Network Marketing is NOT a Pyramid Scheme

Once again, I'm hearing the question all beginning network marketers dread: "Is this one of those pyramid schemes?"  Fortunately, those of us who have been around awhile know the answer to this one.  NO!

What makes network marketing different from a pyramid scheme?  Well, first and foremost, pyramids are illegal.  Network marketing is a legitimate business model. 

Pyramid schemes do not have a legitimate product to sell.  Network marketing businesses do.  The product will vary depending on the company you choose to join.  But there is a product or products in every legal network marketing company.

Since pyramid schemes do not have a product, all of the "commissions" earned by members comes from signing up new members.  In a valid network marketing business, members earn commissions from the sale of products and can also earn bonuses for recruiting new team members. 

Many business builders focus solely on selling their company's products to earn their commissions.  For those of us who understand the concept of leverage, recruiting fellow team members into our downlines allows us to create residual income.  In a pyramid scheme, this is not possible.  The focus is on recruiting as many people as possible to join your "business opportunity" in order to qualify for a paycheck.

In network marketing, there is no limit to how fast or how large you can build your business.  I have team members that I recruited that now earn far more than I do and have promoted beyond me to higher levels in the company.  Their advancement and earnings are based on the amount of sales their organization makes.  They have worked hard to find loyal customers and have taught their team to do the same.  They are able to earn large amounts of money because the products they sell pay for their commissions.  Not all customers become business members so there is always income from customers to cover the cost of commissions.

In a pyramid, there are no customers so commissions depend on bringing in a new team of recruits whose membership fees will pay everyone above them.  No one can advance or earn more money until there are enough people below them to keep the money coming in.  Eventually, when there are more people getting paid than there are joining, the pyramid collapses and anyone who has recently joined has lost all opportunity - and their money.

So when considering a network marketing business opportunity, before joining, look at this checklist. 

1.  Is there a real product?
2.  Are your commissions based on product sales?
3.  Has the company been in business for a while?
4.  Does it have a proven track record?
5.  Do they provide solid training?
6.  Can you contact your upline (your sponsor and those above him)?
7.  Can you contact the home office of the company and speak to a real person?
8.  Is the compensation plan thoroughly explained so that you understand how and where you make money?
9.  Do they provide realistic time tables for advancement (not a get rich quick scheme)?
10.Did the person recruiting you take time to answer all of your questions or put you in touch with someone who could?

If the answer to these questions is yes, then congratulations!  You have found a potentially profitable business opportunity.  If you answered no to any of these questions, you may want to take a second look.  If you answered no to a majority of these questions, run, don't walk, away!  You are likely in the process of being scammed by the dreaded pyramid scheme!