People in Network Marketing are regularly asked if they are involved in a pyramid scheme when they talk to others about what they do – but what is a Pyramid scheme and is network marketing a legitimate business to get involved in?

If you are considering getting involved in Network Marketing this article will help you understand the industry and understand if it the type of business you would do well in.

What is a Pyramid Scheme?

Essentially a pyramid scheme is a business that doesn’t sell a legitimate product or service and exists solely for the purposes of enrolling people in to the ‘scheme’. There is no exchange of a product and the members only recoup their investment when they enrol others. They are illegal and most people lose their money.

What is Network Marketing?

Network Marketing is a method of distributing a legitimate product of service directly to the consumer without using mainstream advertising. Instead of paying for expensive TV, celebrities, radio and other forms of advertising, network marketing companies reward their distributors for finding new customers and promoting their products to them.

Y0u can make money simply by selling the product to your customers.

However as well as selling products to your customers Network Marketing companies usually allow you to build a team of associates  who also go out and promote the companies products to their customers. You support and mentor these associates as they are part of your ‘organisation’ and in return you earn a residual commission from the sales they make.

The structure of a Network Marketing company when you draw it on paper is no different to the structure of any other sustainable business model in the world – it looks the same as your companies structure, the same as the government, the same as your schools!

Robert Kiyosaki, author of Rich Dad Poor Dad – the #1 personal finance book of all time has recently written a book called “The Business of the 21st Century“. You can get a free audio and free first chapter at that link too. In this book, Robert Kiyosaki outlines why network marketing is the business of the 21st century because it’s about helping others. He outlines how network marketing builds people up instead of tearing them down, offers a worldwide network and global reach, develops leadership and business skills and creates genuine wealth.

Several other profile economists and finance experts have recently highlighted the potential of the network marketing industry too. People such as Warren Buffet (the richest man in the world), Donald Trump and many others support and actively endorse the network marketing industry.

Network marketing is one of the fastest growing areas of the global economy and accounts for over $120billion in world wide sales. This industry has created more six and seven figure earners than any other industry.

There are so many myths and untruths about network marketing out there and like all industries there are good companies as well as bad ones. Often people base their perceptions of network marketing on something their friends have told them, but if you are serious about creating a home based business you owe it to yourself to find out the truth for yourself and take a closer look at network marketing.

Network marketing offers you the opportunity to create a low-cost home based business with low overheads, a ‘business in a box’, flexible hours and the ability to build a sustainable profitable business from the comfort of your home.

How to find a legitimate and responsible Network Marketing Opportunity

The first thing to decide when taking a look at an opportunity is to determine whether it is a genuine opportunity or not, to do this ask two questions:

  1. Does the company sell a legitimate product, something that people will want to buy regardless of whether they are interested in the business or not? Is it endorsed by reputable organisations and individuals.
  2. Can you earn money even if you didn’t build a team of distributors and make money by simply selling to your product customers?

If the answers to both these questions is YES it is a legitimate company, but you still need to take a closer look before getting involved.

Opportunity Checklist

Do some research on the company, their products and their compensation plan to see if they are business you could align yourself with and build a business in partnerhip with. The checklist below will help…

  • Are they a member of the DSA (Direct Selling Association for your country)? Very important as all companies in the DSA have been assessed and adhere to a strict code of conduct.
  • Are they publicly listed on the NASDAQ, this makes them more accountable.
  • Do you personally like the products? Are they in demand? Will you be able to make repeat sales (consumable products)? Are they backed by scientific research and studies?
  • Is the company financially secure? How strong is their management team? Do they have a growth plan? Have they been in business for at least 3 years?
  • Is the compensation plan generous? Can you sell products at retail if you wanted to? What is the start-up cost? How quickly can you start earning money?
  • Most importantly, will you get the training and support you need to build your business?