If You Do, Then Consider This Point. There Is A Definite Distinction Between A Pyramid Scheme And An MLM.
A Pyramid Scheme Is Illegal. But MLM Is Legal Because It Is A Proper Business Model!
The term pyramid scheme came up in a past conversation. The person concerned described a network marketing concern with this phrase. So that prompted me to write this post. I also added the following video to make my point. I am never enthusiastic when one describes the MLM business model in this manner. At the same time, I am aware as to why individuals may do so. Especially, when one considers these sorts of businesses. Let me to point out that pyramid schemes are against the law!
A Candid Explanation
Now it is true that they may appear to be the forerunners of multilevel marketing concerns. Therefore there is no argument when it comes to how similar they are. However, there is a distinct difference. The legality aspect constitutes one of these distinctions. Another key aspect to consider is that pyramid schemes are, and have always been, money exchanges. In other words you will never see an associated product or service. That factor alone prompted the illegal designation.
A Pyramid Scheme Is What It Is Because Of The Following Criteria!
As indicated, the framework of a pyramid scheme is very similar to that of a network marketing platform. But, as also highlighted, there is a subtle difference. What many individuals overlook is the following fact. A pyramid scheme forces individuals into the spots that are open below the top ones. To put it another way, as different people become members they fill the next open position. The system operates on a first come first serve basis. It is of no consequence which person does the enrolling!
Consider the image to the right. It doesn’t matter if the individual in position “A1” or “B2” enrolls the person in “C3”. That person fills up position “C3” in any case. The matrix will continue to fill in a left to right manner. The person in “D4” will fill that position regardless of who does the enrolling! This points out why people towards the top benefit the most. So folk frown on MLMs because of this and many avoid them. They do so because they have lost money in pyramid schemes. But this is misinformation!
Now Consider Why An MLM Is Quietly Different From A Pyramid Scheme!
This isn’t the scenario with multilevel marketing. Being at the pinnacle is fine. But it doesn’t mean that you’re going to earn more money than the people who sign up below you. In this case, the reward goes to the individual who does the enrolling. That person assists their team in duplicating the process. To state it another way, the person who works, benefits. The people that don’t put in the effort, don’t earn. But that is how it should be. In life, that is fundamental.
So this means that you can have the following scenario. An individual a couple of levels beneath you is earning much more income. Now you do have the potential to benefit. And that is as a result of volume of people underneath you. However, you would need to work to develop your team. That simply boils down to deploying the required work ethic! In essence, a MLM program is not that different from a traditional business. It just has a different way of distributing a product or service!