Network marketing, otherwise known as multi-level marketing (MLM), is a business structure in which “hiring” consists of recruiting others into the company, and “payroll” consists of personal sales and commission from downline sales.

At the end of the day, everybody becomes salespeople who sell products and get other recruits to sell products. You earn for each product you sell and for each product your recruits sell. It can be thought of as a networking matrix, where the more recruits you get on board, the more income you make.

Pros of the System

It is possible to make money in a MLM system. The key is to get in at the right time and do well selling the product. Studies show that the majority do not make enough money to live off in such an environment, but the average does make between $2,000 and $3,000 a year. Getting in at the right time is important. In the early stages, the system has more possible people to recruit, while in the later stages it can be difficult to recruit and sell products.

Cons of the System

The system is widely criticized for a number of reasons. It widely resembles a pyramid scheme where the bottom pays the top. It is only different in that there is a product involved. Once the system reaches a certain level, there will be a shortage of recruits in the market, which may lead to it failing. A 5×5 matrix (each recruit getting 5 more recruits) will fail around level 10. At this point, the recruits towards the bottom will begin dropping out because they are losing money, which leads to a domino effect all the way up to the top.

That’s why MLM companies are often stigmatized as get-rich-quick or pyramid schemes. Still, some network marketing companies are nonetheless establishing solid reputations and pulling more and more interest from people disillusioned with the job market, failing pensions, and their lack of financial independence.

While the myth that all network marketing companies are scams is steadily being dispelled, some still question whether these businesses are actually worth getting involved in — can ordinary people be successful at them?

My answer is yes, especially if you consider the following tips.

1. Avoid companies with vague or manipulation in business opportunity presentations.

Companies that are legitimate shouldn’t be hesitant to tell you exactly what product(s) they sell, what’s required to get started, and how the compensation plan works. Many questionable MLM companies tend to use high-pressure sales tactics or manipulation to get you to sign up. Any company that won’t give you at least 24 hours to think over your decision isn’t worth your involvement.

2. Pick the right company and be wary of too-good-to-be true promises.

Check out the company’s business plan thoroughly and look for anything that seems fishy or unrealistic. Make sure there are testimonies of ordinary people who have found success with the business. If possible, get in touch with them, as company-sponsored testimonials could be exaggerated. Beware of companies that allude to you receiving compensation without putting time or effort into building your business. And don’t forget that, like any other self-employed person, you’ll need to file a 1099 and pay tax for any income you receive.

3. Take advantage of any and all training.

One of the greatest pitfalls of many network marketing companies is their failure to properly train recruits and equip them with the skills necessary to be successful.

Even though you don’t need a degree or a background in business to succeed as an independent contractor in a network marketing company, you’ll need to know how to run your “business” to maximize your profit. How far and how fast you go will usually depend on how much training you’ve had. Unfortunately, most of these companies don’t offer much in the way of training. They psych you up, hand you your materials, and let you loose.

This means you’ll have to pursue the information for yourself once you pick the right company to work with. One of the best ways to do this is by picking the brain of the person who recruited you, or someone else who’s been with the company a number of years and found success. Ask detailed questions about their business practices, take notes, and request any materials or tools they can spare. If the company is legitimate, there should be at least someone who is genuinely interested in your success and is willing to help you.

4. Show up for your “job.”

You can’t just expect the money to start rolling in without putting time and effort into your business. View your company as a real job to which you have to devote a certain number of hours every week. The more work you put in, the more you’ll get out.

If you’re not a go-getter, this can be challenging — because no one is telling you what to do. Network marketing is almost like being self-employed; you’re the boss. This can be a great perk, but it also means you have to exercise control over your one employee — yourself.

5. Determine your goals for your company.

Is your goal to use your network marketing as a side job to supplement another income? You should devote at least a few hours a week. If your goal is to turn your network marketing business into a full-time income, you should set aside 15 or more hours a week. Write a list of your immediate and long-term goals and how you plan to accomplish them.

6. Find out what works for you.

Some people naturally have great salesmanship skills and succeed with seemingly little effort at network marketing businesses. Others struggle to make connections and be a salesman. You may not be a natural salesman, but you can still use what comes naturally to you.

The best way to sell any product and recruit others into selling it is to believe in it and have a story to tell. Most people are more receptive to a person who is genuine, honest, and has personal experience with their products and customers.

This is why it’s important to find a company you believe in and can get excited about. Selling will come naturally, and you’ll be successful before you know it. With as many network marketing companies as there are, finding one you identify with shouldn’t be hard.

Network marketing companies are a unique and exciting type of home-based business that can provide great success to those who pursue training, devote time to their business, articulate and pursue their goals, and use their own unique story to recruit others.

Have you ever considered delving into network marketing?