I see people respond to network marketing opportunities all the time about it just being a pyramid scheme. I would like to explain a pyramid scheme vs network marketing so that you can make more educated decisions about your future.
Now, I do get that opportunities to better your future, create the life of your dreams, and creating residual income may not be for everyone, and that is okay. Okay, really I do not get it, but moving on. We will explain the structure of each and then compare the two.
A pyramid scheme is an organization that compels individuals to make a payment and join. Members are promised a share of the money from each additional member that they recruit. Directors of the organization (at the top of the pyramid) also get a share of these payments. These organizations seldom involve sales of products or service with any real value, and the way to make money is to recruit more people, which funnels even more money to the top of the pyramid. This is ILLEGAL in many countries, including the USA by the way.
Network marketing is considered a form of multi-level marketing, or MLM. Network marketing is essentially direct sales and the term multi-level marketing comes into play for the additional compensation plan of a downline. Independent non-salaried participants are authorized to distribute the company’s product or service. They make retail profit/commission on sales and do not make money on signing up other participants. These same participants can build organizations and make additional income as well if those individuals sell products.
Pyramid Scheme vs Network Marketing
Network marketing companies are not pyramid schemes. If there is any pyramid scheme in the world, it has got to be the corporate world. Where else can you work for the CEO at the top, making them richer, and feel no value or get nothing in return? Network marketing companies utilize their participants to conduct word of mouth and relationship marketing as opposed to spending a lot of advertising dollars. They are counting on those individuals to share their passion about the products and share with those in their network. I think that where people get confused is they think they are paying for job when they ‘sign up’.
When someone joins a network marketing company, they are not paying for a job. They are typically investing in their new business opportunity. Sure, you may get a kit that is typically a great value, but that is not what you are buying. You are buying a business. Have you priced starting your own business, or even starting a franchise? Network marketing is the most low cost, low risk way to start your own business.
Do your research! Make sure that the company you choose has products that you are passionate about, training available, and a great community. No one should tell you that it’s gonna be easy, it is commission-based work, and it is work.
Believe in yourself and succeed.