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Fact or Myth: MLM is a Pyramid Scheme (myth)Multi-level marketing is a form of earning money, especially on the internet, that has become very popular in the past few years due to several reasons. These companies claim that they offer budding entrepreneurs a part time income – or even an extraordinary income – that most other businesses or careers are unable to offer them.

This is actually the hallmark of attraction that the companies use in order to command large followings. In addition to this, it is also their defense when it comes to the charges that they are pyramid schemes. The big question here however, is whether these MLMs are fact or myth.

In general, the legitimacy that a business which operates under this notion depends on the validity of its earning claims. This is mainly owing to the fact that these earning claims affect more than 5 million budding entrepreneurs in the United States region each year; and many more across the world.

Studies reveal that approximately 99% of people who are involved in MLM usually earn $14 less in a week with regard to the rebate income. It is important to understand that the figures actually represent the losses that are incurred, because when you deduct the taxes, inventory purchases and business expenses, there is no profit earned. Moreover, it has also been discovered that there is no net income that door to door sales people usually make from selling the network marketing products.

Most of these companies cover up their losses by only releasing information about successful marketers. Besides, the time frame that is under consideration here is usually a one year period and in some cases even less. It is a well known fact that these companies normally do not release the data that show the actual average incomes.

In other words, should all the participants of a given network marketing company be included in doing the calculations in a time frame of 5 years, the failure rate would even be higher. The statistics reveal that only one person in a 1,000 gains a substantial amount of profit.

The business models that most of the MLM companies use are usually ineffective, because they fail to prevent the loss of millions of dollars that have been invested by budding entrepreneurs. This is a very sad fact owing to the reason that the most industrious and talented participants also fall victim to this statistic.

The effects of these companies as a result usually also include break up of marriage, damage to credit worthiness, general impoverishment and it also degrades the community. These companies usually operate under the notion that there is an endless opportunity of earning income because the chain of people that you are entitled to recruit is also endless.

When you look at these companies from this perspective and take into consideration the facts presented, you will become more enlightened and aware of what you are getting yourself into.

Annetta Powell
Your Professional Success Coach


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