Considering investing your hard earned money in MLM business? Well, you are not alone. Many millennial's around the world might be debating on Pyramid Scheme VS MLM as the better choice, as we speak.
Better you get onto the bandwagon, be sure to verify the legitimacy of the scheme or else the money would go down the drain. As lucrative as genuine MLM business is, there are some traps laid out to lure naive customers into Pyramid schemes and steal their money.
In MLM business, a company employs independent distributors who are trained to sell their products. In Turn, these independent distributors will earn a commission for the sales they do. They are also encouraged to recruit more distributors. under them and earn a portion of commission they earn for their respective sales. These distributors have different titles in different companies like consultant, contractor or distributor.
The distributors also earn bonuses for achieving a particular sales target or for adding your stipulated members under him ( which will be their down-line) ;you can earn cars, vacations and even cash. Quite tempting, isn't it?
Pyramid Schemes are wrapped in MLM ‘s shiny wrapper and presented to unwary people who are impulsive enough to join the bandwagon. Well, to state the obvious, not every multilevel marketing opportunity is legitimate. There are a lot of pyramid schemes doing rounds today.
In a pyramid scheme, no real product is sold. The people who enroll are required to pay a lump sum amount of money right at the time of registration. This is their primary source of income. The naive enrol lees are convinced that this is an initial investment and would get the returns for each new member they recruit and climbing up the ladder.
Pyramid scheme is illegal in most of the countries around the world.
Participating in a pyramid scheme is an offense under the Criminal Code of Canada, punishable by up to five years imprisonment.
Now, let us address the big question of them all - MLM vs Pyramid scheme.
Well, it is quite difficult to tell the difference between a legitimate MLM opportunity and a pyramid scheme by just a glance. So, how do you tell whether it's a legitimate business opportunity or a scam?
The easiest and magnified difference would be from the way the business operates. The pyramid scheme will not ask to sell any kind of product. The company will only be keen on forcing you to make the initial investment and then asking to recruit more people under you and get their money. The big difference between MLM and a pyramid scheme is in the way the business operates. On the other hand, a genuine MLM company will ask you to sell the products and earn commissions from the sales generated.
The MLM company will have a compensation plan that depicts how and how much commission you can earn from it. There are MLM Calculators available online to help you do this calculations. Pyramid schemes will not have such plans. They just have a fixed number of ball model, like 8 ball model where each person has to recruit another 8 people to earn the income. The scheme ultimately collapses when no people are anymore join the network and cash inflow ceases.
You can question the person recruiting you about various aspects of the company like what products they sell, how many years have the company been in operation, how much is the earning possibilities, do they have a convincing office space etc.
Also, you must note that any scheme that is promising huge returns in a short span of time for huge initial investments is most likely to be a fake scheme.
MLM vs Pyramid Scheme- Ask yourself the following questions before joining the network.
To steer safe of the scams, always ensure that you gather all the possible information before investing in one. Source and read the written copies of the company's sales literature, business plan and/or marketing plan.
Talk to other people who have experience with the multilevel marketing company and the products to determine whether the products are actually being sold and if they are of high quality.
Know more about MLM Software and MLM plans here.
Lastly, use the might of the internet to read reviews, feedback's and complaints, if any, of the company you intent to join.