Multi Level Marketing is a simple business model based both on franchising as well as direct marketing. In this kind of model the buyer and seller have an independent contract. The sellers profit from their sales as well as the number of people they bring into the system. In spite of their brush with Ponzi Schemes, they are quite popular in all most all 50 states in US as well as 100 other foreign countries.

Terms like Affiliate Marketing are also used for this kind of businesses now. Usually commissions are earned on the basis of sale of products or services to end consumers who might also be a distributor.

How does MLM actually work?

First a small investment is made and then the person receives necessary supplies to start the marketing and selling the product. The range of products differs from vitamin books to weight loss supplements etc in many cases. In this particular model the person will have to refer others also to the programme. Every time a single unit is sold, the person gets commission. The emphasis is not on selling products but on recruiting more and more people to this programme.

Compensation

Compensation works differently for different companies. There might be a Unilevel Plan, a Matrix Plan or an elevator scheme. The uniliver plan is the oldest and most popular one also. It features both managers and non managers and the sales are same all over the organization. The matrix plan works differently. It has a limitation on the width of each level in a distributor's group, hereby forcing strong distributors to pile ("spillover") their recruits over people who did not sponsor them. The Elevator Plan features a game board or a list where each distributor would pay in one or more product units to participate. When a certain number of units have been paid in, the structure splits and the earlier participant receives consideration.

Recruiting for MLM

Recruiting forms a basis of this model. To some people this comes naturally and they can bring in new people very fast into the system. These are the people who reap the rewards of this model fastest. If you are new to this business and you are not so successful in recruiting, you need to keep trying patiently. The new people need to be properly informed and then only should be brought to the MLM meetings and introduced to this business. A good way of identifying a good prospect is by sending an online questionnaire. If they fill that up promptly, they are interested else they are not into it.

Multi level Marketing has been accused of being aversion of Ponzi Schemes for long time. In fact Amway, the most successful company, employing this business model had to fight numerous legal suits. This does not mean that it is illegal. MLM model is quite legal but not all companies that start as MLM firms keep straight. Some of these give the initial payouts and then later at the right time run away with the money or go defunct.

F. Startup has been involved in many different successful ventures including operating one of California's most prestigious catering companies. He currently spends his time managing his successful health based business from home. You can learn more about real ways to work from home and how to start an MLM business at his web site http://www.allenservices.net