Network Marketing Scam Or Soul Saving System?

In the world of network marketing, there is one word that gets tossed around quite a bit: scam. There are people who believe whole heatedly that all network and multilevel marketing companies operate with shady business practices and set people on the road to financial ruin. The truth is, network marketing is a legal and legitimate business model, despite the presence of a few "bad apples."
Network marketing is merely micro-franchising. If an entrepreneur wanted to open a McDonald's restaurant, they would be entering into a franchise agreement. The entrepreneur pays a (hefty) fee and is allowed to own and operate a McDonald's restaurant. For their money, they receive support form the company in operating their business.

Network marketing works essentially the same way. An entrepreneur pays a fee, and for that money they receive the company's products as well as training and marketing support. It is up to the individual, whether they open a McDonald's or sell vitamins out of their home, to make the business succeed.

So why has network marketing so often been labeled a scam? There are a number of reasons, not the least of which are actual scams operating under the guise of a legitimate network marketing business. These fly-by-night companies usually ask for a large up front fee, require distributors to purchase a large inventory up front, charge maintenance fees, and basically gouge the distributors for as much money as they can while providing no sales or marketing support. Eventually, the company collapses, leaving the distribution network financially broke and emotionally bruised.

Another reason people believe network marketing is a scam is because people confuse MLM with pyramid schemes. They are no such thing. In a pyramid scheme, someone has to lose money for others to make money. In the MLM business model, everyone makes money when everyone is working. It's quite egalitarian. When everyone works hard, everyone (including the company) makes money. Whereas pyramid schemes are based on swindling people out of money, network marketing models are based on teammates helping each other to succeed.

And finally, people tend to think network marketing is a scam because they, or someone they know, has failed at the business. The failure rate in MLM is extremely high, and most people fail within their first year. The big selling point to prospective distributors is the large amount of money that can be made from home, owning your own business, with little up-front investment. People see that top sellers get all-expenses paid vacations or company-owned cars and live in big houses. They are lured by the smell of money. Unfortunately, they never put together the fact that to make money, they have to work extremely hard. A lot of people have made a lot of money in network marketing. But no one has made a lot of money in network marketing by doing little work.

Building any business from the ground up requires hours and hours of hard, thankless labor. It means being rejected many times a day. It means losing sleep, missing social events and falling out of touch with friends. No one thinks, "if I open a retail store and just sit on my couch, my retail store will make me millions in the first year." People unfortunately tend to jump into network marketing thinking they will get rich quickly, and when they don't, they are quick to label it a scam.

Before jumping into any network marketing opportunity, it is imperative that a person do hours of research on the company to determine how long it has been in business, what the character of the leadership is like, what sort of training the company offers, and whether or not they can afford the buy in.