Let's put it this way.  Many companies spend a lot of money hiring sales and marketing executives and spend a lot of money on advertising.  In a Network Marketing business the company uses word of mouth advertising.  When you sign as an associate you just became a member of their sales force and the success of your business will depend on you getting the word out.

When you sign up as an associate you become an independent business owner. You get paid a commission when someone you refer places an order. Depending on the type of business you can also make money when you buy the product at wholesale rates and resell at retail. The marketing is done through your own advertising as an independent business owner. And the company has eliminated a lot of marketing costs--it is given to you instead.

If you sign someone under you to become an associate (your downline) you will get a small percentage of the business they generate. This is referred to as "residual income".  If you are successful and you help your dowline succeed, the amount of residual income can grow over time. Multipy this a few times and you see how you can build a significant income.

Network marketing is sometimes referred to as a direct selling or multi-level marketing (MLM) company.  In the past some MLM companies have tarnished their reputations by very shady business practices. There has been a lot of hype advertising that sounds at times like winning a lottery. That's why it's important you take time and do your research before joining a company. It's important you know about their reputation, understand thoroughly their compensation, and know something about their products and services.  There are scams out there, and you need to know how to spot them.  A genuine network marketing company will have

1. A good product or service at a reasonable price
2. The ability for you to make a profit on the sale of the product or service
3. A dynamic company support system with well developed marketing materials
4. Good training for you to learn about the product/service

OK--so why is it not a pyramid scheme?  Well, pyramid schemes sometime look like network marketing, but here is the difference.  There is no product or service, or if there is it is priced too high to be reasonable.  You make money by signing people up and not by selling a product, and you cannot earn more than the person that recruited you. 

In a network marketing company you are rewarded for you efforts.  It is entirely possible for you to earn more than the person that recruited you.  Yes, it's true they may get a small commission on your sales, but you get a whole lot more.  If you sell more than they do you can end up making a lot more than your upline. This is never true in a pyramid scheme.

You can also think of it this way.  In the corporate world the sales person is paid a commission on their sales, but the manager and director of the department also get commissions for the activities of their sales force.  Paying you a commission on the sales of those you recruit in a network marketing company is really not so different.

For me it was obvious I needed training to be successful in a network marketing business. Some of you reading this may remember one or two MLM company's advertising "no experience needed" and "little money down" or "you don't have to sell, just share".  Tell me, have you ever seen a successful company that did not do selling?  You can call it sharing if you like, but it's still selling.  And as with any business you need marketing and sales training if you really want to succeed.

Network marketing is all about building relationships--with customers, with your sponsor and with people you recruit. Building a good relationship with a successful give/take between the two parties is key. And training in how to do that effectively will help you get started right. 

Network marketing companies are good at training on their products, but often poor on how to approach people and how to be effective in selling.  So many advise making lists of family and friends to approach, but don't go much further. That approach personally go me nowhere.

So here is my advice. Take your time to research home based businesses and network marketing companies. Nowhere can you have the potential to earn a great deal of money for so little investment as this type of business. But it takes work, time and committment, and some money to invest in your own future.  Don't fall for the quick buck hype. Take your time, research companies thoroughly and learn. This web site is a good place to begin. Visit the Home Business Options page, and also visit the Lies of Network Marketing, where you'll find a link to a free e-book packed full of information on Network Marketing.