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It’s hard to escape pitches for multi level marketing programs. After all, they’re everywhere. Turn on the TV late at night or early in the morning, and you’ll likely find an infomercial for one staring back at you. Check the mail, surf the net, read a newspaper – multi level marketing opportunities are coming at you from all corners. And the pitches really do a great job of making them sound enticing. They all have the same common elements. Someone just like you took a chance one day, and now, after making a small investment, they’re living the high life beyond their wildest dreams and barely working at all to do it. They appeal to your material side, and they appeal to the part of you that wishes that you had all the time in the world to spend with family and friends. So are they for real? Here are four things you need to know about multi level marketing.

The first thing is a biggie – you need to know that being successful at multi level marketing take a huge time commitment. They may make it seems like you can do everything in an hour or two a day, but that doesn’t make it the case. In reality, there is a lot of hard work that needs to be put into one of these plans to make them pay off, and in many cases, they require more work than a “normal” job. If you’re getting into any business opportunity, let alone a multi level marketing one, because you think it’s your ticket to easy street, you’re setting yourself up for failure.

The second thing you should know is related to the first. In addition to suggesting that you can make a ton of money without making a time investment, multi level marketers often tell new recruits that they don’t need any skills to get the job done. All they need is the vision to see the potential in the idea of the business. In fact, multi level marketing requires sales abilities that the vast majority of people lack. This is different from any other sales you will. Your pitch will almost always be unwelcome, you have to try and turn your family and friends into paying customers and you constantly have to search out new clients. It requires a special kind of talent.

Thirdly, despite what the pitch people might say, multi level marketing is hardly the wave of the future and it is not going to drive you local mall out of business. It is a business model that has been around for years and has made very little dent into the retail sale market. The best way to think about is door to door salespeople. Do you see many of them any more? Exactly.

Last but not least, you should know that many multi level marketing plans are pyramid schemes in disguise. You could lose your investment, and if you sign up enough people, you could go to jail for fraud. Tread carefully when it comes to any multi level marketing program.

 There is a lot of misinformation out there about multi level marketing, and following the wrong advice could be costly, as it could scare you away from what is really a great business opportunity or it could lead you to invest in what turns out to be a scam. Your best bet is to understand what multi level marketing really is – and what it isn’t – so you can protect yourself and make an informed decision about your business opportunities.

First, consider a simple definition of multi level marketing. In essence, multi level marketing is not unlike a franchise system, except agents involved in multi level marketing generally operate outside of a particular location – like a chain restaurant – and instead do roving sales. In multi level marketing, a parent company has a group of products, and they hire individual representatives, “down stream” as it is typically referred to, to go out and sell those products. Often, the down stream reps purchase the products that the sell from the parent company, although in some cases they can receive stock up front and then split the profits. Down stream reps do not receive any kind of base salary. Their income instead comes in the form of sales.

You have almost certainly dealt with multi level marketing companies without even realizing it. If you have ever attended a party where a host gave you a spiel about kitchen equipment, make-up, lingerie, jewelry or some other kind of product, and then you purchased the product from the host, then you have seen multi level marketing in action. Typically, the people who host these parties receive a small amount of sample stock to show their guests, and then they collect orders, pass those on to the parent company and receive a portion of the profits from sales at the parties they have hosted. The share they receive and whether or not they had to pay for their samples differs from company to company.

Although many multi level marketing programs are entirely legitimate, there are ways these set ups can be exploitative. Most of these programs provide some kind of incentive for people to recruit new reps, but that opens the door for a pyramid scheme to develop. In a pyramid scheme, everyone makes their money by signing up new representatives to the company rather than for selling any products. If you are approached with a scheme that requires you to sign up new representatives and to get them to pay a join up fee, then chances are that you are dealing with an illegitimate multi level marketing plan that not only could end up costing you lost of money but that could also land you in jail.

If you keep an eye out for that important red flag, however, multi level marketing programs can be profitable and reliable ways for good sales people to make money.