MLM is a Pyramid Scheme! (And Other Good Reasons to Join One)


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Yes, there are some negative aspects in MLM, just like in other forms of business. But some, including The Scheme That Shall Not Be Named, may not be what they seem.

In this post, I will try to make sense of some of the more persistent criticisms generated by MLM detractors. 

As if true in most of life, some of these criticisms are valid, and some are not. Let’s list a few:

MLM’s are pyramid schemes!

You’ve heard that, right?

Well let’s break it down. There are two words here, pyramid and scheme. Let’s tackle the Pyramid part first.

How Some People View MLM

Credit: Sigurd Decroos, www.cobrasoft.be

Is there anything wrong with a pyramid shape as a model for business? Some would say yes, but that eliminates pretty much all forms of business, leaving small solo and partnership enterprises and some cooperatives. Other than these small ones, do you know any business that doesn’t have a pyramid shape? Take a look at those large corporations we all buy from! Yikes! People at the top make just amazing amounts of money. In fact, the pyramid shape shows up in government and the non-profit sector, as well. And don’t forget religion!

I think it’s unfortunate that many folks in MLM continue to use the  “If you get four people to work with you, and each of those four people gets four people…” line, because that truly looks like a pyramid. While it’s an easy way to demonstrate the concepts of building a downline and how the compensation plan works, it isn’t how MLM works in real life.

In fact, it’s more accurate to represent an MLM structure as a matrix of interconnected groups of individuals. But that’s for another article.

Let’s get on with the second half of the phrase Pyramid Scheme.

The second word is Scheme

Scheme implies that the MLM model is illegal. It’s true that back in it’s early years, there were some real problem MLM companies. Many were out to make big bucks fast off the sweat and purchases of their sales force.

Around fifty years ago, Amway was brought to trial for running an illegal form of business. Did you know that Amway won that trial? And they’re still around. Is Amway the best business for you to join to make a living? Probably not. But is it illegal? No. It’s as legal as any other business model. Real products are offered and provided in exchange for money.

The people at the top make all the money

For the moment, let’s assume this is true. If so, isn’t this just like any business? (Just for kicks, check out the articles about mega-warehouses which supply Amazon, Walmart, and the like? Oh, my.) In virtually every business, the people at the top make mega-bucks by comparison to their underlings. It’s not nice, and it may or may not be fair. But it’s not illegal.

The people who get in first make all the money

It’s often true that when you look at the structure within the sales force of an MLM company you’ll find that the people who are making the most were those who came into the business early. But there are also people who came in early who are doing kind of poorly, or left the company altogether. And there are people who came in pretty late who are right up at the top, too!

What’s going on here???  I’ll tell you:

  • Some people were lucky, found the company early on, and did a huge amount of work.
  • And some people were lucky, found the company early on, and assumed that luck would be enough. It wasn’t.
  • And some people got in really late in the game, and did a huge amount of work, and that work turned them into a leader. (Or the other way around.)

It’s Selling, and I don’t know how or don’t want to sell

Well, now we’re getting to something worth talking about, though I’m going to have to write another article just about this.

Yes, It’s selling

Some people will tell you they don’t sell. They say they just “share.” In my view, if you tell someone about something and you make a profit, it’s selling. There’s nothing wrong with it, but you have to be comfortable with that fact.

That said, selling is actually simple.

  1. You listen for what people want or need.
  2. If you have something that will fill that hole, you offer it for consideration.
  3. You follow up before the sale.
  4. You follow up after the sale.
  5. You ask for referrals.

What if you were actually trained how to sell in a way that matched your style? What then? Do you know folks in any other career who didn’t receive at least basic training? How many have been in continuous training over the course of their careers?

What if you were given the training you needed to be successful? Then what?

This is not a business for everyone.

There are many other things to do in life. Like those many other things, there are plusses and minuses — real ones, not the boogeymen discussed above. Success doesn’t happen without effort, skill, knowledge, and inspiration. Know what you’re getting into, but don’t be scared away by claims that MLM isn’t legal, that the deck is stacked against you, and that you can’t succeed.

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