Multilevel Marketing: What It Is and What It Isn't

A lot of people who hear the words "multilevel marketing" run screaming in fear of being scammed, or at least, being part of a scam. This could be due to the negative publicity that mlm marketing has been receiving to date.  The notoriety of this business model (which is legitimate, by the way) springs mostly from the few rotten apples (read: pyramid scheme) that have made it into the multilevel marketing barrel.

One thing is certain: the main difference between the two is that mlm marketing is a legitimate business model, while pyramiding scheme IS a scam and IS definitely illegal - not to mention immoral and downright dirty. In layman's terms, multilevel marketing is a highly social business model that seeks to cut out the middle man and lower the overhead cost, so that the end consumer isn't paying for the storefront's operation expenses, including labor, utilities, and even the traditional advertising media.

Pyramiding schemes, on the other hand, will want you to invest your money on the possibility of big rewards for small amounts, but is actually just a transfer of money from the "downline" to the "upline" (to be explained later).

If it's Too Good to be True...

It's probably a pyramid scheme. The confusion between the two systems as earlier explained stems mostly from pyramiding schemes that disguise themselves as legitimate mlm marketing businesses. These pyramiding schemes use the same vocabulary and even the process of building up your network. 

In both business models, you have to sell some kind of product, you will create a "marketing network", you will either be "sponsored" by your "upline", or you will sponsor a "downline" with the idea that the "upline" gets commissions from the sales of the "downline." The first thing that would tell you that you are in a legitimate mlm marketing business is that the commissions from your "downline" are just a plus, but the bulk of your profits come from YOUR sales and YOUR hard work.

Entering the Market        

Multilevel marketing is a relatively easy business to get into, sometimes for investments as low as $29, which is in no way saying that it's an easy business to thrive in.  On the plus side of the equation, it is a very flexible business environment. You can stay at home all day in your jammies and still make a decent enough living. Formal education isn't even necessary, but a bit of techno savvy does help.

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Basmajian Art

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