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Sorting Scams from Truth in Business Opportunities

Business OpportunitiesFinding a ‘business opportunity’ has always been a task fraught with peril even before the days of mass email and shady Google ads. The phrase ‘business opportunity’ is a loaded one; it evokes a sense of impending success, money, power, connections and overall a chance to make something better out of what you have. But there is a dark side to the coin: many so called business opportunities are nothing more than pyramid schemes, work schemes and chances for other people to bill you and give you very little in return save being embroiled neck deep in a business that requires you to drag others into it. These schemes aren’t always illegal or obvious either; some of them seem just good enough to pursue and work with until you realize you’re holding smoke and staring into a mirror. So how do you sort out the scams from the legitimate business opportunities?

Legitimate, Shady or Outright Scam?

It’s actually pretty hard to work through the murky waters of business opportunities, especially when the internet makes it easy for disgruntled users of a system to mud-sling and call something a scam when in truth they didn’t understand it, use it right or succeed. For example, selling Avon products could be viewed as problematic because you have to do things like host parties or do a lot of pavement pounding (or own and maintain a website) in order to sell things, but it’s not a scam because you can make money as long are willing to put the work in. An MLM scheme is even more difficult to ascertain because of some of them are definitely pyramid schemes (read: scams), while others are legal, but hard to make money from.

Here are some good ways to really see the differences between something legit, something shady and something scammy:

How many complaints does the company have leveled against it? (and how many of those complaints have legitimate concerns rather than just whining that they failed)?
Do you have to pay a fee to take part in the business? Is it monthly or annual? How much is it? How hard is it to get out of the business opportunity and thus stop paying for it? The harder it is and the more frequent the billing, the more likely it is a scam.
What is its BBB rating? Most of these schemes claim to have an A+ rating, but many of them actually have a C+ or lower; not a business you may want to get into bed with.
Do you get a clear business pitch or does the company spent more time trying to tell you how wonderful their product is and how much better your life will be if you sign on?
Has the company had trouble with government organizations such as the FDA or the EPA?
Is the product(s) you’d be selling something you can actually get behind? Can you get free trials (with no obligation) to try them out?

A legitimate business opportunity will have few or no genuine complaints, it will have a reasonable structure of fees to pay in order to get on board, if it has any at all besides your own costs for things like a website, business clothing etc., (optimally, you should never have to pay money in order to make money, but if you’re involved in a business that has you selling their products, they will take a cut), it should have a high BBB rating, a clear business pitch, no trouble with the law and products you can get excited about or at least agree that they are useful to the wider population.

Pyramid Schemes and Multi-Level Marketing Schemes

When you’re looking at shady business opportunities and illegal ones, you will run into these two terms, so it’s good to get a primer on them so that you can start on your own quest for business on the right foot.

A pyramid scheme is an outright scam; it is the measuring stick by which all other business scams are measured. It’s a scheme whereby up to 98.8% of people will never make a profit, but the .2% at the top is rolling in it. It’s characterized by the fact that you in theory make a ton of money by ‘recruiting’ others to also make a lot of money, either through endorsing a ‘starter kit’ of goods to sell (wherein you make more money in recruiting others to sell it than you do in actually selling it) or by flat out recruiting people. The pitch always sounds good, for example, you could be selling healthy drinks and recruiting other sales people to sell healthy drinks who you manage. However, the stinker is that in order for the next ‘level’ to make money, they too have to recruit people and pretty soon you have a bunch of sellers and recruiters and no one buying. The pyramid collapses.

A multi-level marketing scheme on the other hand differs in one very important way. Yes, you’ll be ‘recruited’ by the business and yes, you can ‘recruit’ others to sell. The big difference though is the emphasis is put on the products, not on the recruiting when it comes to making money. Companies like Amway and Mary Kay put their focus on encouraging their ‘Independent Business Owners’ to sell goods, not recruit (although you are perfectly free to recruit and can take a cut of your own). This is an easy way to sort out the pyramid schemes from the MLMs when it comes time to seek out your own business opportunities: where is the most emphasis put? On product, probably legit; on recruiting, probably as scam.

If It Looks too Good to be True, It Probably Is

The old adage definitely holds true when looking for business opportunities. If the business spends more time hyping up a more leisurely lifestyle with more money and almost no work, chances are it’s a fraud. If the business has a proper set up, complete with a good pitch, outlines how you can make money and what success rates are and don’t try to sell you on just getting other people to sign up, then you’re probably getting started on something that’s all right. But it’s still important to do your research, listen to your gut, talk to others about it and always know how you can get out of the opportunity fastest if things go south (and any legitimate business venture will have a way out). Good luck and be smart with your business opportunities!