Network marketing or Ponzi scheme, which is the way to go? Are they synonymous or just trifling variations? Are they legitimate businesses? Is there a simple way to identify the difference, if any?
In Network Marketing, a distributor (partner) builds a network of people (distributors and customers). The size of the network (organization) determines his net worth. The sale of products or services (virtual or physical) is a primary part of this business model. That is what drives the cash flow. The payout is in multilevel. It is a legitimate business.
There is no such thing as “no action required”. Network marketing is not a piece of cake. A lot of work is required to become successful in the profession. On a regular basis, distributors in the Industry face different types of challenges. These bring out the resilience in them. They toil, they sweat it out before reaping the rewards of their labors. So any business model that claims return on investment without any form of action on the part of the investor cannot be referred to as a Network marketing company. It is certainly not a get-rich-quick program.
A Ponzi scheme is a punctiliously coordinated financial scam. Investors are promised high return rates for little investments with little or no risks. And for the very lazy and greedy people, the most attractive bait in such schemes is the promise of “no action” on their part. Just invest, tell a few friends to invest, then sit back and watch the money grow. Sounds pretty easy, right? But hold on for a moment, before investing in any of such give a thought to the questions below:
What drives the business? In other words, what produces the cash flow? Put simply: “taking from Peter to pay Paul”. The operators pay the investors from the capital invested by new investors. All the claims about profits accrued from legitimate investments are just a fallacy. That explains why early investors get paid, and the letter ones lose out. Ponzi schemes are the get-rich-quick programs.
Therefore, one has to look very well before investing in a business. Spot the difference. Ask questions. If the cash flow process cannot be simply and clearly explained, then there is a problem. If there are no products or services (virtual or physical), there is a problem. In this era, information is available in the blink of an eye! So do you due diligence before investing. Network marketing is definitely different from Ponzi schemes.
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