recruiting salespeople to
sell a product and offer additional bonus or sales
commission on the volume of other salespeople they recruit,
commonly known as their "downline". New joiners may be
required to pay for their own training / marketing
materials, or to buy a significant amount of inventory.
Thus it is possible that an MLM may be considered a pyramid
scheme if salespersons are more concerned with recruiting a
downline or if they must buy more product than they are
ever likely to sell."
The encyclopedia further goes on to state, "A commonly
adopted test of legality is that MLMs follow the so-called
70% rule which prevents members "inventory loading" in
order to qualify for additional bonuses. The 70% rule
requires participants to sell 70% of previously purchased
inventory before procuring new orders. There are however
variations in interpretations of this rule. Some attorneys
insist that 70% of purchased inventory should be sold to
people who are not participants in the scheme, while many
MLM companies allow for a significant part of the sales of
a participant to be to themselves for their own use."
A pyramid scheme they go on to state is "a non-sustainable
business model that involves the exchange of money
primarily for enrolling other people into the scheme,
usually without any product or service being delivered. It
has been known to come under many guises. Pyramid schemes
are illegal in many countries, including the United States,
the United Kingdom, France, Canada, Malaysia, Norway,
Australia , New Zealand, Nepal, Sri Lanka and Iran. Where
these types of schemes have existed for at least a century."
The Federal Trade Commission cannot tell you whether a
particular multilevel marketing plan is legal. Nor can it
give you advice about whether to join such a plan. You must
make that decision yourself. However, the FTC suggests that
you use common sense, and consider these seven tips when
you make your decision:
1. Avoid any plan that includes commissions for only
recruiting additional distributors. It may be an illegal
pyramid.
2. Beware of plans that ask new distributors to purchase
expensive inventory. These plans can collapse quickly --
and also may be thinly-disguised pyramids.
3. Be cautious of plans that claim you will make money only
through continued growth of your "downline" -- the
commissions on sales made by new distributors you recruit
-- rather than through sales of products you make yourself.
4. Beware of plans that claim to sell miracle products or
promise enormous earnings. Just because a promoter of a
plan makes a claim doesn't mean it's true! Ask the promoter
of the plan to substantiate claims with hard evidence.
5. Beware of shills -- "decoy" references paid by a plan's
promoter to describe their fictional success in earning
money through the plan.
6. Don't pay or sign any contracts in an "opportunity
meeting" or any other high-pressure situation. Insist on
taking your time to think over a decision to join. Talk it
over with your spouse, a knowledgeable friend, an
accountant or lawyer.
7. Do your homework! Check with your local Better Business
Bureau and state Attorney General about any plan you're
considering -- especially when the claims about the product
or your potential earnings seem too good to be true.
There are millions of people worldwide that desire to have
their own businesses however, do not have the initial start
up capital for a storefront, inventory or funds to
compensate for sustainability issues. A great way to test
your individual ability to operate and succeed in a home
based business is to find a great (legitimate) MLM
opportunity. But, like any business you venture into be
smart about your choices.
My personal recommendation is to know yourself first. If
you are not a take action, persistent, motivated and
confident person, I wouldn't recommend starting your own
business. You'd best serve yourself working for someone
else willing to pay you for your physical or mental
abilities. A business doesn't sell itself and there is a
lot more to success then just wanting to open the retail
doors.
If you have the confidence but limited finances, put one
toe into the business world at a time to see what you are
made of. Find an MLM program that offers training,
mentorship, products, services, WebPages, pre fabricated
advertising mediums, advertising sources, customer support
and that process, ships and delivers their own goods and
services. You would be best served with a program that
does not require purchase of large amounts of their
inventory.
The trick here is to glean all the experience necessary to
succeed in sales. Like it or not every business requires
sales, customer and employee coordination, advertising
budgets, book keeping and a whole lot of other
coordination's to succeed. Don't let your desire to be an
independent success get ahead of your business abilities.
There are many thousands (by now millions) of people
running successful home business. You can too, just don't
let yourself get railroaded into the MLM programs out there
that require high start-up investments.
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Ronald Hudkins is a successful Internet entrepreneur that
is highly capable of mentoring affiliate success. He is an
affiliate executive in SFI's home based business
opportunity and seeks action orientated people to join his
ever expanding team of Internet marketers geared to learn
and earn. To join Team Venture go to
http://www.adultwishfoundations.com/free.html
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