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Network marketing companies: what are the risks?


If you have had a friend or family member approach you about wanting to ‘join their team’ to sell things, you have had a run-in with network marketing companies. If you’ve invested in a business and have shares, then you have had some experience of the stock market. While these are both good ways to generate an income, they are both very different. So how can you identify each and what are the pros and cons? Here is a little more information for you. Then you can decide if either way could be a good way for you to make money.

Network marketing companies: overview

Before we start immersing ourselves in the concept of network marketing companies, it is extremely important to clarify that it is not synonymous with a pyramid pnzie scheme. The latter is a business model considered illegal by law. In network marketing companies, the manufacturer of one or more products sells directly to the distributor, who sells it to the final consumer and receives a commission for what is sold. In this way, the product is cheaper, as there are fewer steps in the sales chain.

In addition to the direct sale of a good or service, network marketing is also characterized by the recruitment of new salespeople in which they recruit new partners themselves. Thus, the recruiter also earns commission for sales made by the group of distributors “hired” by him.

That’s where the idea of ​​a network comes from. In addition to gaining revenue as a chain effect, it is necessary not only to create a network, but also to train it, provide support and advice so that they sell more and more.

Is it an easy way to earn?

Contrary to what many people think, network marketing is not an easy way to make money. As we said, the more effort, the more results. However, for your network to generate significant profits, it can take 3-5 years.

This is one of the reasons why multilevel marketing is not recommended as a good investment option for all people. He is an ideal model for those who want new career perspectives, who seek more freedom of schedule and who want to promote their own well-being, as well as that of a network of people.

Network marketing companies vs direct marketing

Although the approaches are similar, network marketing companies and direct marketing have many differences in their systems. The main distinction between the models is in the form of remuneration. While, in direct marketing, professionals are paid for the final sale of products, network marketing also rewards participants according to their efforts in pursuit of sales success.

Since there is the network effect, multilevel marketing motivates participants to reach more and more people to sell the products. Direct marketing, on the other hand, aims to attract those who are interested in the products or services that the company sells.

Benefits of network marketing companies

The growth of this model is due to the various benefits it generates for those involved. Such advantages can and should be used as a way to attract people to work as sellers of your multilevel marketing business and start a network of relationships. Learn more below.

Freedom of time

This form of networking allows people to define their own routine according to what will be best for reconciling personal and family responsibilities and commitments with friends. With a consolidated network, it is also possible to work from different parts of the world. For this, it is only necessary to define the means of communication that best apply to the reality of the participant’s network.

Low investment

Getting started, as well as staying in business, requires a low investment. This is an excellent argument to attract people who are still fearful about network marketing. Still on the cost, multilevel marketing companies do not have a sales quota as it happens in many traditional companies. It is possible to invest little to stay active in the business and have a positive return.

Income progression

When we talk about the income generated by multilevel marketing, it is important to divide it into two concepts: residual income and leveraged income. The first refers to creating an income without having to invest a lot of money or hiring people. That way you get paid, month by month, for something you did just once.

The goal of anyone entering network marketing is to leverage that residual income. After all, even if the participant has not sold a single product in a month, his network generated results and he will receive for it.

Contact with people

In the economic crisis scenario in which we live, network marketing is a way to help people find a new source of income. Furthermore, given the importance of supporting the network of contacts, it is a way to share knowledge and professional experience with other people.

Professional career

Many individuals strive to grow professionally in a company, but they do not achieve the result obtained, mainly in terms of remuneration. In multilevel marketing, every effort is rewarded. As a person builds his own network, he assumes a leadership position in the group and has to develop skills to manage these people and provide for their growth.

Being mentored

At the beginning of the trajectory in network marketing, a series of trainings are carried out , as the leader of the network shares a series of knowledge based on his experience and trajectory in this type of business. As time goes by and the participant attracts new people and forms his own network, he will become a true mentor and provide training on subjects he has mastered.


In traditional companies, lack of recognition is something demotivating for employees. In the network marketing industry, recognition is the main engine to leverage the results obtained. Small recognitions for everyday actions are made by the network’s leaders, as well as constant competitions with prizes in cash, travel, cars, among others.

Tax advantages

The fact that taxes are collected is one of the reasons that make network marketing a legal practice. For the participants, the big advantage is that there is no bureaucracy in this regard, since all taxes are withheld directly at source.

Multinational partnership

The top companies using the multi-level marketing business model are typically global companies. Therefore, the participants are like partners of these organizations. Like large companies, they tend to have a support system that helps participants grow. In addition, it is a way of transmitting security to those who are starting investments in network marketing.

Simple execution

Unlike many businesses, to start operating in multilevel marketing, all you need is a network of relationships. The investment is made in the purchase of products that will be used personally and sold to customers. In other words, it does not require in-depth technical knowledge. Relationship and sales are the secret and the advantage of this business model.

What to look out for

If you are a beginner, then it can feel really daunting. You could work with a trader or investor if you wanted someone to guide or do it for you. You could also consider something like millionaire blueprint. It is an auto-trading software which you can use to help guide your investments. So if you think you’d need a bit of guidance to start with, it could be a big help.

Both of these two markets are open to scams and fraud. Unfortunately, that is the case with most things these days. The stock market tends to be seen as the more real or legitimate of the two, though. Network marketing often gets confused with pyramid schemes where only the people at the top get any profit. Network marketing can often be unregulated, so it is something to think carefully about.

To conclude, they are both areas that need to be approached with a certain level of caution. They can both be ways to make plenty of money, but they do hold an element of risk. So do your research before investing in either.

About Business Woman Media

Our women don’t want to settle for anything but the best. They understand that success is a journey involving personal growth, savvy optimism and the tenacity to be the best. We believe in pragmatism, having fun, hard-work and sharing inspiration. LinkedIn

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