How To Start & Grow Your Business

Network Marketing: How to Know if an MLM Opportunity is Legitimate

Lionel Luigi Lopez
Jan 6th, 2015
  • 3 min read
  • Hummy's
    Highlights

    1If they demand a big investment to start, think twice. 2If it's legit, you will be offered tools and training. 3"Nothing of real value comes without hard work. "
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Two fashionable young women wearing sunglasses.

Network marketing, also referred to as multi-level marketing (MLM), can mean a lot of things to different people. For some, it’s a fast and relatively easy way to start making a lot of money. It can be a stopgap for those still on the hunt for a new job, or for hungry college kids paying for textbooks and the like. It can also be a full-time career for those who have great social skills and want to earn big bucks.

For others, that associate with less than reputable network marketing companies, it’s a big ol’ money-sink setup by manipulative people looking to scam unsuspecting victims. The moment the word “network marketing” is brought up, a pyramid scheme (i.e., a fraudulent investment scheme) alert starts blaring inside their heads, and they do their best to avoid conversations or meetups.

To be fair, there have been cases for both scenarios. There are network marketing programs that have successfully made millionaires through hard work, and there are other network marketing programs that have swindled naïve people out of their hard-earned money.

So, the problem is this: anyone who has a mild interest in joining a network marketing program has to distinguish who is legitimate and which ones are fraudulent.

To qualm your fears of joining a legitimate network marketing program, here are five things you should expect to see from a reputable company:

A Quality Product or Service
Ultimately, real businesses thrive because what they sell actually fixes a problem or fulfills a need. A legitimate network marketing program has to have a product or a service that people are looking for and willing to buy. This allows distributors to grow and strengthen the networking program. For example, with Herbalife has garnered millions of distributors of its natural-based health products due to its ability to satisfy a huge health-conscious market around the world.

If a network marketing opportunity only sells a dream of getting rich without a tangible project or service to promote, then it’s most likely a scam. Avoid any program that offers commissions solely on recruiting more people. Legitimate programs still pay for recruits, but that should always tie into selling a product or service.

Minimal Initial Investment
Legitimate network marketing programs usually require the purchase of a sales kit (at a minimum) so you have tools needed to reach out to others and sell. They don’t ask for outrageous payments upfront, for whatever reason, be it fulfilling a initial requirement for inventory or undisclosed deposits. If you find that a network marketing company demands a tremendous investment before you can join, be very wary — the chances of them running with your money are much higher.

Clear Return or Buy-Back Policy
In conjunction with the previous point, a legitimate network marketing program does not allow members to overstock company products. This lets you concentrate on the actual networking instead of worrying about having to sell out the entire stock. Similarly, you should also be able to return the products to the company and get a refund if you choose to opt out of the program through a buy-back guarantee. Of course, the items have to be in a saleable condition, but that is just one of the terms that should be outlined for prospective members.

Support through Tools and Training
Like any other real business, legitimate network marketing companies want their independent distributors to do the best job they can. That’s why you should ask if the program you’re planning to join will provide tools you’ll need to start selling and recruiting. The type of tools that may be offered include tracking systems for your sales, commissions, and product deliveries. Also, a legitimate MLM program should prepare and hone your skills with training sessions led by the veterans and industry pioneers.

No Outlandish Promises
The moment you’re told that you will get rich quick with little to no effort, or that you’ll be a millionaire within months that’s when you should look elsewhere. If it sounds too good to be true, then that is probably the case. A legitimate MLM program will require you to put in the work (i.e., reaching out to people, marketing products, attending training sessions, utilizing tools properly).

Nothing of real value comes without hard work. That principle applies to traditional businesses as well as MLM programs. Finding the right network marketing program can help you reach your financial goals faster.

This article was written by Lionel Luigi Lopez and published in YFS Magazine.

Lionel Luigi Lopez is a business writer, entrepreneur and a musician. He is also an active blogger and marketing strategist.