Archive for the ‘MLM’ Category

November 26th, 2020

How Does MLM Compare to Pyramid Schemes?


by Rahimah Sultan








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If you’re considering a multilevel marketing (MLM) opportunity, be very cautious. MLM and pyramid schemes can be very similar.

How does MLM compare to pyramid schemes?


What is MLM?

Some people like the MLM business model. You have the opportunity to become involved in a system for supplying products to consumers. MLM associates have the support of a direct sales company so they don’t have to start a business from scratch. Some of the companies train you.

When you become a MLM distributor, associate, consultant or whatever term the company uses, you make money, by selling products to other MLM participants who are not already a member, when you sign them up.

You earn money on your sales as well as a percentage of the sales of the new distributors you bring in. The people you bring in are your downline. Sometimes you get bonuses after reaching certain milestones like bringing in a certain number of new people or selling a certain amount of product. You can also win cash, trips and automobiles.

MLM can be a legitimate business opportunity, but not always. MLM is legal in Canada and most of the United States, whereas pyramid schemes are not.


What is a pyramid scheme?

If you’re looking for a legitimate business opportunity, it can be very difficult to tell the difference between an MLM opportunity and a pyramid scheme.

A pyramid scheme also offers the opportunity to make money by signing up others and achieving certain levels.

Unlike MLM, a pyramid scheme exists solely to get your money and then use you to recruit other distributors.


Ask yourself the following questions before signing on:

Do you have to invest a large amount of money up front to become a distributor? MLMs do not require large startup costs.

If you have to pay for inventory will the company buy back unsold product? Legitimate MLM companies offer 80% buy back.

Does the company offer actual products or services? MLM companies depend on an actual market for products and services. Don’t sign up if the company doesn’t seem to have any interest in consumer demand for its products.

Is the focus more on recruitment or products and services? Pyramid schemes focus on fast profits from signing up people and getting their money. If this seems to be the case, run.

How to Determine the focus.

The pyramid scheme focuses on fast profits from signing people up and getting their money.
If the emphasis is on recruitment rather than on selling the product or service do not sign up.

Another trademark of the pyramid scheme is the offer of commissions for recruiting new members. This is what matters in a
pyramid scheme, not the products or services being offered.


When you’re deciding on a business opportunity thoroughly check out the company. Get all the information you can on its products and operations.

Check out the business or marketing plan. Talk to others who have experience with the MLM company and its products. Determine if there are real products being sold and the quality of these products or services.

Check with the Better Business Bureau to see if there are any complaints against the company.

When attending recruitment meetings, listen very carefully for claims of you being able to make amazing amounts of money. That should set off the alarm bells for you.

Although being part of a successful multilevel marketing company can be both profitable and fun, unfortunately, some supposed MLM opportunities are just cons designed to flatten your wallet and trash your dream of running a business.

So, How Does MLM Compare to Pyramid Schemes? MLM is a legitimate business opportunity, whereas pyramid schemes are scams to take your money.


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May 14th, 2020

MLM: Is It Legitimate?



by Rahimah Sultan









Multi-level marketing is called many things: network marketing (most common), direct sales, affiliate marketing, referral marketing, dual-level marketing, consumer-direct marketing, home-based business franchising, home-based business opportunity, and inline marketing.

But, using one of these terms to define a business DOES NOT automatically make it an MLM.

Multi-level marketing companies basically promise a chance to leave your 9-5 job, be your own boss, make lots of money and to make new friends in the process. The ongoing debate is whether these companies and programs are legitimate business opportunities.

According to Wikipedia Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation. Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing. Some people use direct selling as a synonym for MLM, although MLM is only one type of direct selling.

So, due diligence is required before joining any of these programs.

Here is a great article on MLM.

This post includes an updated 2020 list of the top MLM companies in the US and international ones.


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February 4th, 2018

MLM: Network Marketing Traps

by Rahimah Sultan

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As you advance in your MLM business, there are three phases you’ll encounter, and each can be a trap.

 

The first is introverting which occurs at the beginning of your network marketing career. At this point you’re very afraid and studying scripts. You’re so focused on getting the words correct that you don’t communicate the concept to prospects. You must get passed focusing on what others think about you.

 

To get passed this, practice what you’re going to say over and over BEFORE getting in front of a live person, focus all your attention on the prospect, and have so much activity going on that you don’t have time to focus on your fears.

 

Second is doing it all. You sponsor so many people that you begin to feel no one else is doing any work or you wonder how to motivate your downline or you feel as though you’re sponsoring “duds.”

 

You have to have the patience to train the people you sponsor. You can’t do it for them. Don’t stop training your distributors until they can properly train their distributors.

 

Third is getting in the rut of making enough money to keep you going, although it’s not the money you dream of making.

 

Read The Three Booby Traps of Network Marketing

 

 

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October 7th, 2017

A Few Tips About MLM

by Rahimah Sultan

 

photo from blog

 

There is an ongoing debate as to whether businesses and programs, that promise you a chance to leave your day job, are legitimate business opportunities or scams/pyramid schemes. Multi-level marketing (MLM) companies offer you a chance to be your own boss, make lots of money and new friends in the process.

 

Here are some major indicators of pyramid schemes:

 

* Programs that focus mainly on recruitment of new people
 

* Plans that claim you will make money through continued growth of your “downline” rather than through your own sales of products
 

* Programs that ask distributors to purchase expensive inventory
 

* Plans that ask you to sign a contract or pay money to participate in a multi-level marketing program, or any business opportunity, without letting you take time to read all of the paperwork
 

* Products or services are just vehicles for recruiting, and may be gimmicks and/or overpriced. Even high quality products may serve as a cover for recruitment activities.

 

Compensation Plans

 

A MLM company will have one of several Marketing Payment Structures. It can be a Matrix Plan, a Binary Plan, a Breakaway Plan or other.

 

The distinct feature of a Matrix Plan is its limited width. Unlike other MLM compensation plans, a Matrix restricts the number of distributors you can sponsor on your first level, usually to less than five. The most commonly used Matrix MLM plans are 4 x 7, 5 x 7, 3 x 9 and 2×12.

 

A Binary Plan is a Two-Legged (Left leg, Right Leg) structure where each new distributor or member is placed in either of the left or right subtree. One subtree is called a Power Leg or Profit Leg and the second subtree is a Profit Leg or a weak leg.

 

Advantages of a binary MLM plan are:

 

Spillover, unlimited depth, fast expansion, it’s volume driven, and there can be multiple business centers.

 

The Breakaway Plan, also known as the Stairstep Plan, has different status stages or steps. Once you reach a certain level you are allowed to “Breakaway” from your sponsor and run your company individually.

 

Advantages of the Stairstep Breakaway MLM Plan are:

 

The earning potential on more levels, no limit on the number of people who can be recruited into your first generation line, and there is no limitation on the number of recruits that your downline distributors are allowed to recruit.

 

It’s important to do your due diligence and check out all programs you may be thinking of joining. Discuss it with a spouse, a knowledgeable and experienced friend, an accountant, or lawyer. You can also check out the company with the BBB. If you feel that you are being high-pressured or that you’re not being given enough time to study and evaluate the details, look elsewhere.

 

Once you have found a legitimate MLM company that you want to be a part of, be prepared to put in the work to make it profitable. If you want success, be disciplined and treat it like a business and be willing to follow advice from others who have made it. Although using multi-level marketing for supplemental income can be a good plan, understand that it will take time to make it your full-time income source.

 
 

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May 31st, 2017

MLM Confusion

by Rahimah Sultan







Multi-level marketing companies basically promise a chance to leave your 9-5 job, be your own boss, make lots of money and to make new friends in the process. The ongoing debate is whether these companies and programs are legitimate business opportunities.

According to Wikipedia Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation. Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing. Some people use direct selling as a synonym for MLM, although MLM is only one type of direct selling.


Read more




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December 19th, 2016

Multi-Level Marketing Tips

by Rahimah Sultan

 

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For those who have not saved enough there is a need for alternative ways to either save more or generate supplemental income starting now, and continuing throughout retirement. You may be one of those people for whom multi-level marketing is a good fit. Or you may just want to be involved in activities that keep you busy, relevant, in good health, and connected to others.

 

If you’re considering Multi-level Marketing Read Multi-Level Marketing For Additional Income.

 
 
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August 20th, 2016

Multi-Level Marketing: Your Approach

by Rahimah Sultan







Multi-level marketing has gotten a bad reputation, partially due to a lot of confusion about legitimacy. Although structured almost exactly like a pyramid scheme, it is legal.

A pyramid scheme is a non-sustainable business that involves the exchange of money, usually in the form of a sign-up fee, and usually has no product or service.



Check what the Better Business Bureau has to say about the company and the guide if it’s nutritionals.

This business is not for everyone. Is your up-line helpful and caring? Are you team spirited?

Another part of the multi-level marketing reputation is due to a marketer’s approach.

When promoting your product or service, don’t be pushy. Just be there when someone is ready to try your offer. If you’ve researched the company and are pleased, educate people on the benefits of using the products or services. You can do this in several ways; physical meetings, online webinars, videos, etc., showing how you are benefiting from using the products or services.



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April 22nd, 2016

Multi-Level Marketing

by Rahimah Sultan

 

photo from blog

 

Multi-level marketing companies are legal although structured almost exactly like a pyramid scheme. A pyramid scheme is a non-sustainable business that involves the exchange of money, usually in the form of a sign-up fee, and usually has no product or service.

 

Some major indicators of a pyramid scheme in multi-level marketing are:

 

1) Focus on recruitment of new people rather than product sales
2) Claims of making money through growing a downline rather than your own product sales
3) Asking distributors to purchase expensive inventory
4) Asking you to sign a contract or pay money before you have time to read all of the paperwork
5) Products that may serve as a cover for recruitment

 

The ongoing debate is whether these companies and programs are legitimate business opportunities.

 

More

 

For an in-depth review of multilevel marketing, read

 

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July 20th, 2015

MLM Is A Legitimate Business Model

by Rahimah Sultan






This was originally posted on July 20, 2015 with the title Multi-Level Marketing for Additional Income.



MLM (multi-level marketing) IS a legitimate business model. MLM is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation.

MLMs have been around for over a century, are legitimate, and they work for some people.

In multi-level marketing, companies basically promise a chance to leave your 9-5 job, be your own boss, make lots of money and to make new friends in the process.

There is an ongoing debate as to whether these companies and programs are legitimate business opportunities or not.

The reason for most of the confusion is that multi-level marketing companies follow a concept similar to a pyramid scheme, except for two significant differences. One being members at any level of a multi-level marketing model can theoretically make income through the company’s products and/or services without signing up any new members. The second difference is that members of any level in a multi-level marketing plan can earn more than the people who signed them up.

Multi-level marketing companies are legal although structured almost exactly like a pyramid scheme.

A pyramid scheme is a non-sustainable business that involves the exchange of money, usually in the form of a sign-up fee, and usually has no product or service. Following are some major indicators of a pyramid scheme.

* Programs that focus more on recruitment of new people rather than the sale of a product or service to an end-user consumer.

* Plans that claim you will make money through continued growth of your “downline” rather than through your own sales of products.

* Programs that ask distributors to purchase expensive inventory. There are horror stories of people with a basement or garage full of merchandise that no one will buy.

* Plans that ask you to sign a contract or pay money to participate in a multi-level marketing program, or any business opportunity, without taking your time and reading all of the paperwork.

Talk the opportunity over with a spouse, knowledgeable friend, accountant, or lawyer. If you feel that you are being subjected to high-pressure sales tactics or are not being given enough time to review the details, go elsewhere.

* Products or services are simply vehicles for recruitment. The products may be gimmicks and/or overpriced, but even high quality products may serve as a cover for recruitment activities.

According to the FTC, a pyramid scheme is defined as a company that specifically pays members for recruiting purposes only.

Check the FTC’s website.

To be super-successful in network marketing, you have to recruit new members.
It doesn’t matter how good your product or service is — the real money is in the flow of new recruits.

There’s the age-old debate that standard companies are set up like a pyramid, with a CEO at the top, some more officials under them, managers at the next lower level, and the team under the managers.

MLMs are completely different from standard companies.

Most companies don’t require their new employees to pay a sign-up fee to join, or have the majority of their product sales coming from their own employees, nor do most companies allow workers to personally recruit other employees into the business. HR does that.

Once you have found a legitimate multi-level marketing company that you want to be a part of, you must put in the work to make it profitable. If you want to succeed be disciplined and treat it like a business and be willing to follow advice from others who have made it.

Click here and check out the best MLM companies of 2019.



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