That question has been debated since Amway was accused of being a pyramid scheme many decades ago. They were investigated and thoroughly scrutinized – and found to be a sound and legal business model. Since then, many companies have come and gone using this same or similar business model as their foundation. Unfortunately, some have been proven to be exactly that - a pyramid scheme. They are no longer in business.
What makes one company successful and another not so successful is just like any other business. They must have strong, knowledgeable leaders who make the right decisions. Many companies have an environment and opportunity that can produce multi-millionaires, while others’ distributors just never find success.
Now, to the pyramid scheme question. Since I devoted over 30 years in the corporate world, I’m very familiar with that pay structure. I was a commission-only sales representative. I served in the capacity of many different sales levels, from entry-level rep to territory manger. My background in in retail and wholesale. I have compared multi-level marketing to that of corporate sales.
The big comment from nay-sayers regarding networking marketing is that when distributor (or associate) B makes a sale, distributor A (the upline) also earns money from that sale. That happened to me in every sales job I held! When I made a sale, I made either a bonus or a commission. So did my sales manager. Often, the VP of Sales also received a bonus based on the sales team’s results. Taking that step further, the general manager did as well. Many people, at many levels, earned money from my successes.
When a person on my network marketing team makes a sale or enrolls a new distributor, just like in my corporate position, others also receive revenue. That’s teamwork, not a pyramid.
One major difference, though, is that in the corporate sales positions, very few people have the opportunity to earn an unlimited amount of income, and few find themselves at the top (CEO) no matter how hard they work and how successful they become. They don’t have control of how much income they make either. Picture this – the common corporate structure is the CEO at the top, with a couple VPs below him or her. On the next level down, you’ll have more department managers than you have VPs. And often there are other levels along the way as well, each with more employees than the level above them. One at the top, with each level (or row on an organization chart) underneath. Look at that as a diagram, and you will see a pyramid shape!
BAck to the earnings issue. What about 100% commissions? Even in this corporate structure, there was a “cap” in my earnings. When one of my territories grew (through my hard work) to where I was earning a very nice paycheck, management would say it was too big, split it up, and gave 1/2 of that territory to someone else. And I’d have to start building all over again.
In network marketing, the sky is the limit regarding revenue, and no one can keep you down if your desire is to climb to the top. You choose the level – you choose your position in the company – you choose your income. And they don’t split your team up to where you have to start building all over again.
I found this article to provide very good information about MLM company structures. Here is one of the network marketing companies with which I’m associated. As with any company, check them out, represent a company that provides products or services that are of interest to you, and make sure they are a legitimate company! Check their company financials, ask around, and my suggestion is to work with a company that’s been around for at least a few years. This is the same advice I’d give anyone who was thinking of investing in another business, no matter what the corporate structure.
The word best is really not for me to say. What is best for you might not be best for your next door neighbor, or even for your family members. The way to know what’s best for you is to determine where your interest lies. Find a product that you can represent according to your life style, your interests and your other businesses.
Choose a company that is not brand new. You can immediately be confident in promoting the product when you’re associated with a company that has proven success. One way to help gauge this is to find out what the average income is of each associate, and also how many high-income success stories there are. This will tell you what most earn, but also what the potential is and how reasonable it is to achieve that high income. Did only one person become a millionaire, or are there quite a few?
Choose a company that coincides with your lifestyle. Are you interested in health? There are plenty of health-related products offered through networking marketing companies. Juices, supplements, weight management, energy drinks, and exercise programs are everywhere. Pick one that has a good track record. I am a MonaVie distributor, but did not join the company until I drank the juice for a couple months. This made it possible to be a personal testimonial to the value of the products. I always recommend that people do their due diligence before signing up with any company.
Choose according to your interests. As an entrepreneur, I knew the importance for me to remain healthy. Staying healthy and being able to continue to grow my business is extremely important. I found I could achieve this through the MonaVie products. Are you interested in children’s products, travel, or general merchandise? There is a network marketing company that can serve your interests.
Choose a company that relates to your other business(es). My “main company” is Hartman Inventory Systems, a business package that is similar to a franchise. I help people start their own home inventory business. Another network marketing company I’m associated with is a legal service. This is a fantastic product, especially for entrepreneurs and small business owners. It’s very affordable, and I’m a customer as well as an associate. (Contact me if you’d like to learn more about this.) I’m sure you can see the value in choosing a product that relates to your other businesses. Think of your current target market, the industry, the desired results of your customers, and you’ll be able to pick the right network marketing company that is a good fit.
Network marketing companies require low entry fees and provide quick start-ups. Let the owners of these companies work on the marketing materials, payroll, research and growth. All you need to do is represent the product. This gives you time to devote to your own business, while earning additional income streams.
Most entrepreneurs realize the importance of passive income streams, especially when you’re just venturing into entrepreneurialship. While building our business, I found out just how valuable it is. When revenue is spotty in the beginning years of a new company, additional income streams are not just a benefit. They are a necessity!
The best way to have the extra income is to keep your current job while starting your new business. Of course, many new businesses are started because of job loss! If that’s the case, finding a part-time job is a good option. There are many opportunities, especially today, to find employment during hours that won’t conflict with your new business. Evening hours, very early moring, or weekends are options. Another possibility would be to work a couple 8- or 10-hour days per week. Take time to consider your options and decide what would conflict least and work best to enable you to still devote the time needed to build your business.
Networking marketing (commonly known as multi-level marketing, or MLM) can be a good option as well, and you’ll have total control of your time. Just a few hours a week devoted to a networking marketing company can add dollars to your annual revenue. Find a product or service that meets the needs of your main business’ target market, and you’ll be able to incorporate both into the time spent networking and when scheduling one-on-one meetings.
The main difficulty is staying focused. With proper planning, balancing more than one company and generating multiple income streams is possible. For a new entrepreneur, it is often essential!