Pyramid Schemes or a legitimate business?
If you don’t know by now by following my blog or my personal story. I’ve been involved in the Network Marketing/Direct Sales industry for over 8 years now. I’ve made a full time living in it since I retired from Corporate America at age 33. Whether you’ve been in this industry 10 minutes, 10 days or 10 years, you ultimately will be asked this question. “Is this one of those Pyramid Schemes?”
First of all let me give you the Wikipedia definition:
A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public. These types of schemes have existed for at least a century, some with variations to hide their true nature, and because of this, many people believe that all multilevel marketing plans are also pyramid schemes.
Pyramid Schemes don’t last. Eventually the Government/State Attorney Generals will get enough complaints from the public and shut down Pyramid Schemes when they find them. Below are some great statistics on Network Marketing. As you can see it’s a very large industry. A main reason why it works so well is that instead of having a huge percentage of the marketing/sales budgets used for advertising Direct Selling companies pay commissions to the Distributor Sales Force to be the advertising arm. Word of mouth advertising is the most powerful form of advertising and the Network Marketing industry saw it’s biggest year ever in 2013.
So, just like anything great in life there will always be a few rotten apples. A few Company Founders will purposely start a company that is not a legitimate business and fall into the category of “pyramid schemes“. With the invention of the internet and social media there seems to be a lot of pyramid schemes that do pop up. Especially in foreign markets where a lot of them are labeled pyramid schemes or money games.
Some questions you have to ask yourself is this? Do they sell a legitimate product or service? Do they actually sell enough of that product or service to justify that they are in business? Does their model recruit and pay out more in commissions than actually the sales of a product or service. If the opportunity you are looking at doesn’t satisfy a legitimate product or service or they are not selling enough of that product or service and distributors are making more from recruiting than you might be getting involved in one of those Pyramid Schemes.
Pyramid Schemes vs. Direct Selling/ Network Marketing Companies
Here are some interesting facts from the DSA who supports the industry of Direct Selling/ Network Marketing and not Pyramid Schemes. They always have great data to support the industry and help fight against Pyramid Schemes.
- Did you know that a new home based business is started every 12 seconds in America?
- That there are 38 Million Home-Based Businesses in the USA?
- 70% of Home-Based Businesses succeed within 3 years vs. 30% of Regular Businesses
- 44% of Home-Based Businesses are started for under $5K
- Over 70% of Americans would prefer to be Self-Employed
As you can see that the Direct Selling/ Network Marketing Industry is viable business model. Just do your research and avoid those pyramid schemes.
Check out this video about about Pyramid Schemes:
So here is the good news. There are a lot of legitimate Direct Selling/ Network Marketing companies all over the world. If you do your due diligence you can find you one of these and avoid those pyramid schemes. Check out my previous blog about making sure you have the right mindset to before starting a Direct Selling/ Network Marketing Business. Click HERE. By taking the time to find a legitimate company you can find yourself with a business that you can start part time, get tremendous support, leadership and mentoring, help a lot of people with great products or services, have some flexibility and eventually you can become a full time Network Marketer and enjoy the lifestyle that most people dream about it. So take your time and find a great Direct Selling/ Network Marketing company and avoid those Pyramid Schemes. Because when you find the right one, your life could change forever. I’m living proof of that!
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