Don't Get Caught In A Pyramid Scheme
Since the distributors are independent, the company does not need to pay any fixed salaries, but only commissions when sales are made, which allows it to save sales expenses. But even the vast majority of those who are sales "leaders" at Herbalife, the top 20 percent of sellers, don't earn enough to live. Last year, more than half of the 82,464 sales leaders earned $1,000 or less in commissions for the whole year, according to Herbalife. By contrast, a pyramid scheme compensates those at the top of the pyramid with participation fees paid by those recruited at the bottom. It eventually collapses when the scheme can't recruit more people.
Pyramid schemes are not only illegal; they are a waste of money and time. Because pyramid schemes rely on recruitment of new members to bring in money, the schemes often collapse when the pool of potential recruits dries up . When the plan collapses, most people, except the few at the top of the pyramid, lose their money.
However, they later introduced multi-level compensation plans, becoming MLM companies. The DSA has approximately 200 members while it is estimated there are over 1,000 firms using multi-level marketing in the United States alone. The main sales pitch of MLM companies to their participants and prospective participants is not the MLM company's products or services. The products or services are largely peripheral to the MLM model. The memoir illustrates the multi-level marketing sales principle known as "selling the dream". The promoters of a pyramid scheme may try to recruit you with pitches about what you’ll earn.
You may also need to buy training and marketing materials or even attend in-person seminars. All things considered, it can cost hundreds or even thousands to get started. If that doesn’t work for you, there are plenty of other businesses you can start for $1,000 or less. Yes, there are some legitimate MLM opportunities out there. And if you’re a customer of a particular company and personally enjoy their products, becoming a MLM distributor can help you score a discount on those products and earn extra money on the side.
Don’t join a company that requires you to keep paying for new inventory of products just to remain active or qualify for bonuses or rewards. Don’t invest with an adviser or firm that isn’t registered with the SEC or state regulators. When a company is registered, you can access information about its management, products, services and finances. They insisted they offered participants an opportunity for “responsible entrepreneurism” and “a journey towards new freedom in their life”, suggesting failures just hadn’t put in the “required effort”. This often results in vulnerable people being targeted by the allure of making easy money, fitting work around your own schedule and entering a supportive community. But some of these companies have an alarmingly cult-like mentality, encouraging distributors to cut negative influences and naysayers from their lives.
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If the company and its distributors make money primarily from the sale of products to end-users (and not boxes of product accumulating in a distributor's garage), it's OK. Participants are also encouraged to bring in or recruit others into the program as participants. While they may not be Anti-MLM pressured to do so, signing up new contractors provides a financial incentive for participants, who receive a percentage of the sales of their recruits. Beware when the products or services are simply vehicles for recruitment.
The entire purpose of a pyramid scheme is to get your money and then use you to recruit other suckers (ahem - distributors). A supposed marketing, business or investment opportunity is predicated on you recruiting others into the program and collecting commissions on them. Again, you do not have to choose to step into leadership but that track is there and paid accordingly if you do decide to do so. I have team mates that make full time salaries that would make people’s jaw drop concentrating on sales ALONE. The product and training is there, it is up to you what you decide to do with the opportunity. As long as you stand behind a product that is trusted, proven, loved, and in demand, you have the perfect ingredients to establishing a reputable business that doesn’t have to push something down people’s throats, so to speak.