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Things To Know Before You Get Sucked Into A Multilevel Marketing Program

Did you know that only 25% of multilevel marketing program participants turn a profit, and 50% of participants quit after the first year?

Multilevel marketing programs aren’t always the best idea, and you could end up spending more money than you earn through an MLM. Sometimes, MLMs are hard to spot, so people can quickly enter into the scheme without fully understanding the consequences.

Keep reading to learn everything you need to know before getting sucked into a multilevel marketing campaign. This guide could help you avoid losing out on money, time, and resources later down the line.

What Is A Multilevel Marketing Program?

A multilevel marketing program, or MLM, is a program that offers people the chance to make their own money through person-to-person sales. 

So, you will be selling the company’s products from your home, online, or via door-to-door sales. However, this program isn’t quite as simple as it seems, and it can become difficult to turn a profit.

As an MLM participant, you can either:

  • Sell products to customers using sales tactics and door-to-door selling.
  • Or, you can sell your products to newly recruited distributors that will then be responsible for selling the products. You will get a commission for each sale your recruits make.

Of course, the big issue with a multilevel marketing program is when the recruits enlist more recruited distributors, and the chain keeps growing. This chain is your downline.

MLMs are often just pyramid schemes. The person at the top of the downline reaps a commission from each sale their recruits make. Thus, the people at the higher end of the pyramid are likely to receive a higher profit than those at the bottom.

If you join a legal MLM, you will make a minimal profit. If you enter an illegal MLM, the company could keep your investments and leave you in some serious debt.

The primary way to distinguish between an MLM and a pyramid scheme is whether or not you will be paid based on your sales or whether you’ll only make earnings based on your recruits.

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If you spot or fall victim to a pyramid scheme or scam, it’s important to report it to protect others from making the same mistake. Act quickly, as debt can ruin lives.

How To Spot A Pyramid Scheme?

There are several warning signs and red flags to look for when determining whether you’re about to join a pyramid scheme or not. Often, it can feel as though they are selling you the dream and an easy way to make money, but it’s essential to apply the brakes, take a step back, and review the situation before investing any money.

Here are some of the signs that you may be about to join a pyramid scheme:

  • You are oversold on the earning potential – if the person trying to recruit you into the MLM is stressing the earning potential, this is usually a falsehood.
  • There is already an emphasis on recruiting for your sales network – if the person recruiting you is already speaking of expanding the downline, this indicates a pyramid scheme.
  • They’re selling too hard – if you feel pressured into joining this MLM, then don’t. Recruiters will often use pitches that make it feel like you’ll miss out if you don’t join quickly. This kind of pressure is a HUGE red flag, and you should back out.
  • Bonuses for purchasing stock – pyramid schemes often encourage sellers to buy more stock to remain active in the company and receive rewards. If you see sellers buying more inventory than they could sell, it’s time to run and keep your money safe.

How To Avoid Pyramid Schemes And Safely Join An MLM

If you think an MLM is right for you and have a good sales plan, you could potentially make solid earnings. However, you need to find the right company to work for that won’t take advantage of your time and money.

Here are some of the steps you can take before joining an MLM:

  • Research, research, research – the more information you can gather about an MLM, the better. You need to look at their promotional materials, training videos, and reviews and speak to existing employees. Keep a discerning eye and if you spot any pressure to spend your own money or recruit for your downline, keep it moving. You should also look for negative reviews where people have lost money from the scheme.
  • Consider your spending carefully – You should be making a profit on your sales and only restocking to meet sales demand. If the company asks you to pay more than you’re willing to, don’t take the risk. MLMs are often not profitable, so do not spend any more than you’re comfortable with losing should the investment fail.
  • Get advice – the best way to ensure you’re not joining a pyramid scheme or an MLM where you could lose money is to seek counsel on the matter. This counsel could be a knowledgeable friend or a professional advisor. This option is perhaps the wisest choice and the best decision you can make before joining an MLM.
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Summary

MLMs are a risky business, and you need to know everything about the company before joining. If you are experiencing urgency or pressure, this is a big red flag. Your money and time are precious, and you need to take precautions before investing. Hopefully, this guide has alerted you to the dangers of MLMs, and you will approach them with a highly discerning eye in the future.

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