Network marketing is a win-win business model that has been around for over 70 years. It is recognized in every country as a legitimate way to sell products and services.
And yet, people continue to refer to it as a pyramid scheme. This does a great disservice to the industry, which is a legal business model that offers millions around the world a legitimate way to better their lives.
If the pyramid structure of a business made it “illegal”, then every corporation, government and organization in the world would be illegal.
The real concern is that no one wants to be taken advantage of and get sucked into a scam.
So it’s important to be able to recognize a legitimate opportunity from an illegitimate one.
This Win-Win Business Model Benefits the Company and Its Associates
According to the Better Business Bureau, an illegal pyramid scheme is a model where “Revenue is generated from selling the opportunity, not the product or service.” Network marketing companies sell products and services to consumers. The difference is that they don’t do it in brick-and-mortar retail stores.
There are over 1200 network marketing companies operating in North America. New ones are started every month.
Network marketing is a win-win business model. It allows new companies to bring their products to market quickly without incurring high marketing costs. This is because the people who represent the products (i.e. you and me) do the marketing simply by sharing the products from within our home-based business.
Also, companies that operate under the network marketing business model provide individuals an opportunity to increase their income with an easy-entry home-based business.
So let’s say someone has contacted you about a work-from-home opportunity. They’re telling you it’s the latest and greatest thing to come along. How do you find out if it’s the real deal?
Well, for starters, you can uncover a lot about a network marketing opportunity from their compensation plan. So here are a few questions to ask.
- Is the compensation plan easy to understand? The best plans are simple and easy to understand. Also, they are generous to the associates who share the products.
- Is excess sales volume carried over to the next commission period or do they get flushed? Some plans flush unused sales volumes so you start back at zero at the beginning of a new commission period.
- Is there a depth restriction on which commission is paid? People you introduced to the business are level 1 and those introduced by people you introduced are level 2 and so on. Many plans restrict or decrease commission to only sales volume generated by people above a specific level. Better plans have no depth restrictions.
Would you like to know other key questions to ask to find out if an opportunity is the real-deal?
Click to download our free guide “The Ultimate MLM Selection Checklist”