A MLM (also known as multilevel marketing or network marketing) is a business model based on a network of independent dealers or distributors, where a person (vendor or independent distributor), money makes money through:
* Marketing (buying and selling) of products that will cater the company that owns the business.
* A percentage of sales made that have recruited participants.
* A percentage of sales made participants recruited people who, in turn, have recruited.
Participants, who have recruited the first person, would form the first level, participants who have recruited people who recruited the first person, would form the second level, and so on.
Depending on the type of MLM, a person could get commissions for sales made participants who are within its network, up to several levels.
Thus the goal of the person registered in a MLM business is to sell the products that the parent company will provide, but also to recruit as many participants as possible and, in turn, train them so they can sell the products, and recruit other participants.
Normally who join a MLM business, you must pay a small sum of investment which gives you the right to market products of the company, and receive training, primarily in sales.
Many people confuse an MLM business with a plan or pyramid scheme, and afraid of being involved in it.
You can both share the same business structure, but are different concepts.
In a pyramid scheme, the objective is to recruit people to pay sums of money to other people who are already within the network, with the promise that they will return an amount greater than the investment.
But for this to be met, the recruit must be concerned with recruiting others to do the same to her.
Therefore, the only way to make money is by recruiting people, so that the pyramid collapses when there are no more people to recruit.