I personally know some folks who have done extremely well starting and establishing network marketing companies. Those that start the companies are the ones that really make out like bandits. They’re quite literally at the top of the food chain. To understand the nuances, benefits and issues relating to MLMs, it would be wise to visit the Wikipedia page outlining the various business models. It’s a pretty good neutral version of the business model. Many other articles out there are simply “warnings” for the unwary.
Love them or hate them, MLM businesses have been successful across nearly every market niche. They also make some of the best reverse merger targets for taking a private company public. Why?
They already have an active network of participants for buying the company’s stock.
One of the biggest struggles for most microcap stocks once they get up and trading is building demand for the stock. Without the right market-maker or broker-dealer as a promoter with both individual and institutional investors, it makes raising money from the open market more difficult. But, think of the small MLM with say 10,000 very active distributors. Such a network provides the perfect scenario for stock demand, thus giving both the fledgling and growing network marketing firms alike the ability to drive stock prices up and raise capital for even more growth within the company.
Whilst some have made their fortunes through the likes of Amway, NuSkin and other multi-level marketing companies, it’s never really been my thing. Don’t get me wrong, I love entrepreneurship, but when I’m asked to tap my personal network to sell a product, I get an immediate sour taste in my mouth. It’s much easier for me to keep my business and personal relationships separate. It’s also easier for me to do a little pushing or pestering to a potential client than it is my aunt whom I may not have spoken to in several years. I think it’s a personality thing.
Regardless of how you feel about them, MLMs have a phenomenal ability ro raise capital faster and more efficiently than any other microcap business I know of. However, network marketing represents a huge opportunity for raising capital through the public markets. Going public is not for everyone. Weigh the risks before jumping in with both feet.