The Difference between MLM and illegal Pyramid Selling

Written by Frann Leach

How can I tell a legal Network Marketing business from an illegal Pyramid?

Network Marketing — also known as MLM ('multi-level marketing'), relationship marketing and referral marketing, isrepparttar 21st century way for entrepreneurs to build a high income, without having to make huge financial investments. Most MLMs don't need any premises beyond a computer desk and perhaps a filing cabinet (though some may need storage space for product). Unlike franchises (the business opportunities ofrepparttar 122513 20th century) in generalrepparttar 122514 upfront investment is small and training is usually free or very cheap. Overheads are low or non-existent, profits can be very high indeed.

At first glance, MLM is very similar torepparttar 122515 pyramid schemes which have been made illegal in most ofrepparttar 122516 West. Inrepparttar 122517 pyramid, a representative pays his initial stake when he is recruited and is then shown how to recruit other representatives. Every representative recruited brings a bonus and adds torepparttar 122518 potential residual income. But, if no customers are required, sooner or laterrepparttar 122519 whole structure will collapse, because there is nowhere forrepparttar 122520 income to come from. In pyramid schemes,repparttar 122521 people atrepparttar 122522 top arerepparttar 122523 only ones who can make money, because there is a limited pool of potential recruits, and no other source of income. It's pretty obvious that no company can survive for long without any customers.

How to distinguish a Pyramid from an MLM

°< d> In MLM, it is possible for a recruit to overtakerepparttar 122524 person who recruited them, and end up making more money than them< d> In a pyramid scheme, your place inrepparttar 122525 matrix is fixed. You cannot overtake your sponsor. Even if they do nothing after recruiting you, they will still make more money than you.< d> < r>
 < d> < r>
°< d> In MLM, nobody makes any money until there is a sale:repparttar 122526 company's income derives from its customers, and so doesrepparttar 122527 income ofrepparttar 122528 company's representatives< d> In a pyramid scheme, you are paid bonuses for recruiting other representatives, regardless of whether or not they achieve any sales or gain any customers. Because there is no income torepparttar 122529 company, sooner or later this scheme will collapse.< d> < r>< able>

29 Activites Effective Leaders Do to Keep Their Organization Growing

Written by Tim Sales, author of "Brilliant Compensation"

What Leaders Do by Tim Sales

1. A network marketing leader doesn’t wait until he/she gets a large group before becoming a leader. It can’t work that way, because you would never getrepparttar large group if you’re waiting to be leader first! Nor doesrepparttar 122512 leader wait until they feel they possessrepparttar 122513 knowledge to lead - rarely they do. My observation is that leaders select themselves by taking on responsibility (the total reason something happens or doesn’t happen), rather than justrepparttar 122514 desire to lead. Want to be a leader? Go grab enough responsibility that it makes you feel like quitting every day…then don’t quit – congratulations, that’s LEADERSHIP. From that basis there are many other attributes you can develop.

2. At events,repparttar 122515 leader arrives early and reserves chairs for their entire group onrepparttar 122516 front row. Yes, there are normally only two front rows (left and right)…If you’re onrepparttar 122517 2nd or 3rd row – you’re still considered a leader. I spent five years getting up earlier than anyone else to make sure that my group hadrepparttar 122518 front row. What I’ve found is that there are very rarely more than two leaders in any room. Please understand what I mean by this. Once a person gets to a certain level of success they will stop doing these simple leadership things because of ego. They suddenly become “too knowledgeable” to sit and listen to a speaker that has less time inrepparttar 122519 business than them. If you remain humble and hungryrepparttar 122520 world is yours. So isrepparttar 122521 front row, byrepparttar 122522 way.

3. A true leader realizes that there is a difference between being a leader and being a leader of people. More on this later.

4. Network marketing “works” under many conditions, but when those relationships between you and your organization become tight and a “esprit de corps” is created, there’s nothing like it. I do mean nothing.

5. Appearance is impeccable. Even in jeans.

6. A leader “appears” organized, much like ducks cruising smoothly acrossrepparttar 122523 water, however, no one sees or knows how radical and out of control their feet are peddling.

7. Leaders of people treat their people with respect. Respect means you have a good opinion of their character or ideas. Simply put, you are interested in your people – their ideas, their complaints, their fears, their successes – THEM!

8. As a leader you develop or find five “Top Producers.” Devote yourself to them. Find three qualities that you like about each person. Write those in your day planner. Review them frequently, thinking of how you can help bolster one of those attributes. Bolstering an attribute can be many things – from a good verbal acknowledgement, to giving a telephone headset to someone as a gift who is working hard at making calls, to being their friend when they have a personal crisis.

9. New leaders are let down often by those they devote themselves to. Why? Because you selectedrepparttar 122524 wrong person to devote yourself to. You only get good at character choosing with experience. Track record is reallyrepparttar 122525 only place to look first. What hasrepparttar 122526 person been doing with their time… and what doesrepparttar 122527 person do with his or her time? People are what they spend their time doing. Most great leaders begin in a hole and are mad about being there. Of highest concern is whether or notrepparttar 122528 person has been advancing. If they’re not, it might take a lot of work on your part. Perhaps more than you have. Every person who’s ever hadrepparttar 122529 tough decision of choosing between lose two or lose one knows that this is one ofrepparttar 122530 toughest decisions in life. Albeit controversial, do not sink yourself if doing so won’t save your mate. Cut away when you feel you’re being pulled under. If you help “able” people, they will help more people. If you try to help an unable person they may sink you on their way down.

10. The network marketing leader getsrepparttar 122531 product or service “specialist” in front of their group – whether it’s in person, on a conference call or on an audio or video. Example: Your company carries a nutrition line created by Dr. Whoever. He specializes in human nutrition and created an ingredient that is in your products that is truly unique. The leader will somehow get that doctor on a conference call with his or her group to raise their belief inrepparttar 122532 products.

11. A network marketing leader always gives “back” more. Example: Let’s say that there’s a foul-up in processing distributor agreements in your downline. You getrepparttar 122533 distributors onrepparttar 122534 phone with a customer service rep that handlesrepparttar 122535 situation. You know that that customer service rep really worked hard to helprepparttar 122536 situation. Yes, it’s their job… BUT,repparttar 122537 leader will send that customer service rep a bag of M&M’s or flowers or something to say “thank you for going aboverepparttar 122538 call of duty.” What do you think that customer service rep will do for your group now? Just about anything.

12. The leader climbsrepparttar 122539 ladder and finds out whorepparttar 122540 decision makers are atrepparttar 122541 company and gets to know them but never bugs them. This is positioning yourself so that opportunity can see you. This is different than you seeing opportunity. Suddenly you find yourself speaking atrepparttar 122542 convention… hmm, I guess it was just luck. Yeah, right!

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