Is Multi-Level Marketing a Scam? That is the question we will be answering in today’s post. Networking received quiet an amount of hate from the public especially those who don’t understand how the system works. Before you join any MLM business it is important that you know what you are doing.
Day 3 is all about revealing the good, the bad and the in betweens of Network Marketing. We will try to gain more knowledge on the truth networking you might not know.
Before I proceed let’s have a brief overview of yesterday’s post. Click the Smart Goal Setting Worksheet below download it and share it to others as well.
To easily distinguish between what network marketing is and it is not let’s put everything on record. See below notes for comparison.
Networking is LEGAL
Yes, it is and you can find the law in Republic Act No. 7394 that states Multi-Level Marketing as an accepted and legal way of marketing. HOWEVER, the distinction between an MLM and pyramid schemes is not distinct causing confusion to the people. You can find the rest of the legal explanation in THIS LINK.
Networking IS NOT easy money
Many joins MLM in the hope of doubling their investment within a week or less. That’s a lie. If the company promise an overnight of success then its a scam. Go out of that building with your cash. Yesterday’s post I revealed how to succeed in networking and hard work is one of the main ingredient. If you don’t do your part in selling the product, service and/or business opportunity your investments will be put to waste. It is never an easy money for the people in MLM. It takes a year or two for your money to mature.
Networking is a BUSINESS STRATEGY
One crucial fact that people tend to forget easily is that network marketing is a business strategy in the first place. It is a legitimate marketing strategy used by a lot of companies that is designed to generate increased business volume. And so as long as the product is good and the business sells your money will always be in good hands. Take for example MLM business like Avon, Natasha and Ever Bilena… these businesses rely a lot on distributors and because their products are affordable, valuable and solves any woman’s problem they sell.
Networking is NOT PYRAMID SCAM because of Products
There’s a thin line between MLM and Pyramid Scheme to be honest. Not because there is product does it mean you are safe. Products does not make an alleged network marketing business legitimate. Once you join an MLM company you get tons of product in behalf of your membership fee. But if you can’t sell the product to people and the same happens to your recruits then the company will end up growing because of the membership fee and not the product sales. As stated above networking is a business strategy so products need to be sold to the consumers.
Networking is UNSTABLE
Lastly much in everyone’s surprise, network marketing may collapse one day. Once people stop believing and consumers stop buying… the business is in the verge of falling. It is also worth to note that the payout system in a network marketing business is not the same every time. It will always depend on your sales and commission you get from your recruits.
Now, Can You Really Make Money in Networking?
I have friends and people in my circle who have made money in networking based on what they post in their social media. Our high school valedictorian now has a car of her own. A senior from my college years who’s also a magna cum laude owns not just one but I believe three high-end cars plus a lot of small business like eatery, computer shop etc. thanks to networking. So to answer the question briefly I believe YES, you can make money in network marketing BUT not everyone can.
Let’s take a closer look on how one earns in an MLM business
Each networking business has their own pay plan or commission plan. It again works in a business model similar to this:
You have to recruit new distributors if you want to earn commissions. As more and more people go to your downline your ranking will go up. Thus, your earning potential goes up too because your donwlines mostly do the hard work for you.
It is also worth mentioning that most of the product sales come from members themselves not by the demand of the market. This situation makes joining networking very risky since money comes from the inside rather than outside of the business.
The multi-level marketing system may only benefit those who have the upper hand already. Meaning the money you invest is what makes one of founding members become a millionaire. It works in hierarchy and those your uplines support you all the way it is still work the same. The money made by one member is a lost to another member. They need your money for the system to continue and for them to succeed.
FREE CHECKLIST FOR YOUR NETWORKING JOURNEY
Download, Print and Share
As I’ve said in the introductory part of this SavingsPinay Series I am not way affiliated to any networking/Multi-Level Marketing business. I do not support nor do I discourage you from joining. The point of this whole series is purely for education purpose only. For me MLM business is great itself only and only if it focuses on the product that is high quality, consumable and solve the problem of the people.
At the end of the day it is your call not mine. I just hope you make the right decision for you and for your family’s sake. Goodluck!
Izza of SavingsPinay promotes financial literacy for the young and young at heart by providing insights and tips on budgeting, saving, investing and online entrepreneurship. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her firstname.lastname@example.org