It is no secret that I happen to be a big proponent for small businesses. Especially those that are home based, like mine. I believe that network marketing is likely the way of the future. We see many small, home-based businesses popping up all the time. I, personally, happen to be a part of two of them and I adore them both! I work hard at what I do. And I love what I do. It allows me to stay home with my kids, be around for my family, still keep house and make meals, as well as do something I enjoy doing. I get to be creative all while wearing makeup and cute clothes!
The one thing, though, that drives me absolutely bonkers is when someone hears that I work from home. Naturally, they will ask what I do. I will tell them I am a distributor for LipSense and J Elizabeth Boutique, all under my brand of The Courageous Ladybug. Then I will receive the words I hate: “Oh, you are one of THOSE people, working a PYRAMID SCHEME.”
AAAAAAAAHHHHHHHHH!!!!!!!! I literally can’t even! A pyramid scheme?! Really?! Do you even know what that is???? And then I thought about it. Maybe, just maybe, they don’t know what a pyramid scheme is. Maybe they don’t know that pyramid schemes are ILLEGAL and that the type of network marketing I do (called multi-level marketing, or MLM) is NOT illegal and is perfectly legitimate.
So, since it is very possible that not everyone knows the difference, I’d like to clear the air! So what is the difference between a pyramid scheme and multi-level marketing?
Pyramid schemes, also known as pyramid scams, are just that. They are schemes/scam meant to profit only a few while those on the bottom completely lose out. The definition of a pyramid scheme is thus: “A form of investment in which each paying participant recruits two further participants with returns being given to early participants using money contributed by later ones.” This, yes, was a Google definition, and it sounds complicated. Sadly, it is much more simple than it sounds. In layman’s terms, it is an investment of money for a promise of high returns if those that invest recruit others. The money that each lower tier “invests” is used to pay the “high returns” to those in the higher tiers, and so on and so on. Eventually, this pyramid will collapse, leaving those at the bottom without the money they gave. The “investment” is completely made up, as there is actually nothing to truly invest in. Pyramid schemes do NOT involve the selling of actual products. It only relies on the money constantly coming in from new participants to pay those at the top. And, once again, pyramid schemes are completely ILLEGAL!
Now, an MLM, or multi-level marketing, business is a legitimate form of business. It is not scheme, but it is a marketing strategy. MLMs are about moving product, real product. Commission can be earned (as in any sales company) when product is sold. Money for the wholesaler is made via enrollment fees (if there are any) and product sold to retailers. Retailers, like myself, then turn around and sell the product for market value and make a profit. MLMs are legal and are quite different from pyramid schemes! I’m hoping that this can be seen through this explanatory blog post. MLMs are specifically for selling a TANGIBLE product.
That isn’t to be said that pyramid schemes cannot be disguised as legitimate MLMs. However, those that hide behind a facade of being an MLM do not stay around for very long as, because they are a pyramid scheme, they collapse. Pyramid schemes ALWAYS collapse. Truthfully, I get quite angry and defensive when I find that a pyramid scheme was hiding behind the image of an MLM. It is deceptive and wrong. And it gives those of us working LEGIT businesses a bad wrap. People hear that we do MLMs and some instantly conclude “pyramid scheme.” Of course, they are wrong, and I feel for those who have been duped by disguised pyramid schemes. But if one looks at what the company is all about and does just a little bit of research, they would find out the truth.
Pyramid schemes, again, do not sell actual tangible product. They are based mainly on recruitment via “enrollment fees” and the majority of money anyone makes is through those fees. A real MLM sells actual product, and those that work through it make the majority of their money make it from their own sales. One can climb the ladder of the MLM (just as in any sales company) and receive commissions from group sales, but it is not a requirement. Commission is based on sales, not on recruitment.
Also, to make things perfectly clear, MLMs are NOT “get rich quick” schemes!!!! Pyramid schemes are, and they tout that they are “get rich quick” through “investment.” MLMs take work, consistency, dedication, and drive. I don’t sit around on my keister eating bon-bons all day. I work at showing my product, teaching people about it, letting them see and touch it, and offering them the ability to buy it. Sure, I’ll also offer them the opportunity of what I do, because who wouldn’t like flexibility and the ability to work from home?! If I can help one person be successful and pull themselves to where they want to be, I’ve done good. But most of my income is based on my own sales.
So, if you hear of someone (like me) who works from home and you find that they (like me) work a multi-level marketing business, please do not instantly jump to the idea that they are working an illegal pyramid scheme! Instead, take the time to hear about what they do, listen to what they are offering, and maybe try the product! If you become even more curious about the business said person does, do some research and ask lots of questions! Really, we are more than happy to tell you about what we do and how we do it, as well as all about our products!
I hope this sheds some light on the difference between a pyramid scheme (they are illegal and bad!!!) and multi-level marketing businesses (they are legal and have some awesome products!!!). If you have any questions about this or even about what my business is, please do not hesitate to ask! Leave me a comment here or reach out to me via email!
Please consider subscribing to my blog, too, as I write about things like this and other bits of my own passions frequently! You can also find me on Facebook, Pinterest, Instagram, and Twitter.
I am praying for all of you and I genuinely appreciate you taking the time to read my ramblings! God bless you!