How to Discover Legit MLM Companies
Nowadays, you can easily find thousands of MLM companies. There are many kinds of MLM business. But, not all companies on the market are legitimate. The great prospect of MLM business makes some people do a scam. You should be careful if you want to join an MLM company. It is better for you to get much information so you won’t be tricked.
Do you want to distinguish between legit MLM companies versus a pyramid scheme? You may need to read this article. At this article, you will get some important information about MLM companies. Distinguishing legit MLM companies can be an important thing to avoid the big mistake when you want to join an MLM company. The educational information in this article can be a basis when you want to do your own further research to evaluate a definite opportunity.
There are three basic categories that fit into the illegitimate MLM company. The first category is a gifting program. Gifting program only needs opportunity seekers without products. That is only a chain letter. You will be asked to send money to some people. They will say that when your turn comes, hundreds of people will send you money. You should be careful with this program.
You won’t get income if you don’t get a member. There is no product that can be sold. The only one source of the income is recruitment. The second category is a disguised pyramid scheme. A disguised pyramid scheme is usually perpetrated via the internet, for example direct mail. Sometimes, it offers a product in order to differentiate from a gifting program. A disguised pyramid scheme is absolute network marketing scam. The third category is apparently legit MLM companies. The companies look like the top MLM companies. They are more difficult to detect.
Gifting program and pyramid scheme are usually promoted by fringe players and con-men. Pyramid scheme won’t die, it will be reborn in a different body. The perpetrators will make the programs very attractive to the newcomer of network marketing or some income opportunity seekers. Sometimes, they are difficult to differentiate because they sound like MLM program, they look like MLM program, and they say to be MLM programs. Actually, they are illegal. They are just masquerading as a real thing. They will promise great wealth if you want to purchase the semi-worthless product that is offered via mail or a postcard. They may claim that you can earn $200,000 in 90 days. Some of them also quote a federal law to claim that they make the legal program.
If you find the companies promise 5% response or more from mailing a few pieces of paper, you should beware. Do not believe when they promise a large amount of money in very short time. You should also beware when they promise to build you a downline without your effort. Don’t easily believe when they say they will give cash payment overnight to your door. Legit MLM companies have a contact phone number that will be answered live.
The companies could take themselves in trouble with Federal authorities in the future, if they don’t give a chance for sales to non-distributors, don’t pay commission on sales, don’t highlight retail sales the customers who are not distributors in their training, and don’t have a realistic amount of retail sales for non-distributors. Federal authorities could determine that the companies are not legit MLM companies. If this happens and the companies are shut down, you could be out of the business. You can make your own conclusion and decision about which MLM company is legitimate.
When selecting the company, make sure that it is at least 3 years in the business world. It is important since there are many companies that go out of business in a short period of time. They leave many frustrated distributors who have lost their business. According to a report, around 83.7% of new network marketing companies couldn’t exist for more than 2 years, and 6% vanish after 3 years. But, it does not mean an MLM company that survives for more than 3 years can’t fail.
Before spending your effort, money, and time to promote an MLM business, you should know the company. You should ensure that the company has a good financial profile. This is also important. The main thing to observe is the debt load. It is better for you to choose the company with no debt. But, a little debt is still allowed if it is not less than 25% of the value of its assets. You should also look the cash flow of the company. Some companies have a positive cash flow after expenses. Most legit MLM companies will have adequate cash reserves to handle growth. Make sure that the company has live and efficient customer service. Do not forget to think about the office quarters, computer and software system. Some companies rent a place for their office.