Not all pyramids are schemes
I believe in the direct sales (DS) or network marketing (NWM) industry.
Even if you already have a good job (at home) there are a lot of good reasons to have a business on the side. These include lifestyle, fun, personal and professional development, meeting new people (since I don’t get out much!), helping other people achieve success…plus who wouldn’t want an extra source of income on the side?
- Do you earn additional income based on the number of people that you recruit to your “team?”
- Do you earn additional income based on the productivity of those on your “team?”
If so, you too are in a pyramid scheme*, she insisted.
She was looking for a side business but wanted to be in business for herself and not to be pushed constantly to recruit additional worker bees.
I told her, about the company I was with at the time, I don’t succeed unless I help other people succeed. I have far more customers than teammates. The company I work with doesn’t pay ad agencies to promote its products, it rewards distributors for word-of-mouth advertising. When you consider that many companies have billion dollar advertising budgets, there is plenty of money built in to the operating budget for these bonuses. Unless you are a sole proprietor, you will always have employees or a team that helps you earn additional income.
For example, I am an employee and the company I work for has a CEO, vice presidents, directors, managers, and people like me. Everyone above me makes money on my productivity, so is that a pyramid scam? The difference is W2 vs. 1099.
Network Marketing is a business model respected and endorsed by prominent business people like Robert Kiyosaki and Richard Branson. We have the choice regarding whether or not to bring teammates into our organization. Our company also has a reward program for those who choose to only work with customers.
I had a lively conversation with three other fans about NWM, mentioning Avon, Mary Kay, and Tupperware and every kind of organization we could think of, including the Catholic Church. We all agreed these entities are NOT pyramid schemes. We are all selling products (except the Catholic Church). We don’t HAVE TO recruit “worker bees” to be successful. That is just a good way to build a NWM business if you understand the concept of leverage.
It seems that what she wants to do sounds like a sole proprietorship, which doesn’t compare to any kind of business model where there’s more than one person running involved. That is fine for her, but the thing is, if you are a sole proprietor, you will likely be trading your time for money. If you work with a team of people, you will benefit from their efforts as well as your own.
NWM makes a lot of sense as a business model. If each “employee” is actually his/her own sole proprietor, the company doesn’t have to deal with any HR issues. NWMers have a low barrier to entry and an even playing field because the company provides full training: it is in everyone’s best interest if new distributors learn what they need to do, no matter how long it takes, with no fear of being laid off. Robert Kiyosaki points out that the current economy lends itself well for people to have a little something on the side.
Many of us (me) are competing globally for jobs with people who are willing to work for a lot less money. Many of us (me) have been laid off and know the fear and insecurity that comes with it, when we thought we might be able to work the rest of our career at a company that seemed to have so much opportunity, but instead are kicked to the curb with the excuse of a rating scheme comparing one employee to the next, which creates an atmosphere of competition rather than cooperation.
The real scam seems to be working for a corporation who chooses to only reward it’s high-level executives and shareholders while the worker bees go for years with no raise (me), or perhaps if they are lucky, a 2% raise, and have to figure out how to get by with less because that doesn’t even quite keep in step with inflation.
My husband and I both have good jobs, but we want more out of life: more fun, more friends, more self-actualization, and more success. He’s currently with a company, while I am not.
*This is something important I want to mention. A pyramid organization is not necessarily a scheme. An MLM can be a scheme, but not all of them are. The Better Business Bureau warns:
Red Flags of a Pyramid Scheme
- Promises to make thousands or even millions of dollars with little effort.
- Long anecdotes of how many people have made a fortune with the company without providing concrete facts.
- Large start-up costs and substantial hidden fees to become a distributor.
- Revenue is generated from selling the opportunity not the product.