Chances are you’ve run across the term “MLM scheme” and asked yourself what this is (and how to avoid it). There is a great deal of confusion when it comes to the terms network marketing, MLMs, multi-level marketing, pyramid schemes and Ponzi schemes. This article will clear some of it up.

To put it simply, Network Marketing, also referred to as Multi-Level Marketing or just MLM,  is one business model for marketing and selling products and services. A company which uses the network marketing model will not hire a staff of sales representatives or human resources. They will not interview you to see if you are right for the job. Instead, they “allow” you to join the company as a member (by paying a start-up fee) and to spread the word and sell their products. The network marketing company also counts on you to recruit other members to help you sell the product. You in turn make commissions on the amount of products/services you sell and the number of people you can recruit into helping you with sales and recruitment.

Even though each MLM company differs in what products or services they offer, in their compensation plans, in their training and longevity. . .

. . .Network Marketing, Multi-Level Marketing and MLM businesses are ALL legal businesses that help thousands of people around the world.

Many people are surprised when they learn that companies like Shaklee, Avon and Mary Kay are all successful multi-level marketing companies.

However, MLMs are often confused with Ponzi  or Pyramid Schemes. These are illegal establishments where members only make commissions when they recruit other members into the business. This is somewhat similar to what happens in network marketing but the trick with pyramid schemes is that there are really no products or services involved so no real value is really being offered to anyone.

One of the biggest reasons for the confusion about MLMs and Ponzi/pyramid schemes is that the latter were actually created by previously unsuccessful network marketers who weren’t able to make money by following the rules. So, they made their own illegal rules. In their early days, Ponzi schemes were more common because they weren’t recognized as such.  Nowadays, the FTC clamps down on them very quickly if they do happen to crop up and they are usually shut down before they can do much damage. It’s precisely because of Ponzi schemes that Network Marketing companies are subject to VERY strict controls by the FTC to insure that an MLM is not or will not eventually become a Ponzi/pyramid Scheme.

So, the reality is . . .the “MLM scheme” doesn’t exist.

There are MLM companies and MLM businesses, network marketing companies and network marketing businesses, multi-level companies and multi-level marketing businesses. And then there are Ponzi schemes or pyramid schemes. Two separate animals.

It just so happens that network marketing companies are helping thousands of people around the world to start their own businesses from home. These new business owners include people who were laid off from their jobs, those who lost their retirement funds and need a new source of income, moms who have decided that they want to spend more time with their kids, etc. And most network marketers enter into the business because the products that they now sell had significant positives impact on their lives.

However, anyone who has done even the least bit of research about network marketing will have seen the famous statistic. . .the 97 % failure rate. Yes, this is also true. It actually may be a little bit less at the time of this article but around 97% of those who enter into network marketing fail. Does this make network marketing a scam or scheme? No. But it probably makes you wonder what it takes to be in the elite 3%.
For most of us, it takes training, work, dedication and time. If you’ve been told that you don’t need to put in any effort to succeed in network marketing, you’ve been told wrong.Period.

The appeal and benefits of getting into network marketing include residual income and the flexibility to set your own hours and be your own boss.

It’s also something that you can start out doing in your spare time and at your own pace. If you are interested in becoming involved in network marketing, you have an enormous choice of solid, stable and exciting options. You could join an MLM that offers travel services, skin care products, health products, green products, business development products, and so much more. The list goes on and on.

So, the good news is that the “MLM scheme” does not exist. Something that you may not have wanted to hear is that only a small percentage of network marketers are successful. Having the right attitude is a big part of how successful you will become but even more importantly, you need the right training and a system that can work for you as well as your team.