Attraction Based Networking

If I had a dollar for every time someone asked me "Is this one of those pyramid schemes?", I could probably quit my Network Marketing business and retire. 

The unfortunate stigma that is still slightly attached to our industry, however, is the few bad apples that spoiled a good thing.  It is not as prevalant today as it was, say, 10 years ago, but the question still comes up and needs addressed if you are to be successful in your business.

So what are some determining factors in separating an illegal pyramid scheme from a legitimate Network Marketing Opportunity?

1)  The sales of services or products to the ultimate users.

To understand this you need to understand what is considered an ultimate user.  The ultimate user can be anyone in your downline (distributors) or your product customers.  This does not mean only sales to product customers outside of your organization.  Anyone within your organization that you sell product to is considered an ultimate user.  When the product is getting to an end -consumer (in this instance that would be either distributors or customers), then it is legit.

What would send up a red flag would be if you are asked to purchase a large quantity of a product that ends up getting stored in your basement with no intention of getting it to the end consumer.  Beware if a company requires you to purchase thousands of dollars worth of a product up front.  Just be sure that you are not being "Front-Loaded" with this product with no intent of moving it to the end consumer.   This could be a sign of an illegal pyramid scheme.

Today, most companies have "drop ship" orders which consumers can order directly from a website so there is no need to store any inventory.  Personally, this is my choice when looking for a company but it can be legit either way.

Just use your common sense.

2)  Commissions are paid on product usage - (sales volume) - not recruiting.

This does not mean you should not be recruiting in your Network Marketing Business.  Quite the opposite.  Recruiting is essential for success.  Some recruit more than sell and some sell more than recruit.  Either way is fine because Network Marketing is about leveraging people within your organization.  That is the bread of butter of Network Marketing. 

What this means is simply that your income must come as bonuses and overrides based on the sales volume produced by your organization.  If you are paid only for recruiting, the number of distributor kits you purchase or the training materials - then beware.  It might very well be a sign of trouble.

3)  Companies pushing sub-standard or overpriced products.

Mailing list clubs come to mind immediately.  These are chain letters and have no basis whatsoever in Network Marketing.   The product or service must be a legitimate one that people would buy at retail on the open market. 

If your product or service is something that no one would even think of buying at retail or without participating in the comp plan; then red flag it.  It could be a pyramid.

There are many other signs to look for when checking out an opportunity. 

There are thousands of quality, up-front Network Marketing Companies out there.  In fact, direct selling is booming right now and is a very accepted business model for the 21st Century.

Just like anything, you need to do your homework first.  There are always people out there trying to scam you and Network Marketing is no different.

Look for good signs - are they a member of the DSA? If not, how long have they been in business?  What are their products?  Are they reputable?  Who is their leadership and what type of system do they have?

Ask questions, research and you will find what you are looking for in the way of a great opportunity.

There has never been a better time than now to be in Network Marketing.  If you find the right company and work hard, you can have success beyond what you ever imagined.

Utilize the tools available today, both on the internet with Attraction Marketing and the old fashioned methods of working your warm market. 

To summarize - how do you know if you are looking at a great, legitimate opportunity and not an illegal pyramid scheme?

DO YOUR HOMEWORK.  Education is key.  I always emphasize that.

NEVER stop educating yourself in this business.

For some great information on Network Marketing and to subscribe to his free newsletter, visit Network Marketing Times by Randy Gage.   

Once you find what you are looking for, take the plunge.  This industry is exploding so get on board now while the train is still moving forward and be part of the revolution.