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The Difference Between MLM And Illegal Pyramid Selling |
By:
Frann Leach |
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How can I tell a legal Network Marketing business from an
illegal Pyramid? Network Marketing — also known as MLM
('multi-level marketing'), relationship marketing and referral
marketing, is the 21st century way for entrepreneurs to build a
high income, without having to make huge financial investments.
Most MLMs don't need any premises beyond a computer desk and
perhaps a filing cabinet (though some may need storage space for
product). Unlike franchises (the business opportunities of the
20th century) in general the upfront investment is small and
training is usually free or very cheap. Overheads are low or
non-existent, profits can be very high indeed.
At first glance, MLM is very similar to the pyramid schemes
which have been made illegal in most of the West. In the
pyramid, a representative pays his initial stake when he is
recruited and is then shown how to recruit other
representatives. Every representative recruited brings a bonus
and adds to the potential residual income. But, if no customers
are required, sooner or later the whole structure will collapse,
because there is nowhere for the income to come from. In pyramid
schemes, the people at the top are the only ones who can make
money, because there is a limited pool of potential recruits,
and no other source of income. It's pretty obvious that no
company can survive for long without any customers.
How to distinguish a Pyramid from an MLM | °< d> | In MLM, it is possible for a
recruit to overtake the person who recruited them, and end up
making more money than them< d> | In a pyramid scheme, your place in the matrix is
fixed. You cannot overtake your sponsor. Even if they do nothing
after recruiting you, they will still make more money than you.<
d> < r> | | < d> < r> | | °< d>
| In MLM, nobody makes any money until
there is a sale: the company's income derives from its
customers, and so does the income of the company's
representatives< d> | In a pyramid
scheme, you are paid bonuses for recruiting other
representatives, regardless of whether or not they achieve any
sales or gain any customers. Because there is no income to the
company, sooner or later this scheme will collapse.< d> < r><
able>
So there you have it. When you look at the differences, it is
quite clear why pyramid schemes were made illegal in the first
place; they're just a scam. In contrast, network marketing is an
excellent way of making money by recommending products and
recruiting others to do the same; it is the 21st century answer
to the franchise. It's hardly surprising that 10% of new
millionaires made their money in MLM... and who knows how many
settled for just half a million, or less?
In my opinion, the best opportunity available in the UK and
Europe for residual income is this. This opportunity is
expanding all the way across Europe, from the UK, across Germany
and Spain and on via the Czech Republic - well, watch this
space!
In the US, you might want to join the IAHBE here.
Finally, let me wish you as much success as you deserve in your
new venture.
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Article Source: http://www.PopularArticles.com/article6070.html |
Article: The Difference between MLM and illegal Pyramid Selling
Author: Frann Leach
Total Views: 51
Word Count: 496
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