Differences Between Multilevel Marketing (MLM) And Pyramid (Ponzi) Scheme – Facts to know!

Are you thinking of joining a network marketing business and you are confused about the different between multilevel marketing and pyramid scheme? No qualms, I will tell you both the meaning of Multilevel Marketing, Criticism and benefits and its contrast to Pyramid Scheme. So in more meaning way, let me say am going to review the marketing business as a whole. But, I will advise you to gently read each and every words here in this article so that have the full insight of what am trying to tell you.

Table of Contents

1) What is Multilevel Marketing Business?

2) How Multilevel Marketing Business Works

3) How MLM business is criticized

4) MLM scheme Vs Pyramid/Ponzi scheme

5) Benefits of Multilevel Marketing Business.

So, let start!

What is Multilevel Marketing Business?
Multilevel Marketing (MLM) is a type of business everybody outside there can do that can earn living. It’s a type of business where different people are wooed to become a sales representatives for a particular company. The main objective of these sales Representatives is not just to sell products of that company only but also, to call in more people to join the business also as a sales representatives. These sales representatives are often called distributors. These distributors works together to build a large networks of sales reps.

So, the existing Distributors aren’t just selling products or requiting more people to become distributor like them or to sell products only but, there are bonuses for every impressive points made by a distributors. For clear understanding, they enjoy both Financial and Travel Incentives. This is made possible by the company in order to build and increase large sales force.

The simple formulae to be successful in this business is to know how to build Networks of people who are ready to work for themselves but not by themselves; they partners with a multilevel marketing company not employed by the company.
The company is not paying out salaries just as I have said above, they gives out Bonuses inform of Cash bonuses and Lifestyles enjoyment. The simple logic you must know before joining any of this business is to take it as your own personal business and work hard and build network.

In multilevel marketing business, your Network is your Net worth. That is why the it’s also refers to as the Network marketing, Person-to-person marketing, direct selling etc.
Multilevel or Network marketing business is one of the most patronized industries in the world!
Regarding to a report made by Direct Selling Association (DSA), multilevel Marketing businesses across the world employed about 5 million people in 1991 and 10-12 million people in 1999.

How Multilevel Marketing Business Works

Multi-level Marketing business usually work by prospecting people to work as a part-time or full-time worker depending on the current status or determination of the person being prospected. Most people who join MLM business are students, employed people, apprentice students, frustrated graduates, women etc… In recent times, we have seen a lot of people who have left their “half-lucrative” job for MLM became of the future advantages attached to it.

An American entrepreneur who is also a wealthy networker, Gitomer said MLM is the affordable and easiest path to achieving your DREAM. He added that it’s the best business that you can operate from your house without anybody bossing you.

Although MLM is a legal and lucrative business but, it also has Criticisms which may likely discourage you from investing on it but, it’s not all true and most of these criticisms are as a result of ignorance and defamation. What are the MLM criticism?

How MLM Business is Criticized

MLM are criticised negatively due to arrant reports of different business scams such as “Ponzi Schemes” but, MLM is far different, legit and better than any of the ponzi schemes outside there.

The greatest criticism of MLM results from the methods used by most business which use MLM’s network marketing strategies.
These illegal business ventures who imitate MLM strategies are no way related to MLM. They are called Pyramid Schemes.

business strategies of these Pyramid Scheme, MLM are criticised badly.

Apart from defamation brought on MLM by these ponzi schemes, most people think that those who participate in Multilevel Marketing business are poor and suffer more than enough at the inception of their business. According to a report made by Direct Selling Association in 1991 stated that ninety percent of MLM distributors earn less than $5000 a year but, is this still true about today MLM industry? No! A lot of representatives have and they are currently making something big and achievable. Let check some benefits of this business.

Benefits of Multilevel Marketing Business (MLM)

Regardless of the false accusations made on MLM, we still have some benefits to look up to. The core benefits of MLM can be summarized into the following:-

    Low Capital

: Unlike other businesses outside there where they invest their fortune and whole lifetime and at the end of the day, they earn something meager and fixed. I know of a man who invested about $800 on a business but earn nothing as profit and couldn’t recover his capital (went bankrupt).

But in MLM business, you starts with few capital (about $50) and you may likely earn $500 within 3 months.
This is not a quick way to make money, you earn money in respect to how much more you work (In MLM, You earn directly in proportion to your efforts, sales and network you builds).

So by far, MLM is very easy to start and lucrative!


: MLM business guarantee wealth as long as the sales representatives work towards the plan or marketing strategies of the business. Bonuses, commissions and incentives are giving to these sales representatives whenever they make a sale, call in new sales representatives, stepping up to another status etc…..
When these are accumulated together, the money earned by an earnest network marketer will be higher than those who work alone, employed etc..

Because of this reason, most most have left their job for MLM and, they are sharing impressive and motivational testimonies now.


: One thing you loose when you work for other people is “Freedom”. When I mean freedom, am talking about your whole lifestyle in regards to social and financial life. No matter how big your dream is, if you are working for someone else in order to collect SALARY, you are not going to make it as fast as you have ever think because, you are collecting something “fixed” as salary and your “responsibilities” to take care of, increases everyday.

You are never entitled to “financial freedom” even if you are operating poverty in a shop!

Also, people who either work alone or under someone else doesn’t have what we called “social freedom or lifestyle”. This is what I mean; you wake up very early to work and close very late from the work. So, the time you are to use to catch fun with your family and friends has already been snatched away from you.

But in MLM business, you work when it’s convenient for you. The normal hours of the day to work is 8, meaning that a normal worker will work for 40 hours ( added with the time for transport, break etc… It will be 60 hours per week) but in Multilevel Marketing business, 60 percent of their sales representatives work less than 30 hours per week will 40% work less than 10 hours per week.

Apart from social and financial freedom, MLM business open wide opportunity for their distributors to enjoy travelling incentives to foreign countries and have fun and they don’t require very long term commitment from them.

Multilevel Marketing business also allows their sales representatives to established their own business. You don’t work for any “Boss” or “employer” in MLM, you work for yourself alongside with your team of distributors or “downlines”.

    Lifetime Benefits

: The most interesting part of MLM business marketing strategies is that, it assures you of achieving whatever you want to achieve in life.

You can clear the poverty in your generation through this business opportunity even if you “die”, your family members will still be benefiting from what you have done in the marketing industry.

The main focus of MLM is to help you bring your DREAM into fulfillment. The future of the business is very bright and we have seen a lot of people who are illiterate in term of schooling but literate in earning.

Am not writing on behalf of any Network marketing business but, just to write and convince most people outside there who confused MLM to pyramid scheme.

Do you have any addition or question about this article? Kindly use the comment box below or contact me for personal or private enquiry.


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About the Author: Stephen Olgade

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