A year ago, I started reading about real estate and residual income. My desire to become an entrepreneur was born. As I read, the term network marketing and its synonym multi-level marketing (MLM) kept coming up. The authors of these buzzwords did not bother to explain or define them. They assumed that I, their avid reader, knew their meaning.

I asked, but no one had any idea what network marketing was. Thus began my quest to find out what I could about MLM, as proponents boast that anyone can start a business for as little as a few hundred dollars.

Finally, I found gold. I gaped at my computer screen. The name of the network marketing company revived an old memory. In high school, he had met a young man who belonged to this company. A couple of times he came to pick me up for a date and before we left he would clean my mother’s stove or refrigerator, showing her the miracles of his product. His goal, I guess, was to make money and to dazzle me with his entrepreneurial qualities. I was humiliated because my mother was taking advantage of him to clean his kitchen and because this boy was embarrassing me: I wanted to go to the movies or to a party, and he was cleaning my mother’s appliances.

I had the holy grail in my hand, but I was apprehensive. I told my colleague what he had discovered. He shrugged and said, “It’s a Ponzi scheme.”

But I found that the lure of residual income far outweighed my apprehensions. Today, I am a proud network marketer, ready to give my budding experience to anyone who has no idea about network marketing. Here’s the scoop.

DEFINITION: Network marketing is a business that markets a product line or multiple product lines through independent salespeople. An independent vendor is hired; she, in turn, recruits other people; these people recruit others, and so on. Each rep builds her own business with her recruits and her recruits under her, and she takes a commission on the sales volume of her team. The people under the independent salesperson are called the downline. The potential to grow your downline and earn money is exponential.

SCAM or LEGIT BUSINESS – When I was in high school and young lovebirds cleaned appliances, many fawned over these businesses. Let’s be honest. There were many jokes. Most people didn’t make a lot of money; they annoyed their family and friends, and horror of horrors, they had garages full of unused products that they had to buy to meet their quotas (a certain amount of the products that a vendor or team has to buy). The time has changed. Today, large corporations and Fortune 500 companies, such as AT&T, MCI, Citigroup, and IBM, have multi-level sales forces.

The difference between network marketing and a pyramid scam is easy to explain. Network marketers sell products; they run businesses. A pyramid scheme is a scam. People give someone money in the hope that they can get other people to give them money. The claim is that anyone can get rich simply by finding other people to do the same. There is no product, there is no business. The people at the top make a lot of money. The scam falls apart. This is illegal. People are arrested.

THE GOOD, THE BAD, THE UGLY: Not all network marketing companies are created equal. There are some excellent ones, some acceptable ones, and some horrible ugly ones. If you’re looking for a network marketing company, you need to do your due diligence and make sure you find a great one. Remember that you are investing in your future.

RESIDUAL INCOME: What network marketing offers is a way to create a residual income, while working part-time. Network marketing is not a “get rich quick” scheme. Those who are successful work hard, but they are creating something magical: residual income.

You go to work and you get paid. If you don’t go to work, you don’t get paid. This is a linear income. Residual income does not depend on whether you work. Think of an author who writes a book and receives a royalty check year after year. Residual income, like royalty checks, keeps coming and allows people to retire, have the freedom to travel, and do other tremendously enjoyable things.

MY 12 SUGGESTIONS FOR NEOPHYTES FROM ANOTHER NEOPHYTE:

1. Don’t rush into network marketing. Look around you and find a good company that suits you and your needs. Don’t be pressured by anything. Ask the network marketer you are talking to a lot of questions. Avoid high pressure people.

2. As soon as you finish reading this, run out and buy Richard Poe’s Wave 4: Network Marketing in the 21st Century. I don’t know Richard Poe, but I know that this book explains it all.

3. Find a company and a product that excites you. It’s hard to sell something you don’t believe in. Ideally, you want a product that people buy over and over again, month after month, year after year, and a company with values ​​that are consistent with your values.

4. Look for a company that has been around and proven itself. Someone who has been in network marketing and has experience could take a chance on a new company, but a newbie should be more careful.

5. I suggested publicly traded companies. Your financial statements are public and you can request your financial portfolio. Visit www.morningstar.com, or www.nasdaq.com, or www.valueline.com, or your favorite place and do some research. You just need the company’s ticket number and you’re good to go. If you don’t feel confident doing this yourself, find a friend who knows something about stocks and financial statements and ask for their help.

6. Consult the compensation plan. Is the commission fair? How often do you pay? Does excess money accumulate from sales? Does your team have to meet a quota? This could be a big drawback. If there are hefty fees, you may find yourself buying products you don’t want. Poe’s book is priceless here; explains the different commission plans.

7. Do you have to buy, store, deliver products? Most network marketing companies don’t do this anymore. Most companies offer online or phone ordering, and the company distributes its products. You place an order and they do the work.

8. Training is very important. What kind of training program do you have? In network marketing, team members help each other build their businesses. In network marketing, if the people on your team are successful, you are successful.

9. How does your business work? Face to face with the people you know? In Internet? Or a little of both? This is important. Are there hidden costs in marketing? Ask for details.

10. See if you can find something dirty in the company. Check with the Better Business Bureau. Are there complaints against the company? What kind of complaints? You can do this online. Know what you are getting into.

11. IMPORTANT: Make sure you are willing to put in the time and energy to build your business, 10-20 hours per week. If you have a family, make sure they are okay with this.

12. Don’t quit your day job! At least not until you make more money in network marketing than you do in your nine to five.