If you are looking at information about starting a business at home you have probably come across some network marketing opportunities, and you may be asking “what is network marketing”.
There is quite a bit of misinformation out there about what it actually is. Tell some people you are looking at working with a network marketing company and they immediately think that you are involved in a pyramid scheme or that it is just a scam.
So let’s be clear. Genuine network marketing companies are not running pyramid schemes. Pyramid schemes are illegal and any company operating out in the open is highly unlikely to be operating one.
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The level of scrutiny registered companies are under and the strict reporting requirements in most jurisdictions would make it nearly impossible for a company to operate illegally without being found out.
If you are worried to check out the company with the regulatory agency in your country. In Australia, you can find information on companies with ASIC or the Australian Business Register.
Same for a scam. Check to see if the opportunity involves a registered company and read up on their history, like when was the company created, is there a real product or range of products, and check out their promotional materials.
If it looks like you are getting one hell of a deal if their materials are riddled with grammar and spelling mistakes, you can’t find them listed in the white or yellow pages, and they are really coy about what they are selling, give it a miss as it is unlikely to be a real network marketing opportunity.
So, What is Network Marketing if it is not a Pyramid Scheme or a Scam?
It is a business model used by many large and reputable companies to market their products via a network of distributors.
Rather than selling through stores themselves or supplying supermarkets or department stores, these companies develop a network of distributors who operate as independent business operators.
Usually, the distributors are product users themselves – who better to spread the word about a great product – and they market the products using materials provided to them by the company to other individuals.
Network Marketing is also sometimes called relationship marketing because it involves building relationships with people – some you will know and some you will get to know – and sharing the products or the business opportunity with them.
Most new distributors start with their friends and family and can sometimes be seen as pushy, but it does not have to be that way. Particularly not these days with social media making it so easy to connect with new and interesting people.
Network Marketing comes in a number of different forms. Some are a single tier where you get paid a commission on any sales you make to people in your network.
In a two-tier networking format, you get paid a commission for any direct sales you make and you also get a cut of the sales made by anyone who signs up as a distributor directly under you.
In Multi-level Network Marketing, you receive commissions on two or more levels, so that is your sales, the sales of distributors directly under you and the sales of distributors under them.