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When someone says that he or she has an MLM business, shady characters sneaking out of town in the middle of the night with everyone else's money may spring to mind. However, there are many MLM businesses that are legitimate opportunities and many people looking for a home business idea are perfectly happy starting an MLM business.

What Is an MLM Business?

One reason people are confused about MLM businesses is that they aren't sure what they are. Multi Level Marketing companies are those that give a percentage of the money each person earns to the person that recruits that person into the company and a portion to the person who recruited the person in the second tier and so on. MLM opportunities are actual businesses that sell products, usually through house parties or catalog sales. They have gotten a bad rep because some people have lumped them in with pyramid schemes, which are elaborate scams that are in no way related to legitimate MLM opportunities.

A pyramid scheme makes money by having each new group of people joining the scheme pay into a pool, which is divided up into different percentage amounts for each tier of the scheme that joined before the newcomers. Eventually, the people who started the pyramid will leave, taking most of the money with them or people will stop joining the bottom tier, causing the scheme to collapse.

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