Of all the home business startups, the most feared and misunderstood is network marketing or mlm (multilevel marketing). True direct marketing (the marketing network and mlm part) is an effective way to start a home business quickly and cheaply. But like everything else in life, there is a shyster and it is up to you to discover and practice your skills while exploring the opportunity.
What is mlm?
Multi-level marketing sometimes called a pyramid sale or pyramid scheme in some cases is a marketing strategy aimed at selling products or services where unpaid employees contribute the money. Instead of selling products to consumers, products are presented as a business opportunity where customers would sell to a particular group of people at the same location, and so on. The relationship between sending and word-of-mouth marketing is a big part of mlm.
Before you sign up on the dotted line to start a home business with a direct sales company, make sure you can see these ten warning signs of the mlm program.
- Not if low-quality product or service
There are many red flags that should alert you from a business or financial opportunity, but the biggest lack of product. Plans that promote collections on the marketing of a product or service can be a pyramid scheme. If a company is not looking to get more customers to buy its products, but that it is more interested in “building a team” or being a member of a marketing team, take it as a red flag.
The foundation of any good mlm business is access to products and services to reach customers. While team building may be part of that, money is earned on the products sold by the team, not by taking it personally.
- Horror and unnecessary product requests
Wild complaints are frequently seen in healthcare and healthcare companies where mareps boast that their products cure diseases or perform miracles.
Eric Tippetts tells a successful business is based on high-quality products. If the company you are considering joining has incomprehensible products or products that seem too good to be true, be careful. The last thing you want your name to be tied to is a bad product or product that becomes a court case.
- High-pressure sales tactics
The most common high-pressure tactic is the lure of low penetration. But in direct marketing, a good opportunity is a good opportunity no matter when you enter. In fact, it is safer to go with a company that has been around for more than five years (the longer is better) than start-ups. Any attempt by an attorney to protect you from learning the company, talking to others, or “sleeping on it” is not the person you want to work with.
- Pressure buy and stock inventory
All mlm businesses will have start-up capital. You can’t buy mcdonald’s without investing, and the same is true for direct sales, though not cheap.
What you need to be aware of is pay-based “fast track” plans or clicks to have an inventory that requires some cash. As a result of this practice, the law now requires mlm companies to sell records, but that does not mean that you need to be bound by credit before you can start and fully understand the business.
Having a few popular products on hand can be great, but do not fill your garage with products unless you are well aware, based on your experience in the business, that you can sell them.
- Negative company communication
Do not be afraid to ask difficult questions. If you do not get strong answers or are punished for not being a good thinker or believing in a company, consider yourself a red flag.
To be successful in any business, you need strong support and training. The law requires mlm companies to provide you with more information, information about the payment plan, and financial information about the average income earned by agents.2 learn this and ask questions. If the rep is reluctant to answer your questions or glosses over your concerns, he is not a co-worker. The law firm wants you to be notified
- Expensive on-go training or other business items
Some of the amway reps got into the hot water selling tapes they (reps) made and sold. Most represent teams and companies with free training may be locally and/or online. While they may have additional training (i.e., audio or video) you can afford, there should be no compulsion to do so.
Further, most companies have Networth for an annual convention, which can be fun and educational, but expensive to attend. If a company constantly pressures you to pay for training this is another red flag.
- Poor better business bureau rating
Of course, this is a difficult sign because bbb always marks low home business opportunities because they are doing homework, not from any survey. Thus, you can see if there are any complaints and how the company has dealt with them. If a company is responding and resolving problems (all companies in the entire industry will have customer service issues), that is a good sign. Thus, if they fail to respond or provide assistance, it is a red flag.
- Deceptive acts of advertising
Some mlm reps promote their business as a “job” or use another definition to attract attention. Mlm is not a job, a business. Any mlm rep promoting “work” is using deception and is not the person you want to work with. Other fraudulent (and often illegal) practices include making money promises or encouraging money laundering.