Network Marketing and the Home-Based Business
Network Marketing (NM) Companies are a popular entry point for
many people considering a Home-Based Businesses. Formerly called
"Multi-Level Marketing" (MLM), these companies are characterized
by the Home-Based Business person, or Independent Business Owner
(IBO) selling products or services. The IBO gets paid commission
on sales of the products with the company acting as a
fulfillment center. The IBO gets paid (more substantial)
commissions based on the number of other IBO's he or she can
recruit into the company (the downline).
Because of their unique structure of downlines, uplines,
distributors, and sponsors, Network Marketing companies have
special considerations for anyone considering an NM opportunity.
Ownership - One thing to consider with an NM company is
that you don't really 'own your own business' in the sense that
you can choose what products or services to sell or take various
independent directions in growing your business. (There are
usually only two ways to grow an NM business; by building the
downline and/or establishing multiple NM businesses). NM
companies are more closely related to the franchise -- a
business structure that retains control on many operational and
management aspects of the business in return for providing a
branded, turnkey business. This is a trade-off you will make in
a Network Marketing company and you'll need to make sure this
fits into your vision of 'owning your own business'.
Legality - Is the Network Marketing structure of the
company legal? Since the first NM company appeared in 1959,
Network Marketing companies have fought various legal battles
relating to the pyramid-like structure of the organization and
in some cases relating to the products they sell. Check to make
sure the opportunity you're considering is not in legal hot
water.
Lead Generation - In the past, IBOs have been required to
sell the products to friends, family, extended family, church
members, PTO members, etc. The IBO's circle of contacts (called
'warm leads') is always limited. Modern Network Marketing
companies will have advanced Lead Generation tools in place and
the company should be able to assist and direct you in this
area. Make sure you won't be stuck selling only to your warm
leads and that there is a viable lead generation plan in place.
How far to Independence? - Ask your sponsor (the person
trying to get you into the company) if he/she is making an
independent living from the Network Marketing company. If the
sponsor is not independent, is their sponsor? Try to find out
how far up the chain you have to go to find someone who doesn't
have a day job.
A legitimate Network Marketing company can provide a valid
Home-Based Business opportunity in many cases. But due diligence
is definitely in order and doing your homework before signing on
the dotted line can save you disappointments and failure later
on.