There are good MLM companies and bad ones, just as there are good corporations and bad ones. There is nothing inherently bad or sinister about MLM - most people who think that way just don't know the definition, or they've been harassed by people poorly trained and/or associated with substandard companies.
MLM is NOT a pyramid. Pyramids are illegal. Direct sales or network marketing is not the same thing. There are a few ways to make sure a DS company is legitimate: membership in the Direct Selling Association (which is by invitation only, limited to approximately 200 companies among the 5000+ out there, and based on a year's scrutiny of books and business ethics); a long history (many DS companies come and go, but if something's been around for years, that can be a good sign). Mary Kay, Avon, Reliv, Silpada and many others have been around a long time, are well-respected companies, endorsed by key economic experts, and written up in reputable business magazines. There are no pyramids, no ponzi schemes, in this mix.
A MLM company is usually a home-based business that has no overhead, no storefront, and (frequently) no TV advertising. Almost all sell a product, although some sell a service (e.g. telephone/internet services). They don't pay a celebrity spokesperson, they don't pay rent or property insurance, and they don't have a lot of overhead. The sales staff is spread out across the country or the world. Ideally, the sales staff is well trained.
There are MLM companies with good products, and some with bad. There are MLM companies with good compensation plans, and some with less desirable ones. That's no different from corporations (some people hate WalMart but love Costco - but the fact that they are box stores isn't, by itself, a disqualifier, right? MLM companies eliminate a lot of layers seen in corporate America. In fact, most economists will say that huge corporations are true "pyramids" - with 1 CEO who makes all the money, a layer of Executive VPs who make a lot, a whole bunch of layers of middle managers, and then an army of lower-paid people at the bottom, with a huge discrepancy between the lowest paid and the highest paid. The people at the bottom have virtually no chance of becoming a highly-paid executive. That's why people in legitimate MLM companies laugh at the "pyramid" label, where people aren't paid on a zillion levels and where many people make more than their "upline" or sponsor. If there's a good compensation plan, people who are newer in the business can make more money, access bonuses, and so on, rising to levels higher than the person who brought them into the business.
A lot of people don't understand that "work at home" or "work from home" - and the word netWORK - all involve WORK! They are not get-rich-quick schemes. SO anyone who goes into MLM (or corporate American, for that matter) expecting a bunch of trips and freebies is being naive. And a good MLM company won't promise that - they will lay out the whole compensation plan and make it clear how you make money and how you don't.
Another way to evaluate an MLM company is what the start-up costs are and what the guarantees are. For example, do you have to buy a big inventory? Is the product consumable so that people buy every month? Is the market large? If the product is only of interest to a certain segment of the population (e.g. people with a certain decorating style or dress/make-up style), do you have a big enough circle of influence to keep making sales? Or, better, is there something for everyone (men, women, children)?
Is there are guarantee, if you buy into the business as a distributor? Can you get out without losing your shirt? (For example, a company that offers a 90% buyback for 1 year is an awesome company!) Is there free training and education on an ongoing basis, or just a brief introduction? Is there a strong support system? Is there residual income (meaning you get paid for your lifetime on the work you do today)? (In a corporation, if you leave, you don't get a paycheck.) Is that residual income a willable asset to your kids? Are there monthly quotas? If so, you may have to spend a lot every month just to stay in. That's a problem.
Other things to evaluate are personal - are you interested in what the company does? Do you like and get excited about its products? Do you believe in them and do you feel you can adequately represent them? Does the company rely on parties that take you away from home evenings and weekends? That's okay if you know it up front and it works for you. But if you don't like that sort of thing, you don't want it to be your only way of making money.
Is your product seasonal? Will most of your sales be for Christmas gifts or back-to-school or graduation or wedding? Then what will you do all year long?
You cannot make money if you are only able to go after all your friends and keep harassing them. You need to have other ways to reach out and you need a product that people NEED and WANT, not just something they are buying once to be nice to you. That one-time sale doesn't build an income. You have to be self-directed, motivated, and entrepreneurial. Not everyone is.
I'm in something that works for me, that meets all of those criteria. I wasn't interested in the beginning because I didn't really understand how MLM works and I had seen all the negatives (people bugging me, college kids saying "Can I practice my presentation with you?" (when that is just a come-on for a sales call and they say it to everyone.) But after I saw what certain products can do, and when I see that they are often superior to what's in the grocery store or department store with the store caring NOT AT ALL whether the product works, I saw the value of having (and being) an educated and ethical direct sales representative. In a company with top accolades and top endorsements, and multiple awards for social responsibility and business ethics, MLM lets you make as much as you want to make and not have someone else in a corporation deciding what you are worth.
Let me know if you have other questions.
