What's the Difference Between an MLM Business and a Pyramid Scheme? By Brian Garvin At Isnare.com Ezine Articles

If you are just beginning to get involved network marketing, you will soon notice things that might disturb you. Many people start looking at network marketing with its matrix pay system and recruitment bonuses, and they are suddenly reminded of pyramid schemes, which are illegal and which, with the emergence of the internet as an important form of communication, have seen a huge surge of popularity. The fact is, however, that a good MLM business is completely legal and will make you a certain amount of extra income. Unlike a pyramid scheme, an MLM business will in fact be something that you are proud to put on your portfolio and resume.

When you are trying to figure out if your MLM business is a legitimate one, one of the first questions you should ask yourself is where your money is coming from. While getting a bonus when you recruit someone new is very nice, you'll find that a pyramid scheme will restrict the money you earn to a percentage of the recruitment fees. This means that it is near to impossible to make money just selling the product. With a good network marketing strategy, you'll find that your money comes from the product as well.

There are many ways to tell the difference between an MLM business and a pyramid scheme. First, think about how much money you are required to invest up front. While a certain amount in materials can be legitimate, be careful if you are asked to pay a large sum. No legitimate MLM business will ask you to pay a large amount in start up fees, and you will find that the ones who do will show that this is where too much of the money you will make comes from.

Similarly, you can figure out if an opportunity is legitimate by asking about inventory. Many network marketing opportunities will allow you store your inventory with them, but if you are asked to buy it, figure out if they will by it back if you find that this opportunity is not for you. A legitimate MLM opportunity will make sure that you can sell back unused inventory; after all, they can always sell it again. However, pyramid schemes are looking to make sure that you have to keep it!

When you are trying to tell if your MLM business is good, just look critically and realistically at the goods or services provided. Is it really worth the money you spend on it? You'll find that pyramid schemes put a lot more thought into the marketing and the selling and money earned that it does on the product, and this can act as a real red flag.

When you are thinking of joining up with an MLM business, remember to do your research. There are a lot of pyramid schemes out there that are disguising themselves as something legitimate, and the last thing you want to do is lose your money and get punished for something illegal besides!

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