Multi-level marketing opportunities are great for those that want a lucrative business model with maximum time flexibility. It is important to understand the difference between a multi-level marketing business and a pyramid scheme. When presented with the opportunity, make a wise decision. It’s important to know the primary differences between them. Below, we will be going over what a Pyramid Schemes in 2018 are and what you should be looking out for to identify one.
What Is a Pyramid Scheme?
Pyramid schemes concentrate entirely on making unsustainable profits by recruiting others into your business rather than focusing on selling a product or service to an end user. This entire business model is flawed because it is no sustainable. It puts every new business ‘partner’ in recruit mode where that is their only means of recouping their investment. Below, we will discuss some of the red flags to be aware of when it comes to identifying one.
Red Flags For Pyramid Schemes:
1. Promises Of Success With Minimal Effort.
When a business makes promises of success and financial freedom with minimal effort is going to be selling a ‘dream.’ Because this kind of business doesn’t exist, it is a huge red flag when a business promotes itself as one.
2. Large Start Up Costs.
Pyramid schemes are full of start up and buy-in costs. They typically force you to buy a certain amount of products or spend a certain amount of money in order to buy into the business. If a business is forcing large investment to become a distributor or business partner it’s a red flag. While there are network marketing companies that do this as well, their investments are typically lower.
3. Majority Of Revenue From Selling To Recruits and The Opportunity.
When it comes to the revenue from the business, you want to make sure that a majority of it is coming from actual sales. Rather than buy in opportunities and sales to the members involved in the business. If a majority of the sales are going to actual recruits and the money coming in is largely from the opportunity itself, it is likely a pyramid scheme.
In order to minimize your chances of opting into a pyramid scheme, you are going to want to understand what a multi-level marketing company is. Below, we will be going over a brief list of things that you should look for prior to joining.
Things To Look For In The Business:
1. Company Information.
The first thing that you are going to want to do is verify all of the company information. You will want to find all of the credentials that you can use to look up whether or not the company is reputable. The best way to do this is by looking at the Better Business Bureau if they have a good rating.
2. Start Up Costs.
You are also going to want to verify all of the start-up costs associated with the business. See what kind of returns you might be able to get with your initial investment.
3. Verify Earnings.
Verify whether or not the earnings that you heard about are legitimate or over exaggerations.
4. Refund Policies.
Determine whether or not they have any sort of refund policy for their buy-ins.
5. Product Sales.
The company must sell products to consumers. Products that people are actually interested in, in the first place. By ensuring that the company is selling a quality and viable product, you should be able to maximize your chances of succeeding in the business and avoid going with a pyramid scheme.
Overall, there are a lot of things to be aware of when it comes to joining a network marketing company. The biggest difference between them is that a pyramid scheme is designed to get the most money out of its recruits. A legitimate multi-level marketing business is designed to achieve sustainable growth with their distributors by selling a viable product to an end consumer. By utilizing the information above, you should be able to distinguish whether or not an opportunity is a legitimate one or not.