Miss Money Sense: Is it a pyramid scheme or a legit business opportunity?
By Teneshia “Miss Money Sense” LaFaye
We have all experienced this before. An extended family member, an old friend or a co-worker calls you up and invites you to an opportunity meeting. At the meeting, you hear the pitch that you are getting in on the ground floor, and you are going to make more money than you could ever imagine on your job.
You probably were once seduced into thinking you would get rich in the business, only to experience little to no success.
So the next time someone calls you up inviting you to look at an opportunity, you label it a scam, a pyramid scheme.
But let’s have some real talk. Pyramid schemes are illegal. So are Ponzi schemes, and the U.S. Federal Trade Commission prosecutes perpetrators of pyramids and Ponzi schemes, which trick people into spending lots of money and there is no actual product or service being exchanged.
So now that we have gotten that out of the way, let’s address what many of these business opportunities really are.
They are network marketing organizations that offer people the opportunity to be direct sellers of unique or highly demanded products, and these people earn commissions for selling products and/or services. Usually there is a multi-level marketing aspect in which the direct sellers, also known as distributors, get a percentage or override of the production of the people they recruited into their downline.
By allowing individuals to sell directly to their family, friends or whoever will listen, it cuts down costs for clients because of the elimination of storefront overhead, television advertising and junk mail. It also gives the little person an opportunity to own his or her own business with the credibility, training and inventory from a big corporation for that individual to make an attempt to achieve the American Dream of wealth.
These opportunities are nicknamed MLMs in their industries and offer something for any business interest without the hefty upstart costs and maintanence fees of a traditional business. So if you like coffee, you can pay a few hundred bucks to sell and recruit a downline to offer Organo Gold’s coffee instead of applying for a mega bank loan or spending your life savings to open a Starbucks. If you want to help people plan for retirement, you can join a company such as World Financial Group to offer solutions from dozens of carriers, such as Prudential, Nationwide, etc. An opportunity that I am really excited about is All Communications Network (ACN). Billionaire Donald Trump endorses ACN, which offers individuals the opportunity to broker services of top carriers, such as Verizon Wireless, Direct TV, ADT, Sprint and Dish, in order to lower client’s electric, cell, cable, internet, home phone bills and more. Distributors also may build a team of people around them to offer the services.
Only a small percentage of people ever succeed in network marketing or MLMs, but that’s in any field. How many little boys and girls dream of being a professional athlete, but only a few actually do. How many people want to retire rich, but only 1% actually do.
So although success is rare in anything people do, people are quick to label network marketing opportunities pyramid schemes when they aren’t successful at it. But it just may not have been the right opportunity for you or maybe you didn’t stay in it long enough to master it like those who ascend into professional athletics or the top echelon in their career field.
Truth be told, most people are not successful and will never retire rich. But MLMs give you a legitimate opportunity to try. I have been involved in MLMs for more than 15 years. I have never gotten rich, but I have created a good life for myself and my family. Right now, I am part of three MLMs that are quite successful, and one could lead to riches. But if not, at least I took my shot at the American Dream and have landed in the six-figure range.
Teneshia LaFaye is a former award-winning newspaper journalist and a nationally certified financial education instructor. She owns a health insurance agency and has written two books, What My Mom Taught Me About Money and Mom’s Money Lessons. Get her FREE daily money tips to work on improving your financial mindset by “liking” her MissMoneySense page on Facebook.