Frequently Asked Questions About MLM and Direct Sales Opportunities
With all the different opportunities out there, how do I know what is legitimate
and what isn't?
Look for an opportunity that has been around at least two years, preferably longer. Like any
other business, new network marketing/direct sales companies can start and fail for reasons within
or out of their control. Companies with a record of long-term stability and good service are your
best bet. Examine a company like you'd buy a car - learn all you can about the vehicle before you
buy in. Choose wisely and don't just take someone's word about it.
I don't want to be involved with a "pyramid" scheme that will eventually collapse
or be shut down by the government. How do I know the difference between a legitimate network
marketing opportunity and an illegal pyramid scheme?
"Pyramid" schemes focus on fast profits earned by selling the right to recruit others. They
typically offer a product of dubious value to make them look legitimate. Actual profits are made by
recruiting other people into the scheme, not through sale of the product (and some schemes don't
even offer a product - they just move cash around). Legitimate network marketing (also known as MLM
or multilevel marketing) and direct sales opportunities offer a tangible product with an emphasis
on sales to consumers who are not a part of the business itself.
What about "getting in on the ground floor" with a new startup company?
That's a gamble. If you go in knowing the odds and have both spare time and discretionary funds
available, it is possible that working a startup business can be rewarding. After all, every solid
and established network marketing company today was a startup at one time. However, even the most
promising new opportunities can go bust in a relatively short time. This can happen due to poor
management, products of inferior quality or marginal appeal in the real world, or even explosive
growth! That's right, a new opportunity can collapse if sales growth outpaces the company's ability
to grow and adjust to the demand.
A good opportunity will still be a good opportunity after the "ground floor" stage if all the
right elements are in place. And the reverse is true; if the opportunity exists only for a short
time, the company won't have the longevity to provide you with a long-term income. Be diligent, and
choose your business carefully! I recommend looking for a company that has been in business a
minimum of two years as a reasonable starting point in your search.
What about compensation plans? There are so many different types and it all seems
There are several types of network marketing compensation plans. The most common are the
stairstep breakaway, the binary, the matrix, and the unilevel. Some "hybrid" plans combine elements
of these four types. Direct sales & party-plan opportunities offer a variety of compensation
structures based on your overall sales volume. The bottom line is, you can build a solid business
and make money with any of these plans. The most important thing when evaluating an opportunity is
the company (stability, service, and management) and the product line (quality, effectiveness,
market appeal, value). If you find a company and opportunity that is managed well, has shown
stability, and offers superior products with good value you can make money with any of these plans.
The world's greatest compensation plan (with all the bells & whistles) will be worthless unless
the above criteria is met.
Is it necessary to purchase inventory to get started?
In past years it was common to purchase and maintain a product inventory for personal sales to
customers. With the advent of new technologies and faster-paced lifestyles, most companies now have
"direct ordering" capability that allows your retail customers to call a toll-free number and place
orders by credit card or electronic debit. Typical purchases to get started with your business may
include business materials, sales aids, and perhaps an assortment of products for your own personal
use and for demonstrations to customers and potential associates.
After I find a good network marketing or direct sales opportunity, what do I do
Get with your sponsor and upline leaders and let them help you develop an action plan for
starting successfully. Many companies provide sales and sponsoring tools at a reasonable cost. Your
new upline may have a support and training system in place for you and others in their downline to
use. The bottom line is, no one set approach will fit everyone. People are different and different
people will succeed with diverse approaches. There ARE very solid principles of business building
that apply to everyone, but a good support and training system will offer options and flexibility.
Your sponsor and upline should be ready and willing to work with you individually to learn and
successfully apply the approach that is right for you.
What about building a network marketing or direct sales business online? Can it
really be done?
Yes. You can reach a large number of prospects this way. With the right tools you can provide a
lot of information to them online as well, condensing your mail and telephone activity to the most
interested prospects. (These are the ones you want to work with anyway!)
When prospecting online, however, it is still very important to remember that solid business is
built on relationships. Get to know your best prospects and your new distributors, and help them in
any way you can. Developing good relationships online is really quite simple, but many folks aren't
aware of how to do this.
Caution -- Beware of online opportunities that promise you can build a strong and profitable
business with no personal contact, no phone calls, and so forth. Such ventures proliferate on the
Internet. The chances of building a long-term and dependable income with such an approach is
negligible, and that is putting it nicely!
A final thought...
If you are willing to commit yourself to a positive goal, are willing to help other people
attain their goals alongside you, and have the persistence and patience to stay in the game till
you succeed, you may well find network marketing is just the right thing for you!
The statements made and opinions expressed on this page are those of the Independent Watkins
Associate who is the publisher of this document, and are not to be construed as the statements or
opinions of Watkins Incorporated.