Is Direct Selling a Pyramid Scam?

If you have heard the term Network Marketing or MLM, you may associate it as just another pyramid scam. But exactly what IS a pyramid scam?

The definition of a pyramid scam is a business model in which no products or services are actually exchanged. These are illegal, and generally the majority of home business opportunities you see out there do not fall into this category.

But then you may think of a pyramid as being a business model where only the people at the top make all the money while the people at the bottom do all the work and never become as successful as those at the top of the pyramid. Think about this for a moment. The people at the top make the money and the people at the bottom do the work. Does that sound familiar? That’s right…I’ve just described just about every business model in America. From Google to Microsoft, to Ford, to General Electric.

How can that be? Let’s look into it a bit deeper. A corporation is going to have a CEO. I think we can agree on that. And under the CEO there are people who report to him/her. Maybe a CIO and a CFO. And under these people are other individuals who report to them…presidents…then directors, managers, leads, and finally workers.

Does a CFO ever make more money than a CEO? Would a manager make more than a director? How about a worker making sales calls? Would they make more than a manager? Probably not. Ladies and gentlemen, allow me to introduce to you the true pyramid scam in America: Corporate America.

Now, how does something like network marketing or direct selling compare? Yes, it’s true that there is an organizational structure very similar to a corporation. There needs to be structure. However, the difference (and it’s a big one) is that people are generally rewarded for the effort they put into their business. In this structure, it is entirely possible for someone towards the bottom of the “pyramid” to make as much or more than their upline.

It all depends upon the effort one puts into their business and how successful they are in their business. Do 97% of network marketers fail? Yes. But in most of these instances, it is a result of either not being trained correctly or not being dedicated to their business, expecting to get rich very quickly.

The main thing to remember with a direct marketing business is that it IS a business. It is not a “get rich quick” scheme. Just like any other business, it takes effort and an expendiure of capital to become successful.

So long story short, before automatically labeling any networking marketing, MLM, or direct selling business as being a scam, think about the job you currently have and ask yourself if you are the one stuck in the scam.

To Your Success

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