The FTC warns individuals who wish to enter the mlm/network marketing industry/profession to be wary of illegal pyramid schemes which “masquerade” as legitimate mlm/network marketing companies.
How do you tell the difference? Great question!
   The FTC (Federal Trade Commission) explains to be wary of illegal pyramid schemes where the pay commissions for recruiting new distributors, is the primary method of making money. Of course the companies who participate in this type of illegal program will use “smoke and mirrors” to dilute and confuse the actual situation by suggesting that they actually do have products or services being retailed, however, upon closer examination, you will often find an organization which mostly only pays commissions on the new distributor recruits.

   A “business model” such as this inevitably fails, because eventually there are not enough new distributors to support the “business model,” and when this happens, the structure collapses with all but the “highest few” left with nothing.

   The critical question for the FTC is whether or not the revenues that primarily support the commissions paid to all distributors are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture. Another way to understand this is to consider whether or not the majority of the business commissions being paid to the distributors are coming from the retailing of the products or services, AND NOT from the recruting of new distributors.

   Of course any distributor will tell you that they wish to have a new distributor over a product purchaser only (because the distributor will bring more sales than 1 single customer,) however, the reality is that this simply is not what actually happens. If you ask any legitimate mlm/network marketing distributor what percentage of their “down-line” is distributors only, I believe the number will surprise you; it can be as little as 10-15 percent who are distributors only. And of these, oftentimes only 2-3 percent produces “significantly.” However, if only one of those is a “mover and shaker,” they can make you wealthy.

    It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products.” Research is your best tool and here are eight steps to follow:

  • 1) Find — and study — the company’s track record.
  • 2) Learn about the product
  • 3) Ask questions
  • 4) Understand any restrictions
  • 5) Talk to other distributors (beware of those who “talk without the walk”)
  • 6) Consider using a friend or adviser as a neutral sounding board or for a gut check.
  • 7) Take your time.
  • 8) Think about whether this plan suits your talents and goals

           The legitimate mlm/network marketing business model is a very sound one. It gives one an opportunity to create real wealth in the life, oftentimes while making life-long “friends” of the loyal product users, as well as the few distributors which produce real retail results for themselves. It is not an “overnight success” sort of thing; like anything of real value which has built, it takes many years of consistent and dedicated work to accomplish. However, when it is done well, not only are people’s lives impacted for the better, oftentimes, real wealth finds its way into their lives.

   The “old days” of the “pushy salesman approach” and soliciting your friends and family are gone. Today’s new business model finds the recruits and product sales “eventually” coming to you. I say “eventually,” because in the “early formation” of your business, this is unfortunately not true for the majority of all who enter this industry/profession.

   However, once you “make it,” or “prove yourself,” then, almost as if by magic, retail product purchasers and recruits come find you; of course you will always continue to “generate leads” and “develop prospects,” but your “reputation” will precede you in the world of business, and others will want what you have created.

   Imagine a life where when you go on an extended vacation with your family, and when you return, you find that you made more money than you spent while away; all over the world, everyday, this is happening for someone in this most amazing industry/profession. When is it “your turn?”

Charles Stewart
firstcharlesstewart (Skype)

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