Multi level marketing businesses, or MLMs as they are more commonly known, have quite a poor rep as many of them are similar to pyramind schemes. However, there are many successful, legitimate MLMs which can earn people a good wage each month. This article guides you through what to look for in an MLM to make sure you don’t get scammed.

How do I choose an MLM?
When you start an MLM, you must look at it like any other business and ensure that you have an interest and that it is the right business for you. The major thing to look for is is it a pyramid scam or is it a legitimate MLM? Learn as much as you can about the company and the way it operates before you sign up. Look for testimonials on the Net that are NOT associated with the company but are on independent websites as these will be a good indicator of whether this will make you money or take your money!

One of the first things you will notice is the product. There will always be a product (or service) attached to the business. If you have no interest in the product or service, it is unlikely you will be able to sell it well so you might want to look at other MLMs. Try to find out if there are similar products in the market which will easily replace your product – the more similar products there are, the less money you will probably make. Check you product against competitors for price and quality. Ask yourself if the product appeals to the people who you are going to be selling to – there’s little point trying to sell a product to people who don’t match the ‘profile’ of the product.

Next, take a look at the fees that you have to pay to become a prt of the MLM company. A good MLM company will be flexible on entrance fees and will give you something in return after your first payments. They should also be able to guide you in advertising and marketing.

The next issue is the age of the company. If it is a new company, it can be a great opportunity to recruit other people and make yourself commission. However, if the company has just started out, people may not know the brand and may be unwilling to buy the products. With a well-established company, you may have problems recruiting people because there will be many other distributors out there already. You may also find that there are many distributors in your area which will cut down on the number of sales you can make. A company which is one to two years old is normally a good bet.

The compensation plan is something else to look for. You must understand this before joining the company. You should be able to see how your bonus will be calculated so that you can draw yourself a business plan. This will help you understand your investments in the business as well as your earnings and your business life cycle. Try to avoid companies who state you must meet a minimum quota before you get paid.

Find out what tools the company will provide you with. They may have marketing or advertising software or guides that you can use to help maximise your sales. Find out whether this is free and how it is presented – is it on paper, online or at the company HQ? Alongside this, try to find any research or statistics on the company – who buys the product most? What is the target market? Does that fit with where you want to sell the product?

If you are happy with all the information you have found out from the following points, you should find that you have a good MLM company in front of you. Planning and taking your time to do this research will prevent frustration, losing money and dropping out of the business.

Bad MLMs

Many people believe that MLM is another name for ‘scam’. There are many scams and MLM companies do slant towards the illegal side of things. To understand why, we have to look at the history of the MLM.

The multi level marketing concept started when small comapnies in small towns did not have big advertising budgets and they found it difficult to build distribution channels. In some cases, the companies did not advertise at all and preferred to supply local agents and distributors who would then sell the products on and take a cut of whatever they sold. This worked well until the advent of the Internet. We now find that almost every company and customer can be accessed on the internet and worldwide distribution costs are decreasing. Network marketing, essentially what MLM is, dwindled because of these reasons.

So why is it rare to find legitimate MLM companies? Well, most legitimate MLM companies have consumers who are distributors – they buy the products because the like them and not because they see the business opportunity. It is easy to make money by wrapping the product up in a lot of speel about ‘business opportunities’. These companies will often charge a hefty sign up fee. In this way, they create a lot of money even though the product will never sell. The people who are caught up in the scam will only be able to make their money back by enlisting more people to the scheme.

It is important that when you speak to representatives about the product that they concentrate on the product itself rather than the ‘business opportunity’. If the representative is too focussed on the opportunity and barely talks about the product, the chances are that the MLM is a bad one.

Click here for a list of MLMs

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