Different marketing schemes sprout up everyday with their endless promises of bogus unverified gains to its prospective recruits.
Undisputed, some reputed multilevel marketing business models have been successful in sustaining their business as well as delivering on a percentage of promised gains to its recruits, but in a lot of instances, other marketing schemes adopting this method as well have turned out to be scams.
One major challenge is the fact that a pyramid scheme which is illegal and fraudulent can easily camouflage as a multilevel marketing business.
Pyramid schemes are defined as: An illegal investment scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, or so-called returns, given to the earlier investors/recruits above.
A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment … Wikipedia
In quick pursuance of the ever elusive money, a lot of people fall prey to the scams of those who have perfected a system of depriving them of their hard earned funds.
No doubt, some people have made money through these schemes, but based on inquiries made, those who have walked away empty handed, out-number those who have made gains.
There are four main difference between a multilevel marketing company and a pyramid scheme:
Members at any level of a multilevel marketing model should theoretically be able to make income through the company’s products and/or services without having to sign up any new members.
Another difference is that members of any level in a multilevel can earn more than the people who signed them up depending on how much work they put in, which comes from sales of products or services.
You are not obligated to pay out a certain amount of money every month in order to keep your account with the company live, but in some cases, you are required to buy certain amount of inventory within the year.
There is little or no joining fee, and sometimes the fees represent the products that you purchase.
Before taking your decision, consider these tips:
Ask yourself if you are cut out for that particular type of business? Are you an extrovert/people person, willing to go and talk to people about the business if need be?
Are you prepared to work for that income? Like every other business, your income is dependent on your ability to sell or achieve results. Any smooth sales pitch promises made to you about making money for doing nothing is too good to be true.
Delve as much as possible into the history of the marketing scheme you are interested in. Check out the fine print/get as much information as you can. If your recruiter is unable to provide such vital factual information as maybe required, be skeptical. Do not rely only on the slippery talk of the representative; he is doing his job; do yours.
Always do a cost/benefit analysis. Take into cognizance all possible costs associated with signing up against all the potential benefits to you. If the benefits outweigh the costs, you may want to sign-up and try to make some money from the company, but if your potential loss outweighs the gain, then you might consider backing out.
Do you have the required funds to keep servicing the business even when you are not making money?
What is your exit strategy when you are no longer interested in pursuing that business?
How much have would you have lost in the venture if it fails to achieve your set objectives; can you afford to let go of said funds?
Pay particular attention over insistence for your immediate commitment with the concept that the rate you are offered is at a discounted/best rate and would change by the following day or week.
By applying these guidelines, you should be able to tell to differentiate between the two types of schemes. Some pyramid schemes are very cleverly modeled to cause misconception. If you discover that you cannot seem to make a conclusive decision as to what the company is all about, it is always best to exercise caution and avoid being a victim of scam.
In exercising your desire to own your own business or to be an independent consultant, remember the Caveat Emptor ”buyer beware”.
I hope this helps somebody. Thank you for reading and do pass it forward. Some information are meant to be shared.