Tweet

MLM Or Pyramid Scheme?

Guest post by: Eric Stein

Article Overview: How can you tell the difference between the two? How can you determine whether a legitimate MLM actually has the potential to earn revenue?

MLM Or Pyramid Scheme?

MLM stands for Multi-Level-Marketing. Such a program starts with a product or service to sell, yet the way to grow your business is to build a network. If you enlist 3 friends, you receive a percentage of their sales. If they each enlist 3 friends, you are now receiving a percentage of sales from 12 people (the original 3, plus the 9 they brought on). There are plenty of articles online that will educate you on what to look for in an MLM. A simple search for "What is an MLM?" in Google will probably yield enough results in the first two pages to give you most of what you need. One of my favorite resources is the About web site, which has lists of relevant articles under the Entrepreneur section. For starters, check out "Too Good To Be True?" by About contributor Scott Allen, which defines 6 criteria you should look for in an MLM. While there, peruse around for more valuable resources.

Most information you will find will heed the warnings of multi-level-marketing. A few to review are at a web site called MLM The-Truth. And with good reason. There's a standard pitch that seems to can prey on what everyone looks for in an opportunity - no selling, unlimited potential, free time to enjoy your new boat.

However, don't think that all MLM opportunities are ones to stay away from. There have been many companies that implemented this structure and were very successful in doing so. Two examples are Avon and Mary Kay. The best test is to ask yourself if the product or service on its own appears to be valuable and profitable. In other words, do you feel confident in the business of selling the product or service alone without creating a network? If not, then you should dig deeper into its potential.

Related Articles
  Ponzi Scheme or Pyramid Scheme - What's The Difference?
  Kenya, the land of the pyramids
  Network Marketing Opportunities – Pyramid Schemes or Legit Opportunities?
  2 Major Differences Between MLM and Pyramid Marketing
  Who Else Wants to Discover the Truth Behind MLM Pyramid Schemes?
  Network Marketing vs. Pyramid Schemes
  Do network marketing Prospect Questions Make You Go Berserk?
  Flipping A Network Marketing No Into A Not Yet (And Then To A Yes)
  How To Find A Long-Lasting Home Based MLM Business Opportunity
  Article #13 Hoping the Next Business Opportunity Would Be “The One” to Make You Rich?
  career transition&Success paradigms
  Legal Marketing: How to write your firm's blog
  What do You do if a Critic of Your Home Based Online Business Happens to be a Friend or Family Member?
  SEO Success - Website Navigation
  The Marketing Pyramid: How to Find Your Ideal Client
  Scam Alert - Be Careful What YOU Deem as a Scam
  Equipment Suppliers - Can You Offer Finance Options To Your Customers?
  How To Protect Yourself If Your MLM Goes Bankrupt
  What is wrong with Multi-Level Marketing?
  Where Are You In Abraham Maslow's Hierarchy Of Needs?

Article Tags: Home Business, HomeBusinessBug, MLM, MultiLevelMarketing, Pyramid Scheme, Work From Home



Related Forum Posts
Different Types of Funding - Finance for business can be obtained through a number of different sources. Let's review some of those channels to help you decide what's right for your business needs: Grants There are over 930 different EU and UK grants and loans available from over 100 issuing bodies. This is the cheapest form of finance and an important part of the funding package that companies and individuals need. We can help you find your way through this maze. Technology Micro Projects: 50% of eligible costs up to £20,000 Research project: For a technical and feasibility study of an innovative idea for new technology 60% of costs up to a grant of £75,000. Development project: For development up to pre production 35% of costs up to a grant of £200,000 Developing an innovative idea: valuable for small companies and individuals at the start of a technical project: 75% of costs of hiring a mentor and consultants. Export To start exporting or moving into new markets grants of 50% of costs up to £20,000 each. Training and Education Knowledge Transfer Partnerships, Achieving Best Practice in Your Business, Investors in People Modern Apprenticeships New Deal for various grants. Environment BOC Foundation for the Environment: 25% to 50% of Project cost, typically £20,000 to £100,000 Clean up Fund: Emission reducing equipment up to 75% of cost Community Chest Fund: Up to £25,000 for projects near active SITA sites High Impact Fund: £150,000+ for larger projects near SITA sites Assisted Areas Regional assistance grants of between 10 and 35% for capital expenditure in less favoured areas of the UK. Loans Loans are an excellent source of finance if you have suitable security to borrow against or a reliable earnings stream. This needs to be planned and presented well to obtain funds. Credit cards Provides up to 56 days free credit if you play the game! Overdraft Banks are surprisingly supportive when presented with a well thought through plan and competent management. Bank Loans Lenders tend to look for a good business plan and security. Typically the loan is approved by a centralised back office function rather than the person you meet. Terms and rates depend upon the risk. Repayments can be very flexible to meet your specific needs. Mortgages These can include flexible repayment terms to meet your business needs. This can even be incorporated into your overdraft finance so that you have one flexible account for both personal/ business mortgages and overdraft Small Firms Loan Guarantee Scheme Up to two years trading: Up to £100,000 Over two years trading: Up to £250,000 However these are difficult to obtain and are a loan of last resort. Export Guarantee Scheme This is government backed insurance against appropriate export documentation. Mezzanine This is a halfway house between loan and equity. It can be an innovative way of raising funds for the more established business. Mostly for expansion capital. Equity This is not as easy as the papers would have you know. Only 1% of business plans received by Venture Capital Funds are successful. However, a good business proposition consisting of a strong demand for the product or service, management track record and a sound financial plan will enhance the chance of success. Business Angels These are high net worth individuals who are successful businessmen looking for investment opportunities. They can provide both time expertise and money. Typical investment size is £25,000 to £250,000 but can go as high as £2m for the right opportunity. Exit within 3-5 years. Venture Capital These are investment funds seeking high rates of return. However typically investments are over a million pounds. Some funds are targeted at lower amounts depending upon the sector and region. These funds are looking for exponential capital growth over 3-5 years. Asset backed finance This can cover machinery, sales invoices even sales orders. It can be a very flexible source of finance to the growing business Leasing This will cover your capital expenditure and spread the cost over a three to five year period. It is particularly useful if you do not have taxable profits to maximise your capital allowances. Sale and leaseback of a property you own is another good source of funds. Factoring Factoring offers a sales ledger administration and debt collection service. Up to 95% of an approved sales invoice is paid within 48 hours, quicker if required. Credit protection is also available to protect against a bad debt. The Factor will own and place a first charge over the book debts and they might also take other charges, depending upon the strength of the financial information. Invoice discounting Invoice Discounting can be Confidential or Disclosed; it depends upon the strength of the financial information. The service is the same as Factoring, except that the sales ledger administration and the debt collection is the responsibility of the client and not the Factor. Pre payment of the approved sales invoice is still up to 95% and the factor will still have a first charge on the book debt and therefore own the debt. This service can also have credit protection cover. All sales invoices need to be for a business to business debt, and some proof of delivery is generally required. Trade Finance This is funding provided against stock purchases, signed contracts and orders whereby the funder will prepay a certain percentage of the value Pension fund It may be possible to use your pension funds for a loan back to the business What do u think about it?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Why Use an Advertising Agency

Are You My Mentor

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.