If you’ve never heard the term network marketing, it doesn’t relate to television. It’s a concept that’s been brought up in the best-seller, Secrets of the Millionaire Mind by T. Harv Eker.

In the book, Eker writes, “If you don’t have a brilliant business idea, not to worry: you can use someone else’s. First, you can become a commissioned salesperson. Selling is one of the world’s highest-paid professions. If you’re good, you can earn a fortune. Second, you can join a network marketing company. There are dozens of excellent ones, and they have in place all of the products and systems you need to get started immediately. For just a few bucks, you can become a distributor and have all the benefits of owning a business with few of the administrative hassles.”

This book, like a lot of volumes on this subject, encourages the reader to start their businesses and hone their salesperson skills because there’s supposedly a lot of money out there to be made. And one way that many recommend getting launched as a salesperson is through network marketing.

Many people aren’t aware of the concept behind network marketing, or the pros and cons of getting started in it, so here’s a primer, because as with anything in life, you always have to do your homework and make sure there’s water in the pool before you dive in.

Network Marketing Defined

As Entrepreneur explains, network marketing is “a business model in which a distributor network is needed to build the business. Usually, such businesses are also multilevel marketing in nature in that payouts occur at more than one level.” And as this report continues, “some of the best-known companies in America, including Avon, Mary Kay Cosmetics and Tupperware, fall under the network marketing umbrella.”

Usually, when you get involved in network marketing, you make an investment, “usually only a few hundred dollars for the purchase of a product sample kit,” and then you can sell those products to friends, people in your family, and whomever else you can. Obviously, the larger your network, the more money you can potentially earn. And network marketing companies also want you to recruit more people to help sell the products as well.

Now here’s where you have to be careful…you have to make sure that the company you’re working for isn’t what’s called a “pyramid scheme,” which is illegal. The big difference is when the company is using people to bring in more people instead of selling the products, it’s a pyramid scheme, not network marketing. As Entrepreneur makes clear, “A network marketing system in which most of the revenue comes from recruitment may be considered an illegal pyramid scheme.”

Do Your Homework

Before you decide to get into network marketing, it’s important you research the company, and see if it’s right for you. Indeed it can be much cheaper to do network marketing for a company instead of starting your own business, it’s certainly a much smaller investment, but again, it’s important to do your homework and make sure that you can succeed at it. There are no guarantees in any business, and nothing will come to you without hard work. As a report on the Huffington Post explains, “Does anybody really make money in network marketing? The short answer is ‘ABSOLUTELY!’ However, many people have attempted to get into network marketing and haven’t been willing to do the work necessary to see dividends on their investment.”