Zimbabwe is not a stranger to crisis. We have moved from one economic crisis to another over the last couple of decades. This has, on one hand, made Zimbabweans very adaptive and innovative. On the other hand the dire situation has made people look for alternatives that assure them an easy win.
We have seen a lot of Zimbabweans running with stuff they don’t fully understand in a bid to make some extra buck. Most of the time, the end result is loss and heartache.
What I am arriving at here are pyramid schemes.
“A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.”Wikipedia
They are endeavours that promise participants a quick revenue stream for doing something as simple as selling goods or services for a company.
For any member to be a part of these kinds of enterprises they usually have to buy in. This buy in is sold very well by a spokesperson or presenter who says that the prospective participant will get a windfall if they join. Their initial investment will seem like nothing in comparison to what they will eventually make.
Pyramid Schemes have one thing in common. You have to recruit other people to come and join in. You get a rank bump with every member you bring into the fold. They make the business and process seem as legitimate as possible. Testimonials from members who have “made it” are a common feature.
They sell a very good game, and they make it seem as though the process is very simple. People who raise an eye at the intent, benefits and convenience of the whole affair are said to be erroneously sceptical.
The thing is skepticism is a fantastic trait to have and to develop. When we are talking of something that involves a means of survival (in this case money) we should have as many questions as possible. Any investment needs to be properly assessed before money leaves one’s possession.
So here is a guide that may help in identifying pyramid schemes:
- There is a large initial investment or a joining fee
- Your income is based on the number of people you recruit and the money those new recruits use to pay to join the company (not only the sale of products to a consumer or providing a service to the company or consumer).
- You are required to buy a large volume of inventory. (this isn’t exclusive to goods, the company may require you to provide them with a service)
- You are compelled to buy other products from that company or affiliated companies to remain in good standing.
There are close relatives to these schemes that practice what is referred to as Multi Level Marketing (MLM)
Multi-level marketing (MLM), also called pyramid selling, network marketing, and referral marketing, is a controversial marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company’s products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission systemWikipedia
The things is MLMs are legal in some countries like the United States or aren’t regulated at all in some other countries. They are usually run by a “reputable” company. The only problem is that outcomes from MLMs can be similar to those of Pyramid Schemes
It’s always good to be cautious when you come across any offers that may align to what has been mentioned above (Pyramid Schemes and MLMs). As well as to do as much research as possible in order to ensure that money and time invested isn’t lost to a fruitless endeavour.