Anthony Shelton’s Blog

Hello everyone, I promised you a article on this subject and here it is.  Post your comments and let me know your input.

Anyone who is involved with or has been involved with a Network Marketing / Multi-Level Marketing (MLM) company has been asked the question when presenting their opportunity “Is this one of those pyramid schemes?” Most people jump straight to trying to defend the company they represent, instead of figuring out why the prospect feels that way. In this article I will use the term “prospect” to define a person whom you are presenting your business opportunity with. Also I will use “upline” as the person who introduced and trained you on the company. The “downline” is the people you present your opportunity too and they join the company underneath you becoming a part of your downline. Now with some terminology out of the way, I will explain the difference in MLM and Pyramid schemes.

This first step you should take before jumping on the defense is to answer their question with a question. I know this sounds a little odd, but hear me out. Ask your prospect “What is it you know about a pyramid scheme to make you ask that question?” This will get your prospect to tell you what exactly it is that they don’t like about it. Maybe someone they know or even they have been caught up in one. Before you go to telling them why it is NOT a pyramid scheme, ask why they jumped to that statement. You will gain understanding on the situation you are attempting to defuse and this will help you. I will tell you 3 good ways to explain why your company is not a pyramid scheme all while telling them the benefits of your company. The products, the compensation plan, and the opportunity. We will discuss this more in a few.

We are all aware of the big corporations and how they are set up. Coke a Cola, Sprint, IBM, Frito Lay, all the companies of the products you buy. CEO at the top, Vice Presidents and Executives below him, and so forth. What shape is this? A Pyramid. What about any club or group you know? You have the leader, the secretary, treasurer, you get the picture. Most every group, company, club, organization has the “pyramid” structure. So why does network marketing and MLM get pounded with the “pyramid scheme” question so much? This is my analysis of it.

Typical Organization Structure

In the past couple of decades illegal pyramid schemes have needed a way to hide what they actually are. A scam! So they look at the MLM industry. Why? I want to say it is because we do build our business by showing other people how to do that same thing. From the MLM companies I have investigated that is how it really comes together. You sell product, share the opportunity, and show them how to do it themselves. When you look at the illegal pyramid schemes, normally you just sign people up without selling anything, paying your starter fees to invest more money on some materials and tools they tell you to use. Yea, it sounds easy and you may even get some more people involved even maybe a couple of checks. Then one day the company is closed, the websites and phone support is gone, and you are left hanging out to dry. You will lose money every time and probably some friends because they feel as if you scammed them. Now there is legit network marketing / MLM companies that you can make very good money with, but how do you tell them apart from the scams? I am here to help you on that issue.

There is several ways you can use to determine if you have been presented a excellent business module or one of those scary illegal pyramid schemes. I am going to share a few with you. First off, is to listen to what you are being told…all of it. Listen carefully and then begin your research. If you like what you have been told then you should go and thoroughly examine the following 3 things. The Product(s), The Compensation plan, and the business opportunity they offer. This is something you will find that can help separate a legit MLM company from an illegal Pyramid Scheme. All MLM companies have Product. If you have someone presenting you a way to make good money by not selling nothing—RED FLAG! Every single company I have looked at has a product line. One single product or a several hundred products. The basic way to make money in MLM is to buy product at wholesale and sell it to customers at retail. That way you generate some immediate earnings. True, not all companies you have to sell-sell-sell to make money with but selling is a big factor of marketing. If you are told that no selling is required and all you do is sign people up who want to make money, you should be getting more red flags and move on.

Next, look at the compensation plan. How do you get paid? That is something that I and other people are sure to want to know first. Most true MLM companies have a few ways to make money. It should start with buying wholesale/selling retail. That is normally how you can make a good 30% or so rather quickly. Also, with MLM you do sign people up. That is what most people spot as a red flag for a pyramid scheme. My friends, this is not the case. Signing up people is a form of building leverage and a very critical part in MLM. I am not going into building leverage and how that works today. When you sign people up they go into your downline and with most companies you get paid a percentage on your downline’s sales and purchases. Notice that you are not getting paid for just signing people up, they have to work too. There is many different comp plans’ that companies use to pay their distributors, just make sure you can get paid by selling product as well as helping other people. Companies usually have bonuses and incentives for certain ranks of achievement. This is good too, shows they are willing to pay us to network there product. Most people will now pop the question of “ok, so the person on the top makes more than anyone underneath them, isn’t that a pyramid scheme?” Yes people at the top make more money than anyone underneath them, in most cases and No, it is not a pyramid scheme. Well why that is you are probably asking. Well the people at the top once upon a time started at the bottom where we all begin at. They had to work hard to get to the point where they are, and we have to do the same. Yes you can make very good money in MLM but it does not come easy and we all have to work to get there. By seeing people who have worked the plan and gotten to the top, you are less likely to discover this company as a pyramid scheme.

The last thing you should look at when being presented a business opportunity is just that. The business opportunity. You shouldn’t look at it as “am I going to make as much as the man on top starting off”, instead look to see if you have the exact same opportunity to make what the man on top is making. Would you hire someone if they told you that in a job interview? If you do have the opportunity to make the same as everyone else and the other two factors worked out then you could have yourself a legitimate MLM business. If you need further creditability after that point then ask the person presenting to you to show you the proof. If they are not making the good money or still building their way up remember this– they know someone in the business making the money either their upline or the upline above them, and they can give you the creditability you are looking.

The best way to make the final decision on the company you are being presented with after all this is to call or visit your local Better Business Bureau and/or your local Attorney General’s office and let them know you are trying to check on a business opportunity you have been presented with for legitimacy. They will be able to help you with records of businesses and information from others in your area. I also want to state that I am not a MLM guru, and this is my personal opinion from my experience from being with network marketing / MLM companies. Some may agree with me, so may not. This is just my opinion and I hope it helps!

Look out for my upcoming posts and I will share more information with you then.

Peace, Love, and Health.

-Anthony