Also people say they ruin lives, how?
In: Economics
MLMs that turn a profit based on recruiting more than selling product are indeed pyramid schemes. In the US there’s a law banning this. There are MLMs that don’t require you to hold inventory, instead just ordering through a website, thus reducing the risk.
Every MLM has a card they have to give to every new recruit with stats on how much most people make in that company.
There are many challenges trying to run a profitable MLM business, even when it’s focused on sales.
First, most people are bad at sales. REALLY bad. Turnover in sales positions in any industry is horrific, and that’s with a company handing them leads or phone numbers to call.
Second, most people are REALLY bad at lead generation, so they just hit up their “circle” of family and friends, which inevitably hits a ceiling and fizzles out. Lots of MLMs encourage them to hit up their circle knowing they’ll burn out because churning through burnouts makes the company more than hoping they figure out sales and lead gen. But not all companies do this.
That said, there exist companies who focus on sales, offer free training on sales, lead gen, leadership development, coaching, etc. With zero up front investment from the seller. They’re rare, but they do exist. I’m good with those.
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