A Network Marketing (or Multi-level Marketing, MLM) business can be a lucrative opportunity that can help you generate a residual income provided that you do not make the common mistakes that many new MLM distributors are prone to. Five common mistakes are outlined in the following article to help you recognise them if you are new to the MLM industry.

1. Avoid MLM business groups that offer commission-based compensation among distributors. There is a possibility that it is an illegal pyramid scheme.  Although this is not always the case, it is wise to stay on your toes.  Any company that offers payment for recruiting new members into the company is a pyramid scheme and such companies are illegal.

2. Avoid MLM business groups that oblige the new distributors to buy expensive products or any materials that the group offers. This might be another sign of a pyramid scheme, especially if you are expected to load up on inventory.

There are pyramid groups that force their newly entered distributors to purchase the expensive products or materials.  All they are concentrating on is how much money they can make from you.  Please do not fall prey to such groups and if you already have joined such a group, it would be wise for you to find ways to quit that group.

3. Be wary of pyramid promoters who promise you that you will earn more money through continued help in recruiting more distributors.  The reality is that their products are worthless to anyone, therefore the only way they can make money is to dupe more people to join the group.  Stay away from groups like these because they are not helping you to build a real sustainable business.

Before you join a company, look at the products they are offering and decide whether you would personally use such products for yourself.  If you are not interested in the products that the company has to offer, chances are not many other people would either.  The power of MLM businesses is that they work through product endorsement and word of mouth.  You cannot endorse a product if you have never used it.  If you don’t believe in your product, how will you convince someone else to buy it?

4. Some distributors do not give enough time or attention to their MLM business. If you join an MLM group half-heartedly, it is as good as not joining.  You can’t expect a business to build itself for you and it will count days or months to build your business in MLM.  You must be committed to your business and work at it or success will always elude you. The same would go for any conventional business you start (e.g. a restaurant).

5. Not realizing why you are operating your MLM business.  To succeed in MLM, you need to have a clear, definitive objective for being in business.  Knowing why you are in business helps you set goals and plan a direction for your business.