How To Identify A Pyramid Scheme?

The MLM business model is attractive and is popular among many. In this business model, you need to get involved to distribute the products to the consumers.

You get to grabbonuseswhen you sell a certain number ofproducts or get a certain number of peopleto join this scheme. AMLMbusinessmodelthatisrun well can let you get rich too.

However, beware of thepyramid schemes.

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Recognise a pyramid scheme

  • Does the business model ask you to invest a huge sum of money to become their distributor? This could be an inventory charge. Most of the legitimate MLM business models will not ask you to invest a lot of money as a start-up cost
  • Check if the company buys back the unsold inventory. You are asked to pay a huge amount of money for the inventory but what happens to that which is not sold? The legit companies will buy back the unsold inventories at a little lesser price.
  • Do check if the MLM Company mentions about its product, services, and talks about the target market. The company should aim to establish its product in the market. However, if it seems that the company is not interested in it then it is best to not sign-up with them.
  • If the company focuses more on recruiting people but pays very little attention to sell the products then in most cases the MLM business model is a pyramid scheme that can get busted anytime. The pyramid scheme will look to make profits fast and their aim is just to get more people to sign-up and make investments in the scheme. If the company’s main aim is recruitment then ignore them.
  • Also, make sure that you check the design of the business model. How do they make money is something that you should focus on. Are they making money through recruitments or through sales? If they are making money through hiring people then this is a clear pyramid scheme.
  • Another trademark of a pyramid scheme is when the company offers you huge commissions when you recruit people to the team. For a pyramid scheme all that matters is the number of people who sign up with them. Their product or service is the least important thing for them.

You can find detailson the websites. Before you sign up with a scheme, make sure that you understand about thebusiness model to protect yourself.