3 Personal Tips to Avoid Losing Money from a Get Rich Quick Scheme

This article continues the discussion from 5 Organizational Issues for a Pyramid Scheme.  In general, people often lose money when chasing opportunity.  How can you avoid this trap?

1.  Avoid making an emotional decision.  Some people associate music, celebration, suits and recruiting with an illegitimate organization.  However, in reality, when looking at an opportunity it is important for a person's will power, mind and heart to align.  One must not only be emotionally motivated by an opportunity, but must also be able to have a thought out plan as well as the will power to see the plan through.

2.  Stop thinking the grass is greener on the other side of the fence.  When you jump around from opportunity to opportunity, you may develop various skills but you will never achieve excellence.  Discipline, time and focus will lead to success.

3.  Focus on developing your talents.  In the book Outliers, it is mentioned that it takes 10,000 hours to become success in any given area.  There are no short cuts to developing your character.

Sometimes when people fail, they will point the blame everywhere else but at themselves.  What do you think?  Have you had a bad experience?  Can you describe it?

This post was reposted from http://finlit.biz/business/5-personal-issues-for-a-pyramid-scheme/, originally written on March 28th, 2013.

5 Organizational Issues for a Pyramid Scheme

This is a follow up to the post What is a Pyramid Scheme?  The basic issue encountered was that many organizations have a pyramid shape, such as government, military, churches, schools and businesses.  So, how can we determine whether one of these organizations is legitimate?

Here are five questions to make sure the organization is legitimate:

1. Can you clearly identify the product or service being offered?  Every business offers either a product or service.
2. Is the organization using deceptive practices?  While no organization would welcome criticism and negativity, a legitimate organization generally welcomes questions arising from interest and curiousity.
3. What are the chances of a new peson acheiving the exceptional financial success in an organization?  Small businesses fail 90% of the time so if 1% of an organization acheives exceptional financial success, this is a good indicator.
4. What is the wealth distribution of the organization?  The more transparent an organization, the better.
5. What risk does the organization have if resources are wasted on a new person who does not produce profits either directly or indirectly?  In general, a legitimate business whose product or service is not related to training or education should take a definable risk, losing an investment in the form of time or money.

Continue reading the article 3 Personal Tips to Avoid Losing Money from a Get Rich Quick Scheme.

This post was reposted from http://finlit.biz/business/5-organizational-issues-for-a-pyramid-scheme/, originally written on March 27th, 2013.

What is a Pyramid Scheme?

The term pyramid is synonymous with pyramid scheme or ponzi scheme.  But what is a pyramid, really?

This is an interesting question that comes up in the world of multi level marketing.  Practically everyone you know has probably been touched in one way or another by a multi level marketing company.

At factsaboutherbalife, the site actively speaks against the multi level marketing company Herbal Life.  Here, they state, "The organization is deemed a pyramid scheme if the participants obtain their monetary benefits primarily from recruitment rather than the sale of goods and services to consumers". – Dr. Peter J. Vander Nat, senior economist at the FTC, Journal of Public Policy and Marketing, Vol 21-1, 139-151, (2002)

The site also states, "In a pyramid scheme, the money at the top is made from the losses of the people at the bottom."

Here, perspective's may differ.  For instance, some people might say, relationships underly all businesses.  Therefore, to see the vision of a company come to pass, the business must actively recruit the talent necessary to accomplish that vision.  Whether directly or indirectly, I would say every big business obtains its monetary benefits primarily from recruitment.

Imagine a store purchases products from a manufacturer to stock a shelf.  If the store goes out of business, the store may take a loss while the manufacturer made a profit.  Likewise, imagine a franchise company convinces a business owner to purchase the franchise.  If the franchise then goes out of business, the business owner takes a loss while the franchise company made a profit.  Lastly, imagine a college convinces a student to start a diploma program.  If the student drops out or doesn't get a return on the investment, the student takes a loss while the college made a profit.

The manufacturer may recruit as many stores as desired, the franchise company may recruit as many business owners as desired and the college may recruit as many students as desired.

The only thing that is clear to me is that it is very difficult to define a pyramid.  It is also hard to argue that services are not being provided since education and experience are valid services.  I have to say, I am stumped.  Any help?

This post was reposted from http://finlit.biz/business/what-is-a-pyramid-scheme/, originally written on March 21st, 2013.