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The MLM Business Model – Multi Level Marketing Basics
MLM, which is an acronym for Multi Level Marketing, is an amazing success formula for working from home, using the POWER of the Internet and achieving your financial and personal dreams!
A multi level business model is utilized by hundreds of companies to move their goods and services to the end user. In this article, my objective is to provide you with information on what this industry IS and what it is NOT.
You can only make an informed educated decision as to whether or not this business model if right for you if you have the required information upon which to make your decision. I hope to provide some of that information in this article.
Multi Level Marketing is simply a business model for moving products and services from production to the consumer using independent distributors with a multi level commission payout plan. Since distributors can recruit other distributors and establish teams that work together, this business model is often also called Network Marketing.
Unfortunately, many people do not understand how multi level marketing programs work and believe that they are some sort of illegal pyramid or scam. Nothing could be further from the truth for legitimate Network Marketing companies.
The first thing that you need to know is that MLM is not illegal and it is not a pyramid scheme. While the organizational structure resembles a pyramid in shape, this is true of almost all businesses. There are far more workers in the lower ranks of any business then at the top, if not, the business would collapse. Not everyone in the company can be CEO or Vice President. In fact, Multi Level Marketing companies are one hundred percent legal and many multi-million dollar companies use this business model to market their products.
Some well known Multi Level Marketing companies include Herbalife, Mary Kay Cosmetics, Shaklee, Amway, Tupperware, Princess house (a subsidiary of Colgate Palmolive), A. L. Williams (Insurance), Melaleuca, U.S. Sprint, MCI, and NSA. Companies such as these have been around for decades.
There are hundreds more MLM companies and just like other companies, some are good and some are not so good. But MLM is certainly here to stay and it is an explosive growth field! In fact, increasingly you will find more and more Fortune 500 companies employing the Network Marketing business model for some portion of their marketing portfolio!
So what’s the big attraction to MLM companies and programs? Well, it represents a wonderful opportunity for the “little guy” to start his own business on a part time basis and make a whole lot of money provided he or she is willing to put in some work! This is not a get rich quick scheme and work is involved, no matter what some MLM recruiters would like you to believe.
The magic of MLM is that independent distributors earn commissions not only for their own efforts, but also on the efforts of other distributors that they recruit into the business. Earning 1% of a hundred peoples efforts is always better than earning 100% on your own efforts, as John Paul Getty noted.
What makes the business “multi level” is that each independent distributor can recruit other independent distributors to work under them and earn a wholesale commission on the amount products their recruited distributors move to consumers. And this process can go on and on for some designated number of levels. This chain of distributors is called a downline.
The more recruits a distributor can get under them, the larger their downline and therefore the larger their total commissions. How many levels a distributor can earn commissions from in their depends upon the particular company’s compensation plan. Five to seven or more levels is not unusual.
A strong incentive is thus created not only for a distributor to recruit more distributors for their downline, but also to train them to move products as well. Thus a successful distributor will want to duplicate their success by teaching their downline members how to be successful. By making their downline members successful, they make themselves more successful.
Building large stable residual income is therefore the result of successfully recruiting, training, and retaining others. The better one is at doing these things, the larger their income will become. While it is not necessarily easy, it can be very rewarding.
Millions of people are discovering the advantages of being their own boss and working from home with the MLM business model. A basic computer, telephone, fax machine, a HUGE ambition, and the knowledge of how to proceed to grow your business are all it really takes!
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