Network Marketing versus a pyramid scheme Since running my own home based business within the business model of Network Marketing, the only consistent objection I get is people saying to me “Isn’t that a pyramid scheme?” I could spend a whole day sharing my thoughts on this but instead I will summarise it.
Ten Key Points
- Pyramid selling is illegal. It was made illegal back in 1973 because of cowboy fraudulent practices
- In a Pyramid scheme money was exchanged between individuals. Sometimes there was a product to exchange for that money but sometimes there was only a concept
- The price of the product or concept was increased and often overinflated as it moved through the chain so each individual could make their money
- If you got in early in a pyramid scheme you could make money.
- It was the person coming in at the end who lost money and the problem was people didn’t know if they got in first or not. This is what gave pyramid selling a bad name and so it was made illegal
- Network Marketing is a business model taught in Harvard and Cranfield business schools. It is a follow on from Franchising
- So you get to run your own home based business under the umbrella of a successful company, you access the support structure of this company and follow their formula
- Choosing the right company is key: It needs to be a stable company with a sought after products, preferably a consumable product; a tried and tested company with an asset base that offers a great rewards package. It also needs to be governed and have accreditation for its training and support to ensure success
- Network Marketing is a little bit like a franchise, you get to use the company name, the company product and all with training and support but the good news is you don’t have to buy in. The Network Marketing company is not going to say you need to invest £30,000 up front, the Network Marketing company is not looking for your money but looking for your time so it can show you how to succeed
- Network Marketing does not work for everyone. It works for those who are open minded, willing to learn and get to work. The success comes through the personal development. The journey of development produces incomes that most people only dream of.
So now you have the top key points around Pyramid selling versus Network Marketing. Don’t just take my word for it, Robert Kiyosaki in his book The Business of the 21st Century presents a case to say Network Marketing is the future. Many household names are moving their business into this model: Alan Sugar, Richard Branson, Jamie Oliver to name a few.
I really hope that has helped to dispel the myth that Network Marketing is a “Pyramid scheme”