MLM Business: The 5 Business Factors Test

Several questions buzz in one's mind regarding Multi-level Marketing business. People seem to be perplexed by the status of this business...is it really a business! Then comes the question of its productivity....can it generate enough money for livelihood? Is MLM business is a distribution business? Does it care for the satisfaction of customers and looks always for new customers?

All the answers of these questions are positive.

Let me clarify how and why it is called a business. There are 5 business factors test questions whose replies are required to qualify any venture as a business.

Does MLM business distribute some kind of goods and services?

Yes. Goods and services are distributed in MLM business by personal distribution methods. The goods are directly distributed to the customers without any involvement of middle man. The MLM company can certainly manufacture these goods and services but they generally don't. In the MLM business, the goods and services are fabricated by outsiders; those are then shipped by the MLM business to the distributor or customer. The distributor now takes possession of the goods and is ready to sell them to their own customers.

Is there any existence of official office, headquarters or structure from where the MLM business is done, with an address?

Yes. Every MLM business possesses some sort of headquarters of office from where the goods are shipped; they must take the responsibility of the handling of the shipments to the customers. The office need not be a pretty looking edifice, but a structure which provides proper atmosphere to accomplish the necessary works in scheduled time. All the MLM businesses must have a visible address for the convenience to communicate.

But the distributor works out of this office as his business is home based.

Does MLM business possess a structure of accounts for an effective and legal running of its works?

Yes. The MLM businesses have an accounting structure; there should be professionals for taking care of the smooth running of all business transactions. These persons maintain the book keeping task for the MLM business as well as the MLM distributor. The MLM business taking place from home must also have some kind of an accounting function. This is needed for profit and loss statements and tax purposes.

Are there business licenses and legal structures of MLM business which are required to do business in the countries and states they work in?

Yes. Every MLM business, irrespective of the time period of their operation, requires having the necessary legal structures and business licenses to work in any corner of the world. They are subjected to cease in a state if they cannot show proper documents. A large portion of MLM business possesses some kind of a corporate body under which the company operates.

Is the basis of the operation of any MLM business 'for profit'?

Yes. A traditional or non-traditional successful business, in general, operates on a 'for profit' basis. The MLM distributor even requires working on a 'for profit' foundation. This 'for profit' basis is needed because operating not in a mode of profit and incessant loss of money can mar the prospects of a business.