Before you choose the Company, Product and agree to join the Network and start your business, it is important for you to know how this Network marketing business works. Unlike the misconception that many people have, MLM selling involves hard work with focus and you need to be consistent with your effort in building and expanding your network. Unless you are clear about the MLM business concept, understand how the sales and income generation happens and have clear understanding, you are likely to get confused.
Before you get into business, you will need to understand in detail all about this business. Many people confuse MLM selling with pyramid selling. It is quite true and likely that the general opinion of the people regarding Network marketing can be poor and you might be confronted with such attitudes when you approach people. Therefore it is important for you to have a clear understanding of the difference between MLM and Pyramid selling including the legality and ethical aspects of both the systems, so that you are in a better position to explain the difference and clear the ambiguity of your prospects.
Pyramid selling is a scheme that operates similar to Network Marketing in the form of recruiting people to join the network. Pyramid schemes are derived to make money by the promoters through recruitment of people into the network promising those future benefits that will accrue when they recruit more people into the network.
These schemes do not involve any sale of goods or products and charge entry fee from those joining the network thereby earning money in promise of a future income. It takes a while for the participants to realize that there is no money to be made and that the promoters stand to gain without any real business.
Often you will find the Pyramid selling schemes talking about some kind of illusory products or treatments, subscriptions to magazines, catalogues and trainings etc.
Ask tough questions and dig for details. A good businessperson needs those answers. Here are some questions to ask:. Federal Trade Commission Consumer Information. Search form Search. Share this page Facebook Twitter Linked-In. Businesses that involve selling products to family and friends and recruiting other people to do the same are called multi-level marketing MLM , network marketing, or direct marketing businesses.
When it comes to recognizing potential pyramid schemes, scamwatch. It is important to ask your sponsor and other distributors tough questions, and dig for the details. Do not consider it nosy or intrusive. Take the time to properly vet any opportunity that comes your way — it might just save you in the long run. What is multilevel marketing? What is a pyramid scheme? The Federal Trade Commission suggests keeping the following questions in mind: Is your income based mainly on the number of people you recruit, and the money those new recruits pay to join the company and not on the sales of the products to consumers?
Are you required to buy a significant amount of inventory? Are you forced to buy other things you do not want or need just to stay in good standing with the company? Are people claiming rags-to-riches stories and lavish lifestyles made possible by participating in the program?
Are the products genuine products of real value, at a reasonable price and the type of thing that consumers want to buy time and time again?
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