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There are many Internet business opportunities that exploit the novelty of the Web as a lure. If you nibble, they’ll further bait you with promises of freedom, esteem, high income and the good life. For a fee, they’ll set you up with a company-sponsored, duplicate Website, along with products or services to sell. But many will also offer you incentives to recruit others to pay the fee, which is really what these so-called opportunities are all about. They are among what the U.S. Federal Trade Commission cleverly calls Dot Cons.
The real business of these types of dot-cons is not wholesaling products or services. It’s selling the concept of the scheme itself, and duping you into reselling it for them. But by law in most U.S. states, one can’t profit from recruiting, with nothing changing hands but fees and commissions for the scheme itself. That’s illegal pyramiding. To get around it, these dot-cons sell tangible, “distributorship” Websites on which to seemingly resell their products or services. But a closer look reveals that, what’s really for resale, is the distributorship itself over and over again.
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If you found a good network marketing company with all the above things in order, the next step is to study their compensation plan. Analyze and review the experience of other distributors so that you can adapt their success and learn from their mistakes. Of course you need to review the product line and ask questions addressed to your sponsor. There is no real need to dig out the microscopic details, but ask enough general questions to satisfy your curious mind.
Remember that not all network marketing companies are created equal. There are a lot of bad apples out there that will give you a bad experience and spoil the reputation of the good ones.
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2. Determine the financial ‘muscle’ of the network marketing company that you are looking into. Is it a worldwide or global corporation? Or just a local establishment? It is very important for your corporate partner to be financially sound because they are the ones paying for your commissions and incentives. Check out if the company pays these compensations all the time and on time because that is the true test of stability.
3. As a rule, it is better to be associated with a privately held company rather than a publicly held one. This is because private companies cannot be taken over by the government.
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There are three important things to consider before you finalize your decision of joining a particular MLM company, which includes the following:
1. Consider the number of years that the network company has been around. Don’t fall for the sales pitch of ‘getting in on the ground floor’ kind of opportunity. You would definitely want to find a company with actual track record. New companies often don’t start with everything in its proper order. You do not want to be caught up in the things that pop up during company start-ups such as unfocused leadership or product fulfillment problems among others.
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This is a marketing model that has been around for almost 50 years. Due to its enormous success, several large corporations have already adopted its strategy to effectively distribute its products and services across the globe. Thousands have already created a fortune for themselves, by being associated with a quality MLM company.
It is very critical for you to select the right company if you want to thrive in a network marketing business. After all, you will be investing your dreams, money and time in it even before the rewards come. Research, research, and more research are necessary before you join one.
Before going into multilevel marketing (MLM), check out your company first if it is operating legally. The criteria that you should take into consideration are the following:
Is the company carrying a good quality product that can be retailed?
Does the product reach the end user through independent contractors (direct sales representatives) and not through retail establishments?
Is the company’s compensation plan designed to reward the independent contractors for the sale of the product and not just through the introduction or enrollment of another participant in the program?
If the answer to all of these questions is “yes,†then you are dealing with a legal company.
The FTC (Federal Trade Commission), BBB (Better Business Bureau) and USPS (United States Post Office) gave some advice to make sure that you are signing up with a legal MLM (Multilevel Marketing) rather than just falling into the trap of pyramid schemes.
According to these watchdogs, you should get all the facts about the company including its history, owners, officers and products. Find out the start-up cost, if it’s too expensive then maybe the members are earning from getting more people into their organization, which is strictly prohibited. The company should also have real products to distribute to its customers with a good buy-back policy in place.
The Federal Trade Commission (FTC), Better Business Bureau (BBB), and the United States Post Office (USPS) have investigated a number of multilevel marketing businesses.
The Better Business Bureau gives the following advice:
Before investing, get all the facts about the company, its officers, its products. Find out the start-up cost, and the company’s buy-back policy.
Get written copies of the company’s marketing plan and sales literature.
Check with others who have experience with the company and its products. Are the products actually being sold to consumers?
MLM companies operate under their own set of guidelines which come in every possible variety imaginable. The general looseness of the guidelines has resulted in a large number of lawsuits from distributors who have lost substantial sums of money in the programs. The landmark legal case for the industry is the 1979 Federal Trade Commission ruling on Amway which found that although Amway engaged in deceptive practices, as long as profits were made through the sale of product, the company could continue to operate within the law.
For MLM businesses to operate legally, they must meet the following criteria: