The Difference Between Mlm And Ponzi Or Pyramid Schemes

Have you been reading about the nasty MLM Scheme and wondering how you can avoid it? There is quite a bit of misunderstanding, mistaken information and g confusion when it comes to the terms network marketing, MLMs, multi-level marketing, pyramid schemes and Ponzi schemes. This article will set you straight.

Let's start with the basic terms. Network marketing, also referred to as multi-level marketing or just plain MLM, refers to a legitimate business model for marketing and selling products and services.

A company which operates under the MLM model will not hire a staff of sales representatives or human resources. They don't conduct interviews to evaluate if you are right for the job or if that job is right for you. They operate by allowing you to join the MLM by paying a start-up fee which varies from one company to the next so that you can then distribute their products by their rules. MLM companies also pay you when you bring in other members to the business. You in turn make commissions on the amount of products/services you sell and the number of people you can recruit into helping you with sales and recruitment.

Although each MLM company differs in what products or services they offer, how long they have been in business, in their marketing/training methods and strategies, in their compensation plans, just to name a few. . .

. . .Network Marketing, Multi-Level Marketing and MLM businesses are ALL legal businesses.

Most people are surprised when they first learn that Mary Kay, Avon and Shaklee are all successful MLMs?

However, legal MLMs are frequently mixed up with illegal pyramid or Ponzi schemes where members make money when they bring other people into their business.

Network Marketing companies also pay you to recruit members into the business. But they have products services to offer. The reason that pyramid achemes are illegal is because no such product/service exists.

One of the biggest reasons for the confusion between MLMs and Ponzi/pyramid schemes is that the latter were actually created by previously unsuccessful network marketers who weren't able to make money the legal way. So, they made their own illegal rules. In their early days, Ponzi schemes were more common because they weren't recognized as such. Nowadays, the FTC clamps down on them very quickly if they do happen to crop up and they are usually shut down before they can do much damage. It's precisely because of Ponzi schemes that Network Marketing companies are subject to VERY strict controls by the FTC to insure that an MLM is not or will not eventually become a Ponzi/pyramid Scheme.

So, the reality is . . .the "MLM scheme" doesn't exist.

In reality, network marketing companies are helping thousands of people around the world to start their own businesses from home. These new business owners include people who were laid off from their jobs, those who lost their retirement funds and need a new source of income, moms who have decided that they want to spend more time with their kids, etc. And most network marketers enter into the business because they want to represent products that have already had significant impacts on their lives.

But, the most recognized statistic about MLM is unfortunately true. . .the 97 % failure rate. Yes, this is also true. Does this make network marketing a scam or scheme? No. But it probably makes you wonder what it takes to be in the elite 3%. For most of us, it takes training, work, dedication and time. If you've been told that you don't need to put in any effort to succeed in network marketing, you've been told wrong.

There are two main reasons that multi level marketing is so appealing. First, it can provide residual income long into the future. This allows you to earn even when you are no longer working. Secondly, you can set your own hours and work at your own pace.

It's also something that you can start out doing in your spare time and at your own pace. If you are interested in becoming involved in network marketing, you have an enormous choice of solid, stable and exciting options.

So, let's set the record straight. There is no such thing as an "MLM scheme". What's not so pleasant is that only a small percentage of network marketers are successful.

Having the right attitude contributes greatly to how successful you will become in MLM but even more importantly, you need the right training and a marketing system that works for you and your team.