Network Marketng

Wednesday, 4 January 2012

MLM Network Marketng

Top MLM Companies

We explore how the top MLM companies attained a great rating and then tell you exactly why all of that might not make a bit of difference to you.

25 of the Top MLM Companies

Let’s start by listing 25 of the most well-known network marketing companies. All of these companies have been around for more than ten years, and some go back thirty, even fifty years or more.

Amway – Herbalife – ACN – USANA – Pre-Paid Legal – Nu Skin – Forever Living – Arbonne – 4Life – Shaklee – Advocare – Sunrider – AmeriPlan – Nikken – Nature’s Sunshine – Freelife – Tahitian Noni – Reliv – Amazon Herb Company – Oxyfresh – Team National – Neways – GNLD – Univera – New Vision

There are 3 factors that were used to compile this list of 25 top MLM companies:
* Google page rank
* Alexa ranking
* Google trends

In other words, to get on the above list, a network marketing company needed to be favorable for each of the 3 factors.

Yes, we realize that you might be able to name a company or two that has been around for more than ten years but still was not on this list of 25. We did not pick and choose who to put on the list and who to leave out; it was all based on the 3 factors mentioned.

Other Possible Aspects of Top MLM Companies

There are other ways to be considered one of the top MLM companies and here are the main ways it could happen.

Age of the Company

How long a network marketing company has been around is important because it usually indicates they survived the bumps and bruises of getting up and running. A lot of MLM organizations do not last more than two or three years, and many fall by the wayside in a matter of months.

We urge you not to use the age of a company as the only measure of how good it might be. After all, even the best companies were new and unknown at some point.

Type of Product

Most of the MLM companies, past and present, feature nutritional supplements and/or personal care products. People joke about “lotions, potions and pills” but we should point out that 21 out of the 25 top MLM companies on the list above have health and wellness types of products.

What about the remaining 4 companies? One is a technology company (ACN) and the other 3 are service-related companies (Pre-Paid Legal, AmeriPlan, and Team National).

Although travel-related programs have gotten a lot of attention during the last few years, nothing from that field is on the list of 25.

Sales Volume

Some of the top MLM companies boast about reaching a lofty goal, such as 100 million dollars in sales in a certain amount of time.

A thing like that is certainly something to be proud of. However, the total number does not always tell the whole story. For example, if the total sales volume in one month is a million dollars, was that total reached by selling 100,000 items at $10 each or 5,000 items at $200 each?

Also, it would be interesting to know how much of the sales volume came from actual customers and how much was from independent distributors that buy product to remain qualified as an active distributor.

Number of Distributors

You can probably guess that the top MLM companies usually have lots of distributors or members and perhaps even a large number of retail customers. The total number does not always tell the whole story, just as with sales volume.

Our curious nature wants to know if a couple of groups are really good at recruiting and sponsoring and that is why the total membership is high. Also, it can make a big difference if the network marketing opportunity is truly global or available in just a handful of countries.

Number of Millionaires

Network marketing gives people from all walks of life an ideal opportunity to attain financial independence, and many distributors have become millionaires.

A few of the top MLM companies brag about how their program has created more millionaires than any other home business.

Just because some people have done well with a particular program does not mean it is the right one for everybody.

Endorsements from Doctors or Athletes

It can be very impressive to hear a well-known doctor or athlete speak about the benefits of a juice or nutritional supplement. That’s fine and dandy, but is that the only reason to join an opportunity?

There are several things to take into consideration, so we urge you to look at the whole picture before making your final decision. And that leads us to a fundamental section of this page…

The Top MLM Companies on YOUR List of Favorites

This is The Most Important List of All

We have looked at how the top MLM companies might have attained that distinction, but now we want you to focus only on the programs from one list and one list only!

So, which list are we talking about? It’s one that you create. You start by looking at a wide variety of network marketing companies. Make notes about any programs that appeal to you in some way.

It does not matter how many programs end up on your list. Once you feel that you have seen enough, you can start to narrow that list down until you have 2 or 3 programs that remain on your list. These are YOUR top MLM companies.

As you narrow things down, get more information about the background of the company, the founders and/or top managers, the pay plan, and so forth. Make sure you understand what it will take for you to reach your desired level of success. We say this because the requirements that need to be met in order to attain a strong residual income can vary from one program to another.

Also, picking a good team can be as important as picking a good company. A good team or downline group can provide training and support above and beyond what the company might offer.

Your final decision should be based on what you feel in your head AND your heart. Were talking about a combination of rational analysis along with feelings or emotions.

If it does not feel positive (and strong) in both places, then maybe that particular opportunity is not a good “fit” for you.

Here’s what it all comes down to…
It really does not matter if the program you like most is one of the top MLM companies or a relatively unknown one.

The main thing is to pick a network marketing program that you feel good about. Also, you should feel passionate about following a simple plan of action. Those are the keys to success in MLM, or any other type of home business.

Click here to go from the “Top MLM Companies” page to the home page.

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MLM Resources – How To Find Them

MLM resources are almost mandatory if one wants to succeed with their new ventures online or in the Internet world. These resources would help one get the kind of information and data that they would have got normally after being in the business for one year. But the problem with most of the new distributor’s expectations with tools and resources is that they want them to reveal ideas as to how could they make quick money and that too with as little hard work involved as possible. To be very blatant, there is nothing called get rich within days and MLM resources would not be able to help in this regard either.

How to Find Good MLM Resources

One of the best ways to find details relating to a multi-level marketing company is to make use of search engines and the Internet. With these search engines, there are lots of chances of one finding data relating to a multi-level marketing company. Not only that but one could also come across different other network marketers who would be looking for the same information as you are. Some of those network marketers could have failed miserably and some of them would have been successful with their ventures. Talking to them and exchanging ideas and suggestions would be a great way to cement your relationship with them and also get some valuable information.

There are also lots of threads and forums about the topic of MLM resources and one would be able to participate in them as well. The participation and discussions would come in very handy and you would be exposed to new strategies that you probably would not have been aware of before.

Ask Others About MLM Resources

If you are not sure how to build and grow your MLM business, you should get involved in these forums and be a part of the discussions. Just type the word ‘forum’ along with the other keywords in the search engine and you would get huge number of pages which would be nothing but forums.

There are some people who are active members of such forums and some who log in only on a weekly basis. So if you have started a particular thread in the forum or if you have responded to a particular question in the forum and wondering as to why have you not received a response for the same, then do not worry as it might take some time. But it would not take more than a week or so depending on the popularity of the MLM resources or forums.

A Link to A Page Full of MLM Resources

You can find plenty of MLM resources on the business opportunity lead page.

MLM Network Marketng

Whether you are an MLM distributor or company, sound business, tax and liability reasons may have guided you to incorporate.

So you have decided to incorporate your business and you are headed down to your lawyer's office. Hold off for a minute, and take some time to get organized - save yourself some time and money. Here is a checklist for some things to consider for a first meeting with your corporate counsel.

1. FIRST, GET YOURSELF TO A CPA. Other than yourself, the most important person with whom your corporate attorney will work is your accountant. Your accountant will provide valuable input on corporate financial structure, funding, capitalization, allocation of stock, etc. Your lawyer will be looking to your accountant to provide an opening balance sheet for the corporation from the time that the business moves from sole proprietorship or partnership to corporate status.
2. CORPORATE NAME. Contact your attorney ahead of time with the proposed name of the corporation. A quick phone call to the Corporation Commissioner will discover whether the proposed corporate name is available. Will the corporation have a special mark or logo that needs federal trademark protection or state registration.
3. CORPORATE STRUCTURE. Who will be the officers of the corporation, i.e., president, vice president, secretary and treasurer? Will there be a chief executive officer or chief operating officer? It may be that the bylaws of the corporation should have a special description for specialized corporate officers.
4. SHAREHOLDERS. How many shares should your corporation be authorized to issue; how many shares should be issued at the commencement of a corporation and how many held in reserve for future issuance? Should there be separate classes of shareholders? Should some shareholders be preferred shareholders and thus receive first crack at dividends? How many shareholders are anticipated? Will the number of shareholders trigger any securities registration problems?
5. SHAREHOLDER AGREEMENTS. Is there a method for preventing shareholder voting deadlock? You may wish to discuss with your lawyer possible pre-incorporation shareholder agreements which govern employment status of key shareholders or commit shareholders to voting a certain way on specific corporate issues.
6. THE BUY-SELL AGREEMENT. The first meeting with your lawyer is a good time to discuss buy-sell agreements. What happens when one of the shareholders wishes to leave the business. Under what circumstances should he or she be able to dispose of stock to third parties? As a general matter, in closely held corporations, either the corporation or other shareholders are granted the right to buy the stock. What circumstance should trigger the buy-sell agreement: death, disability, retirement, termination, etc.? Should the buy-sell agreement be funded by key man insurance that would fund the purchase of stock in the event of death of a key shareholder? What will be the mechanism for valuing stock: annual appraisal, book value, multiple earnings, arbitration, etc.?
7. PLANNING FOR FUTURE SHAREHOLDERS. Are there plans to take on new investors or shareholders in the future? Are there plans for taking the company public some day? If so, the initial structure of the articles of incorporation and stock may be used as an important planning tool for the future. Should shareholders have preemptive rights, i.e., rights to buy additional stock in the event that more stock is issued so as to maintain their equity interest in the company? Are shareholders concerned about dilution of their interest in the company at the issuance of new stock such that agreements should be entered regarding anti-dilution?
8. CAPITALIZATION. At this point, the attorney works closely with your CPA. What will the initial capitalization or funding of the corporation total? Will shareholders make loans to the corporation and contribute the rest as equity capital? What is being contributed by respective shareholders in subscription to stock: money, past services, equipment, assets of an ongoing business, licensing agreements, etc.? What value will be placed on assets which are contributed to the corporation?
9. BOARD OF DIRECTORS. Who will be on the board of directors? How many initial directors will there be? Will respective shareholders have the right to elect proportionate numbers of members of the board of directors? Is there a mechanism built in for preventing voting deadlock by the members of the board of directors? Should the shareholders consider an independent director for breaking a deadlock or a mechanism for submitting decisions to arbitration?
10. CORPORATE HOUSEKEEPING. Your attorney will need to know a variety of corporate housekeeping information. For instance, information on the anticipated number of employees in the coming 12-month period will be necessary for application for federal tax employer i.d. number. Will the corporation have a fiscal year ending December 31 or at another point in the year? Will the corporation be on a cash basis or accrual basis? Will the corporation initially authorize salaries for officers of the corporation? What institution will be the corporate bank and who will be authorized to deal with the bank and on what terms? Will there be limitations on borrowing power of officers or directors? What will be the date for the annual meeting of the board of directors and shareholders? Who will be the registered agent? - As a general matter, your attorney will be registered agent.
11. KEY EMPLOYEES. The inception of the corporation is a good time to consider employment agreements with key employees. Also to be considered should be confidentiality agreements with key employees who have access to special technology, trade secrets, or customer financial or manufacturing information which is proprietary to the business. At the same time, noncompete agreements should be considered for key employees, as well as possibly for officers and directors.
12. EMPLOYEE PLANS. Be prepared to talk about future plans for employee benefit plans such as profit-sharing plans, pension plans, stock option programs, fringe benefit programs, medical reimbursement plans, etc. If not implemented in the beginning of the corporation, it is good to have in mind where such programs may fit in at a later date.
13. CHAPTER S OR C. Will the corporation be a Subchapter S corporation where income and losses flow through to shareholders and the corporation pays no income tax, or will it be a standard Section C corporation where it does in fact pay income tax and income is not placed on the shoulders of shareholders? If the corporation will sustain major losses and shareholders have other sources of income against which they wish to write-off losses, chances are Subchapter S may be appropriate. Historically, most businesses have been incorporated as a Section C corporation.

As can be seen, there is much to discuss at your first meeting with corporate counsel. A little time, effort and organization ahead of that meeting will pay off handsomely to the small business owner.

Network Marketing information

Whether you are an MLM distributor or company, sound business, tax and liability reasons may have guided you to incorporate.

So you have decided to incorporate your business and you are headed down to your lawyer's office. Hold off for a minute, and take some time to get organized - save yourself some time and money. Here is a checklist for some things to consider for a first meeting with your corporate counsel.

1. FIRST, GET YOURSELF TO A CPA. Other than yourself, the most important person with whom your corporate attorney will work is your accountant. Your accountant will provide valuable input on corporate financial structure, funding, capitalization, allocation of stock, etc. Your lawyer will be looking to your accountant to provide an opening balance sheet for the corporation from the time that the business moves from sole proprietorship or partnership to corporate status.
2. CORPORATE NAME. Contact your attorney ahead of time with the proposed name of the corporation. A quick phone call to the Corporation Commissioner will discover whether the proposed corporate name is available. Will the corporation have a special mark or logo that needs federal trademark protection or state registration.
3. CORPORATE STRUCTURE. Who will be the officers of the corporation, i.e., president, vice president, secretary and treasurer? Will there be a chief executive officer or chief operating officer? It may be that the bylaws of the corporation should have a special description for specialized corporate officers.
4. SHAREHOLDERS. How many shares should your corporation be authorized to issue; how many shares should be issued at the commencement of a corporation and how many held in reserve for future issuance? Should there be separate classes of shareholders? Should some shareholders be preferred shareholders and thus receive first crack at dividends? How many shareholders are anticipated? Will the number of shareholders trigger any securities registration problems?
5. SHAREHOLDER AGREEMENTS. Is there a method for preventing shareholder voting deadlock? You may wish to discuss with your lawyer possible pre-incorporation shareholder agreements which govern employment status of key shareholders or commit shareholders to voting a certain way on specific corporate issues.
6. THE BUY-SELL AGREEMENT. The first meeting with your lawyer is a good time to discuss buy-sell agreements. What happens when one of the shareholders wishes to leave the business. Under what circumstances should he or she be able to dispose of stock to third parties? As a general matter, in closely held corporations, either the corporation or other shareholders are granted the right to buy the stock. What circumstance should trigger the buy-sell agreement: death, disability, retirement, termination, etc.? Should the buy-sell agreement be funded by key man insurance that would fund the purchase of stock in the event of death of a key shareholder? What will be the mechanism for valuing stock: annual appraisal, book value, multiple earnings, arbitration, etc.?
7. PLANNING FOR FUTURE SHAREHOLDERS. Are there plans to take on new investors or shareholders in the future? Are there plans for taking the company public some day? If so, the initial structure of the articles of incorporation and stock may be used as an important planning tool for the future. Should shareholders have preemptive rights, i.e., rights to buy additional stock in the event that more stock is issued so as to maintain their equity interest in the company? Are shareholders concerned about dilution of their interest in the company at the issuance of new stock such that agreements should be entered regarding anti-dilution?
8. CAPITALIZATION. At this point, the attorney works closely with your CPA. What will the initial capitalization or funding of the corporation total? Will shareholders make loans to the corporation and contribute the rest as equity capital? What is being contributed by respective shareholders in subscription to stock: money, past services, equipment, assets of an ongoing business, licensing agreements, etc.? What value will be placed on assets which are contributed to the corporation?
9. BOARD OF DIRECTORS. Who will be on the board of directors? How many initial directors will there be? Will respective shareholders have the right to elect proportionate numbers of members of the board of directors? Is there a mechanism built in for preventing voting deadlock by the members of the board of directors? Should the shareholders consider an independent director for breaking a deadlock or a mechanism for submitting decisions to arbitration?
10. CORPORATE HOUSEKEEPING. Your attorney will need to know a variety of corporate housekeeping information. For instance, information on the anticipated number of employees in the coming 12-month period will be necessary for application for federal tax employer i.d. number. Will the corporation have a fiscal year ending December 31 or at another point in the year? Will the corporation be on a cash basis or accrual basis? Will the corporation initially authorize salaries for officers of the corporation? What institution will be the corporate bank and who will be authorized to deal with the bank and on what terms? Will there be limitations on borrowing power of officers or directors? What will be the date for the annual meeting of the board of directors and shareholders? Who will be the registered agent? - As a general matter, your attorney will be registered agent.
11. KEY EMPLOYEES. The inception of the corporation is a good time to consider employment agreements with key employees. Also to be considered should be confidentiality agreements with key employees who have access to special technology, trade secrets, or customer financial or manufacturing information which is proprietary to the business. At the same time, noncompete agreements should be considered for key employees, as well as possibly for officers and directors.
12. EMPLOYEE PLANS. Be prepared to talk about future plans for employee benefit plans such as profit-sharing plans, pension plans, stock option programs, fringe benefit programs, medical reimbursement plans, etc. If not implemented in the beginning of the corporation, it is good to have in mind where such programs may fit in at a later date.
13. CHAPTER S OR C. Will the corporation be a Subchapter S corporation where income and losses flow through to shareholders and the corporation pays no income tax, or will it be a standard Section C corporation where it does in fact pay income tax and income is not placed on the shoulders of shareholders? If the corporation will sustain major losses and shareholders have other sources of income against which they wish to write-off losses, chances are Subchapter S may be appropriate. Historically, most businesses have been incorporated as a Section C corporation.

As can be seen, there is much to discuss at your first meeting with corporate counsel. A little time, effort and organization ahead of that meeting will pay off handsomely to the small business owner.

MLM Network Marketng

Direct selling has its roots firmly planted in the seedbed of American colonial capitalism. The "Yankee Peddler" was a marketing phenomenon of the colonial period - a drummer who went from community to community selling household goods and farm implements. He was the 17th century version of the Fuller Brush, Tupperware, or Amway salesperson. Companies and products, which have traditionally been sold through "conventional" distribution channels (people going to the product), are now recognizing the potential of Direct Sales, Party Plan sales and Multi-Level Marketing to achieve spectacular sales momentum. There are subtle but important differences between these three methods of person to person selling.

Direct Sales income is earned through addition soliciting one customer at a time and then combining the personal sales commissions earned from each personal sales effort to create the weekly or monthly paycheck.

Party Plans sales commissions are earned from leveraging your efforts through group selling by combining multiple retail commissions earned from a single sales presentation.

MLM sales commissions are earned from personal sales commissions combined with the geometric growth generated by sponsoring others who make sales and sponsor others creating an ongoing multiplication effect.

Direct Sales: A direct salesperson typically is an independent contractor working on a commission basis on sales of a company’s products or services. A sales order is written and the company normally ships the product directly to the end customer. Usually there is no need for the salesperson to stock products other than demonstration items. In the typical direct sales company, the income opportunity is tied to receiving a percentage of the retail cost of the product sold. This is called a commission. Most direct sales products require a reasonably sophisticated level of training on proper sales presentation techniques. While most direct sales products are non consumable, there are exceptions such as insurance and pharmaceutical sales. I define consumable as a product typically reordered or a service renewed at least four time a year or more. Most experienced direct sales people tend to be direct selling professionals, many of which are on a career path and work on a full time work basis. However, many people try direct selling on a part time basis. Unless a person aspires to sales management positions, the direct sales income is based on the combined commissions earned on all personal sales made during the pay period. If you are a sales manager, there may be potential profit called commission overrides on the sales efforts of those you train and manage.

Party Plan: There are probably few women over thirty years old that have not attended a home party offered by a sales rep from Tupperware, Home Interiors, Discovery Toys, or other successful Party Plan companies. The concept of group sales through the Party Plan concept is quite simple. In comparing traditional Direct Sales to Party Plan, two significant differences occur. First, the distribution channel is simplified because the product normally moves directly from the manufacturer or distribution company to the Party Plan hostess to be distributed to her party attendee customers. The hostess is a volunteer ambassador for the products that can earn gifts, cash or credit toward the purchase of her own product selections. This cycle is begun and completed by the Independent Representative who will ultimately be the catalyst for the retail sales of the product at the party.

Most products offered through Party Plan sales are high in quality, low in cost, highly demonstrable and stimulate impulse buying. The independent representative making the group sales presentation relies on word-of-mouth "advertising" by satisfied purchasers to create a brand name loyalty and an ever expanding demand for the company’s products. Enticing the party attendees to return to future parties is critical to the growth of a good party plan system. This can be accomplished by introducing new products, offering future discounts to past customers, or most assuredly by making sure that the attendee has fun and looks forward to a repeat performance. The sales representative can use this group sales party environment to recruit other candidates to act as hostesses for their next party. In addition, they can sponsor new independent sales representatives, usually the hostess herself, on whose future sales they will realize a small return. This recruiting effort is more aggressive than a typical Direct Sales model, but much less aggressive than a typical MLM recruiting model. However, most income generated is based on the direct sales effort to the group attending the party.
In the past Party Plan companies were structured like a direct sales model with single level commission compensation offered to the sales representative. Today, Party Plan companies are combining the Multi Level Marketing compensation model with the time tested and proven Party Plan concept.

Multi Level Marketing: Today, Multi Level Marketing Companies account for billions of dollars in sales, and are estimated to influence one out of every three homes in America with a marketing related contact. In fact, the Direct Selling Association reported that MLM sales in the US represent over 30 billion dollars and has already exceeded 100 billion dollars worldwide. Today, virtually any consumer product is open to Multi Level Marketing style distribution. Any company or entrepreneur ignoring the power of MLM will certainly miss the future.

At a time in history when large numbers of highly professional and entrepreneurial persons are motivated to get out of the corporate arena and into their own businesses, the MLM Industry is growing at an unprecedented rate.

Through MLM, also called Network Marketing, the direct selling process can be duplicated by a sales person who sponsors and trains others. An ever-increasing income stream can be generated through bonuses on sales made by several levels of downline distributors. This creates geometric growth and momentum fueling the spectacular sales volume of which this business is capable. The dollars which would otherwise have gone toward expensive packaging and advertising campaigns are paid directly to the MLM representatives as commissions and bonuses rewarding their sales efforts for retailing the product and sponsoring others who retail product and sponsor others, etc.

In conclusion, it should be pointed out that it is not uncommon for independent representatives to initially get involved in direct selling, party plan selling or MLM opportunities on a part-time basis. It is entirely feasible for someone to continue to work at their full time job while building a second income. When their part time income becomes large enough to provide the basic financial necessities is the point at which most independent representatives will consider devoting full time to their direct selling/party plan/mlm pursuits.

Whether you are considering Direct Sales, Party Plan Sales, or Multi Level Marketing, never before has their been an opportunity so right for the time and a market so ready to embrace the opportunity. Timing is everything. If you are considering a part time or full time sales opportunity with low risk and high potential rewards, the time is NOW!

________________________________________________________________________

About The Author
MLM Consultant Michael L. Sheffield is the CEO of Sheffield Resource Network, a full-service direct sales and multi level marketing (MLM) consulting firm. He is a Co-Founder and Chairman Emeritus of the Multi Level Marketing International Association and in 2001 he was inducted into the MLMIA Hall of Fame. He and the Sheffield team have assisted in hundreds of national and international MLM corporate start-ups as well as offered a full line of services for established direct sales companies. As the most noted expert MLM consultant on compensation plans, he has been a guest lecturer on the subject for the DSA, University of Illinois, University of Texas, Berkeley and Harvard Alumni Association. He has helped launch over 200 new products marketed by direct selling companies around the globe. He can be contacted at 480-968-6199, Sheffield Resource Network, 2239 N. Hayden Road, Suite 103, Scottsdale, AZ. 85257, website address: .

Network marketing, and MLM (multi-level marketing)

In order to understand what network marketing is you also have to understand what it isn’t.

Network marketing isn’t a pyramid scam. Pyramids are programs similar to chain letters where people just invest money based on the promise that other people will put in money that will filter back to them and somehow, they’ll get rich. A pyramid is strictly a money game and has no basis in real commerce. Normally, there’s no product involved at all, just money changing hands. Modern-day pyramids may have a product, but it’s clearly there just to disguise the money game.

Network marketing is a legitimate business. It’s based on providing people real, legitimate products they need and want at a fair price. While some people do make a lot of money through network marketing, their financial benefit is always the result of their own dedicated efforts in building an organization that moves real products and services.
A pyramid is illegal and is based on taking advantage of people. For a person to actually make money in a pyramid scheme, someone else has to lose money. But in network marketing, each person can multiply his or her efforts, skill and talents by helping others to be successful. Network marketing has proven itself as part of the new economy and a preferred way to do business here and around the world.

Network Marketing isn’t about taking advantage of your friends and relatives. Only a few years ago network marketing meant retailing to and sponsoring people from your “warm list” of prospects. Although sharing the products or services and the opportunity with people you know is still the basic foundation of the business, today we see more people using sophisticated marketing techniques such as the Internet, conference calling and other long-distance sponsoring techniques extending one’s network across the country.

Network marketing isn’t a get-rich-quick scam. Of course some people do make large amounts of money very quickly. Many would say they’re lucky. But success in networking isn’t based on luck. Unfortunately, money won’t sprout wings and fly into a new distributor’s bank account no matter what someone has promised them. Success in network marketing is based on following some very basic yet dynamic principles.

Now let’s discuss what network marketing is.

Network Marketing is a serious business for serious people. It’s a success formula. It’s a proven system where the design, creation and expense the corporate team has gone through becomes a road map for the distributors own success. They just need to follow the simple, proven and duplicable system that a good company provides.

Network marketing is leverage. The reason is that independent distributors can leverage their time and increase the number of hours of work effort on which they can be paid by sponsoring other people and earning a small income on their efforts. J. Paul Getty, who created one of the world’s greatest fortunes, said “I would rather make 1 percent on the efforts of 100 people than 100 percent on my own efforts.” This very basic concept is the cornerstone of network marketing.

For example, most successful people building a network marketing business do so in an organized method. They work a few dedicated hours each week with each hour of effort serving as a building block for their long-term business growth. Then they sponsor other people and teach those people how to sell the company product and sponsor others who duplicate the process.

By helping the people personally sponsored to sponsor others, your distributors duplicate themselves. As this process continues, they create geometric growth that can lead to hundreds or even thousands of people coming into their (and your) business. They leverage their time by helping others to be successful and earn an income from all their combined efforts.

Network marketing is a low overhead, home based business that can actually offer many of the tax advantages associated with owning your own business. And with network marketing your distributors have limited capital requirements, fewer geographical limitations, no or low minimum quotas required and no special education or skills needed.

Network marketing is a people-to-people business that can significantly expand the distributor’s circle of friends. It’s a business that enables them to travel and have fun as well as enjoy the lifestyle that extra income can provide.
Every type of marketing has it critics. Network Marketing is no exception. Educating your downline distributors and customers on the benefits and rewards of being involved in this great industry should be at the top of your list of your regular communication content.

Pyramid Structure: An Organizational Problem

The Un-Pyramid

For most MLMs, the product is really a mere diversion from the real profit-making dynamic. To anyone familiar with MLMs, the previous discussion (which focused so much on the fact that MLMs are "doomed by design" to reach market saturation and thus put the people who are legitimately trying to sell the product into a difficult situation) may seem to miss the point. The product or service may well be good, and it might oversaturate at some point, but let's get serious. The product is not the incentive to join an MLM. Otherwise people might have shown an interest in selling this particular product or service before in the real world. The product is the excuse to attempt to legitimate the real money-making engine. It's "the cover."

Intuitively, we all know what is really going on with MLMs. Just don't use the word "pyramid"!

"You see, if you can convince ten people that everyone needs this product or service, even though they aren't buying similar products available in the market, and they can convince ten people, and so on, that's how you make the real money. And as long as you sell to a few people along the way, it is all legal." Maybe...

But the way to make money in all this is clearly not by only selling product, otherwise you might have shown an interest in it before, through conventional market opportunities. No, the "hook" is selling others on selling others on "the dream."

Math and Common Sense

MLMs work by geometric expansion, where you get ten to sponsor ten to sponsor ten, and so on. This is usually shown as an expanding matrix (just don't say "pyramid"!) with corresponding kick-backs at various levels.

The problem here is one of common sense. At a mere three levels deep this would be 1,000 people. There goes the neighborhood! At six levels deep, that would be 1,000,000 people believing they can make money selling. But to whom? There goes the city! And the MLM is just getting its steam going. Think of all the meetings! Think of all the "dreams" being sold! Think of the false hopes being generated. Think of the money being lost.

It Will Fail??? It Cannot Fail???

Nothing irritates a die-hard MLMer more than the preceding argument. If you point out the absurdity, for example, that if "the pitch" at an Amway meeting were even moderately accurate, in something like 18 months Amway would be larger than the GNP of the entire United States, then listen closely for a major gear-shift: "Well, that is absurd, of course. Not everyone will succeed, and so the market will never saturate."

Well, which is it? Are we recruiting "winners" to build a real business, or planning by design to profit off of "losers" who buy into our "confidence"?

During "the pitch," anyone can make it work. "It's the opportunity of a lifetime." "Just look at the math!" But mention the inevitable saturation and the losses this is going to cause for everyone, and then you'll hear, "Of course it would never really work like that." "Most will fail," you will be told, "but not you, Mr. Recruit. You are a winner. I can just see it in your eyes."

If you are a starry-eyed recruit, it will grow as presented. If you are a logical skeptic, then of course it would never really work like that.

But the dialog usually never even gets to this. The fact that MLM is in a mad dash to oversupply is largely chided as mere "stinkin' thinkin'." Expert MLMers know how to quickly deflect this issue with parable, joke, personal testimony, or some other sleight of mind.

New Solution: A Retarded MLM

Some modern incarnations of MLMs attempt to address this particular problem by limiting the number of people you can sponsor, say, to four. But the same geometric expansion problems exist; the failure mechanism has just been slowed down a bit. And now there is the added problem of even more unnecessary layers in the organization.

The claim that an MLM is merely a "common man" implementation of a normal real-world distribution channel becomes even more absurd in this case. Imagine buying a product or service in the real world and having to pay overrides and royalties to five or ten unneeded and uninvolved "distributor" layers. Would this be efficient? What value do these layers of "distributors" provide to the consumer? Is this rational? Would such a company exist long in a competitive environment?

Confidence Men and the Shadow Pyramid

The age-old technique of "con men" is to create "confidence" in some otherwise dumb idea by diversion of thought, bait, or force of personality. The victim gets confidence in a bogus plan, and, in exchange, the con man gets your money. MLMers are very high on confidence.

Since the brain inevitably intrudes itself into the delusion that an MLM could ever work, spirits drop and attitudes go sour. But this depressive state can itself be exploited. As doubts grow when the MLM does not do what recruits were first "con"fidenced to expect, then a further profit can be made keeping the confidence going against all common sense.

Thus, a parallel or "shadow" pyramid of motivational tapes, seminars, and videos emerges. These are a "must for success," and recruits are strong-armed into attending, buying, buying, and buying all the more. This motivational "shadow pyramid" further exploits the flagging recruits as they spiral inexorably into oversaturation and failure. The more they fail, the more "help" they need from those who are "successful" above them.

So, MLMs profit by conning recruits up-front with a "distributorship fee," and then make further illicit money by "confidencing" these hapless victims as they fail via the "sale" of collateral material.

Special MLM "Job" Offer: A Losing Proposition

Would a rational person, abreast of the facts, go to work selling any product or service if he or she knew that there was an open agenda to overhire sales reps for the same products in the prospective territory?

What do you think? Is this a good "opportunity" or a recipe for collective disaster?

So, as the saying goes, "Get in early!" This is a rationalization on the level of "getting in early" on the L.A. looting riots. If profit from the sale of products is fundamentally set up to fail, then the only money to be had is to "loot" others by conning them while you have the chance. Don't miss the "opportunity," indeed!

Where is the money coming from for those at the top? From the sucker at the bottom... as in every pyramid scheme. The product could be, and lately has been, anything.

The important thing is to exploit people while the exploiting is good, if you want to make quick money at MLM.

MLM Network Marketng

First, we will analyze the "driving mechanism" of MLMs. We will detail how they are intrinsically unstable, guaranteed by design to oversaturate the market with no one noticing. We will look at why MLMs can never equalize into profitability the way companies in the real world can, so that the result will be that the organization as a whole cannot, even in theory, be profitable. When this inevitable destiny occurs, the only money to be made is not from the product or service but from the losses of people lower down in the organization.

Thus the MLM organization becomes exploitative, and many high-level MLM promoters have been shut down, the "executives" incarcerated, for selling the fraud of impossible success to others. Other, larger MLMs have survived by hiring large batteries of attorneys to ward off federal prosecutors, even bragging about the funds they have in reserve for this purpose.

The unfortunate "distributor" at the bottom is the loser, and once this becomes apparent beyond all the slick videotapes and motivational pep-talks, good people start to get a bad taste in their mouths about the whole situation.

So, yes, money can be made with MLM. The question is whether the money being made is legitimate or "made" via a sophisticated con scheme. And if MLM is "doomed by design" to fail, then the answer is, unfortunately, the latter.

But how exactly does this happen, and must it always?

Doomed by Design?

The first question is this: Is any company choosing this marketing strategy destined to fail, to degenerate into an exploitative venture, regardless of how good the product is?

To see this clearly we must go through an, otherwise, obvious and elementary discussion of how any business must be careful not to overhire, overextend, or oversupply a market.

The Real World

Any business must carefully consider supply and demand. For example, if the ReVo Corporation thinks that it will have a full-fledged fad on their ovoid sunglasses next summer, perhaps they should plan to build and distribute, say, 10M units. This involves gearing up factories, setting up distribution and dealer networks, and carefully managing the inventories at each level so that ReVo will still have credibility with their distributors, retail outlets, and the public the following year.

If it turns out that there is a "run" on ReVo products, and they sell out in mid-June, then they have miscalculated demand and will miss out on profits they could have made. The more serious problem, however, is overestimating the saturation point for the product. If they make 10M units, and sell only 2M units, this may be the end of ReVo as a company.

The all-too-obvious point here is that management of supply and demand, and keen insight into realistic market penetration and saturation are crucial to any business, for any product or service. Mismanagement of this aspect of a business will eclipse good market access, excellent product design, human resource assets, production quality, and so on. Simply stated, a failure to "hit the target" of supply and demand can ruin a company if the market is oversaturated.

Market Dynamics and the End of the Cold War

Interestingly, the issue of supply and demand is what brought the USSR to its knees. By design, the Soviet government tried to macro-manage supply, where bureaucrats would decide how many potatoes were needed, how much toilet paper, etc. Assuming these bureaucrats did the best they could, unfortunately their efforts to deliberately manipulate the control "knob" of supply and demand was not good enough. Notwithstanding their good intentions, they were usually wrong, which created huge shortages and surpluses, and led to a massive economic collapse.

Seeing the disastrous end of market naiveté in Russia should help clarify the fundamental problem with the MLM approach. In the real world, the profit of a company is directly related to the skill and prescience of the "hand" on the "supply knob," so to speak. In the USSR, that "hand" could not react fast or accurately enough to market realities through the best efforts of the bureaucrats.

With MLMs, the situation is much worse. Nobody is home. Even the Soviets had someone thinking about how much was enough! If the bureaucrat in Russia was having a hard time trying to play Adam Smith's "invisible hand" in setting the supply level in the Soviet Union, then an MLM "executive" is in a truly unfortunate position. Not only is there no one assigned to make the decision of how much is enough, the MLM is set up by design to blindly go past the saturation point and keep on going. It will grow till it collapses under its own weight, without even a bureaucrat noticing.

MLM is like a train with no brakes and no engineer headed full-throttle towards a terminal.

"Everyone Will Want to Buy This Product!"

All products and services have partial market penetration. For example, only so many people wish to use a discount broker, as evidenced by the very successful but only partial market penetration of Charles Schwab. Not everyone wishes to join a particular discount club, or buy gold, or drink filtered water, or wear a particular style of shoe, or use any product or service. No one in the real world of business would seriously consider the thin arguments of the MLMers when they flippantly mention the infinite market need for their product or services.

The Demand Problem: Of Widgets and MLMs

Imagine a neat new product called a Widget that will sell for $100 (a fixed price, to keep it simple). Now, while everyone could use a Widget, not everyone will. Some will be afraid of anything new. Some will be loyal to existing brands. Some will want to buy an inferior product for less money. Some will want a more expensive product for prestige, regardless of quality. The reasons go on and on, and the fact is that only "X" Widgets will sell at $100.

The question for would-be marketeers is... what is "X," and how can it be predicted to maximize profits? The fact that "X" is hard to pin down does not mean that it does not exist, and every Widget built beyond "X" will end up producing a problem for the organization. The market only wants "X" Widgets at $100. What are you going to do with your extra inventory of Widgets beyond "X" that no one wants, and the sales people you hired to sell them?

No one can perfectly predict "X," and the situation is not nearly as simple as considered here, but the objective for marketeers is to forecast "X" as closely as possible in order to provide lasting value to all parties involved: to avoid missed opportunities as well as waste, loss, or failure.

The MLM Forecasting Approach: Ignoring the Target

Who has an eye on "X," the point of market saturation at a given price, in an MLM? Well, the funny thing, or perhaps the tragic thing, is that "X" will be reached and exceeded without anyone noticing or caring.

Let's just suppose that "X" has been reached today in a particular MLM; the number of possible units sold at this price has just been exceeded, and you happen to be a starry-eyed prospect sitting in an MLM meeting listening to the pitch. Now consider: Does anyone in this company know about "X"? Does anyone care? Is the issue being suppressed on purpose for some other motive? Since we are supposing that the market saturation number "X" has been reached, everyone joining the MLM from now on is buying into a false hope. But that is not what the speaker will be saying. He will be telling you, "Now is the time to join. Get in on the 'ground floor'." But it is all a lie, even though the speaker may not know it. The total available market "X" has been reached and nobody noticed. All the distributors will lose from here on out. Could this be you? How could you possibly know at what point you will become the liar in an MLM?

Pop or Drop

Perhaps a better paradigm than the runaway train analogy offered earlier of how MLMs perform over time is this: a helium balloon let loose in an empty room with a spiked ceiling, where product quality is analogous to the amount of helium. The better the product, the faster the balloon will rise, accelerating unhindered, towards disaster. The other option would be the case of a lousy product, in which case the balloon will sink of its own accord, never getting off the ground. To be sure, equilibrium is not in the cards, except perhaps as an accident, and then only temporarily. MLMs are intrinsically unstable. For any company that chooses an MLM approach, it's pop or drop.

MLMs vs. the Real World

The basic question that needs to be asked is this: If this product or service is so great, then why isn't it being sold through the customary marketing system that has served human society for thousands of years? Why does it need to resort to a "special marketing" scheme like an MLM? Why does everyone need to be so inexperienced at marketing this! Is the product just a thin cover for what is really a pyramid scheme of exploiting others? But more on that later.

From Contracted, Protected Distribution... to Mayhem

Imagine that Wendy's became suddenly possessed by the idea that "everyone needs to eat," and opened four Wendy's franchises on the four corners of an intersection in your neighborhood. Who would benefit from this folly? The consumer? Certainly not the franchises; they would all lose. Wendy's corporate? Perhaps temporarily, by speculative inventory sales while the unfortunate franchises were under the delusion that they could all make money. But in the end, the negative image of four outlets dying a slow death would likely offset the temporary inventory sales bubble. Even the most unreflective of the hapless franchisees would think twice about doing business in such a manner again. This is why real-world distributorships and franchises are contractually protected by territory and/or market.

Again, the simple fact is that even the most successful products will have partial market penetration. The same is true for services. Demand and "market share" are finite, and to overestimate either is catastrophic.

So why are MLM promoters obscuring this? Who is in control of the supply "knob," carefully and skillfully managing the size of the distribution channels, number of salespeople, inventory, etc., to insure the success of all involved in the business? The truth is chilling: nobody.

Imagine trying to write a computer model of how MLMs work, and you will see this point most vividly. An MLM could never work, even in theory. Think about it.

The People Machine

Chernobyl had a control system that failed. MLMs have no control mechanisms at all.

Where is the "switch" that can be flipped in an MLM when enough sales people are hired? In a normal company a manager says, "We have enough, let's stop hiring people at this point." But in an MLM, there is no way to do this. An MLM is a human "churning" machine with no "off button." Out of control by design, its gears will grind up the money, time, credibility, and entrepreneurial energy of well-meaning people who joined merely to supplement their income. Better to just steer clear of this monster to begin with.

There is simply no way to avoid the built-in failure mechanism of MLMs. If a company chooses to market this way, it will eventually "hire" (with no base pay and charging to join) far too many people.

Thus, the only "control system" will be the inevitable losses and subsequent bad image the MLM company will gain after it does what it was designed to do: fail. And sooner or later we have got to stop blaming this particular MLM company or that, and admit that the MLM technique itself is fundamentally flawed.