How To Start A Pyramid Business?

Pyramid Business

A pyramid business is actually a business scheme or a business model where people add members via a promise of payments or services for enrolling others into the business. Usually, in a pyramid business, the company makes all their profits from signing up new recruits and often attempt to disguise entry fees as the price charged for the product, service, training, etc. The problem with a pyramid business is, it is unstable and considered illegal in many countries. Some multi-level marketing plans are also classified as pyramid schemes.

Starting a pyramid business is very easy. First, you have to find a suitable product that has high demand in the market. Then create a suitable payout structure and financial fantasy among the customers. Now start recruiting people and teach them your business policies. You have to maintain this cycle: the training, attempt, failure, and event loop.

Types Of Pyramid Schemes

There are different types of pyramid schemes available. Let’s check them out!

Multi-Level Marketing Pyramid Scheme

Multi-Level marketing is also known as MLM is a type of pyramid scheme that involves the sale of actual goods or services. This is not like the typical pyramid schemes and participants are not mandated to sell anything to generate income. Some MLMs are really hard to distinguish from the pyramid scheme because they involve the sale of printed materials that have no real value, for example, different types of training courses.

The “Eight Ball” Model

This pyramid model is the simplest of all because in this model a person must recruit two others, who must each recruit two others, and so on. In this model, total 15 people in four tires (1 + 2 + 4 + 8). The eight persons from the last tire should pay an amount of money to join the plan. The single person on the first tire will earn the highest amount of money while other people in the 2nd and 3rd tire will get a small amount of money. Once there are new recruits, the people on the 4th tire will get the commission.

Blessing Loom

This model is quite similar to the eight ball model but it tricks one person by claiming to turn $100 into $800. This model actually flattens the pyramid into a circle therefore this model is known as Loom. In this model, each person has to recruit 2 people without providing them with any service or product. This pyramid scheme is illegal in most of the US cities.

Matrix Schemes

This model also uses the same fraudulent, unsustainable system as the pyramid scheme. In this model, a participant joins a waiting list for a desirable product, which only a fraction of them can ever receive. This scheme follows the laws of geometric progression so there are chances it will collapse. In this model, each person has to buy an expensive but potentially worthless item. This type of scheme also collapses when no more people are willing to join the queue.

Characteristics Of A Pyramid Business

There are few common hallmarks of a pyramid scheme. These characteristics will help you identify whether it’s a pyramid business or not. They are:

1. If a business or business module emphasis recruiting others to join the program for a fee then it’s likely a pyramid business

2. If a business doesn’t sell genuine product or service then it’s a pyramid business

3. Pyramid business promises high returns in a short time period

4. There will be no demonstrated revenue from retail sales in the pyramid business

5. A pyramid business usually has a complex commission structure or the payment method

FAQs About Pyramid Business

What Are Some Multi-Level Marketing Companies?

Multi-level marketing is also known as direct marketing, network marketing, referral marketing, and pyramid selling. Some renowned multi-level marketing companies are:

ACN Inc.
Ambit Energy
Amway Global, previously known as Quixtar
Ann Summers
Arbonne International
Avon Products
Barefoot Books
Bio Performance
The Body Shop
Discovery Toys
Forever Living Products
Fuel Freedom International
Juice Plus
Southwestern Advantage
Stream Energy
Success University
Tastefully Simple
Telecom Plus
USANA Health Sciences
Usborne Publishing
Vector Marketing
Wakaya Perfection
Watkins Incorporated
World Financial Group
Young Living
YTB International
Isagenix International
Market America
Mary Kay
Morinda, Inc.
National Safety Associates
Nature’s Sunshine Products
Neal’s Yard Remedies Organic
Nu Skin Enterprises
Pampered Chef
Pure Romance
Rodan + Fields

Which MLM Company Is The Best To Join?         

Below is a list of the 50 best MLM companies in the world. They are

Amway$8.40 B1959
Herbalife$4.90 B1983
Avon Products, Inc.$4.76 B1986
Vorwerk$4.23 B1883
Infinitus$4.00 B1992
Natura$3.66 B1969
Mary Kay$3.60 B1963
Coway$2.59 B1989
Nu Skin$2.40 B1984
Forever Living$2.40 B1978
Melaleuca$2.05 B1985
Primerica$2.05 B1977
Young Living$1.90 B1993
Tupperware$1.80 B1948
doTERRA$1.70 B2008
JoyMain Int.$1.58 B2010
Rodan + Fields$1.50 B2007
Oriflame Cosmetics$1.47 B1967
Ambit Energy$1.31 B2006
Atomy$1.30 B2009
DXN Marketing Sdn Bhd$1.25 B1993
Pola$1.24 B1929
O Boticário$1.20 B1977
Belcorp$1.17 B1968
Jeunesse$1.11 B2009
PM International$1.11 B1993
Team Beachbody$1.10 B1998
Telecom Plus$1.08 B1996
USANA Health Sciences$1.06 B1992
Longrich$1.00 B2012
Yanbal International$885 M1967
Market America$837 M1992
Stream Energy$800 M2005
OPTAVIA / Medifast, Inc.$714 M2002
LuLaRoe$700 M2013
Shaklee$700 M1956
ACN$700 M1993
Quanjian$700 M2004
Hinode$700 M1988
Arbonne International$672 M1975
Isagenix$663 M2002
Juice Plus+$660 M1993
Team National$651 M1997
It Works!$590 M2001
Amore Pacific$585 M1945
Miki$505 M1966
Futurenet$500 M2012
QNet$475 M1998
Scentsy$472 M2003
Plexus$467 M2008

How Do Pyramid Schemes Make Money?

A pyramid scheme usually makes money based on the recruiting of “investors.” Here the first investor recruits another investor who then recruits more investors and the process goes on. This business scheme is very unstable because if the supply of investor become off then the earnings will stop automatically.

How Long Is Jail Time For A Pyramid Scheme?

In the USA, recruiting people to participate in a pyramid scheme is considered as a felony crime and it is punishable by up to four years in prison or up to a $5,000 fine or both.

Who Invented The Pyramid Scheme?

Charles Ponzi invented the pyramid scheme. Charles Ponzi was an Italian swindler and con artist in the U.S. and Canada. He was born on March 3, 1882, and died on January 18, 1949. 

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