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Author: Diane Paresso Article source: http://www.articledeshboard.com/. Used with author's permission.
(Part 1 of 6)
Are you considering a Home Business Opportunity? Have you ever wondered how the Network Marketing industry came to be? Well, this is the first of a six part series to help you better understand Network Marketing, also known as MLM: Part 2 discusses Just What is Network Marketing; (3) Network Marketing Comes of Age; (4) The Future of Network Marketing; (5) What Makes a Successful Network Marketing Company; (6) The Professional Network Marketer. I have recently published the following articles: Now is the Time to Join a Network Marketing Business; and Criteria for Evaluating a Network Marketing Business.
?In 1940, California Vitamins became the very first company created to offer a multi-level payout. Hence the birth of the MLM industry. Later, California Vitamins evolved into NutriLife.
?Two NutriLite distributors, Jay Van Andel and Rich DeVos, left that company to form their own MLM enterprise, the Amway Corporation. No matter what your perceptions of Amway are, this company is a multi-billion dollar, global leader in our industry. To understand our industry you should be knowledgeable about Amway.
From 1959 to 1970, Amway basked in controversy-free growth and reached over $600,000,000 in yearly sales creating huge wealth for its distributors and the owners. There was no scrutiny from the federal regulatory agencies. But, success always breeds imitators and by the mid 1970's there was a proliferation of copycat MLM companies, some of them guilty of fraudulent practices or unable to produce a product to support their business opportunity.
Consequently, the MLM industry found itself fighting for its life as these companies came under intense scrutiny of state agencies and the Federal Trade Commission. Amway ended up bearing the brunt of the government litigation lasting four years and costing over $4,000,000. At the trial's conclusion in 1976, the landmark Amway Decision was handed down declaring that Amway was not a pyramid company and that the MLM business strategy was a legitimate method of moving products to the end-line consumer. Parameters for legitimate MLM businesses were established and are still viable today.
?From 1976 - 1984, over 2,000,000 people entered the MLM arena. Many companies moved to computerization that made business less cumbersome. Distributors were able to order directly from the company; they no longer had to stockpile products; and compensation payments were no longer made to one distributor who then had to divide that check between qualifying downline distributors. Now companies were able to issue checks directly to each qualified distributor.
Companies like Fund America tried to play in this industry without offering tangible products. This again tested "Pyramid Laws" in the late 1980's. Litigation proved that Fund America was a paper chase---a membership program devoid of any real parameters for long-term success. Its founder landed in jail.
?During the 1990's a number of companies tried to tie a service to the MLM concept. Only a few survived because the margins just were not there. Remember, the MLM product must be able to support the long-term effort by distributors. This proved difficult for some companies offering discount, long-distance services.
Others failed because their offering centered on durable, not consumable product lines. NSA made a big splash in water filters and ended up staving off doom by introducing nutritional products. Quorum built quickly with alarm systems for homes and cars, but alas, without repeat sales the flow of products stopped, sponsoring stopped and the company failed.
Within this industry, there are teams of distributors who move from one company to another, producing false stories of success. The word gets out that people are making money fast and because there are many people who desperately want to believe that you can get rich quick without working, they flock to a new venture only to fall out when they are unable to duplicate the success of these few, showcased groups of players.
Do your research and find a Network Marketing Business that has grown to its present stature without experiencing this phenomenon. Has that company grown with distributors sponsored almost exclusively from outside the Network Marketing Industry or with experienced players from within? What is the strength and integrity of that home business opportunity? The harder you look at that company, the better it should get. Well, be sure you have researched your new business venture thoroughly before committing your time, energy, and resources to make more money and build for financial security.
The above article was compiled from information my partner Karen Huss has received over the past thirty years she has been in this business. She does not claim to be the originator. Karen is a respected leader within the network marketing industry.
Diane Paresso Life Style Mentor and Successful Entrepreneur, is helping many become the next success story. Whether you're looking to create an extra few thousand dollars per month, be an ex-corporate executive, or the next millionaire Mom, Diane can assist you to create a second stream of income and greater peace of mind. visit : Network Marketing
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