How to avoid home based business opportunity scams

© Diane M. Aull

When you first start researching what kind of home-based business you’d like to start, you’ll probably sign up for several e-mail newsletters and perhaps register with a few forums related to working from home. Unfortunately, no matter how careful you are about which newsletters and forums you sign up for, it’s likely that you’ll soon start receiving an avalanche of unsolicited e-mails (spam) advertising all sorts of "business opportunities."

Don’t feel bad if that happens. It happened to me, too.

Even if you manage to avoid the spam e-mails, during the course of your research you’ll undoubtedly come across many websites that promise untold riches, piling up for you while you sleep or lounge on a tropical beach — if you’ll just buy their "fool-proof system."

The truth?

Well, some people do make money with these "systems." Usually, the ones making money are the people who dreamed up the systems, not the poor souls trying to make the system work. if it were simply a matter of implementing a system and then the money rolls in, everybody would be rich.

A good beginning rule of thumb I’ve discovered is to check to see how much work they say you’ll have to put into it. If they tell you that you can earn thousands in a matter of weeks without much effort, that’s a big warning sign. If they tell you that it will take time and you’ll have to work your tail off, but with patience and effort the eventual rewards will be worth it, that may be worth at least investigating.

Beware of multi-level marketing (MLM) plans that rely for their projected income estimates on your being able to recruit significant numbers of "downline" people. Frankly, it doesn’t work that way. Most people you approach are going to walk away (if they’re polite). I don’t want to tell you what the impolite ones might do…

I don’t care how persuasive the promoters are in convincing you that their particular opportunity is "irresistible" to everyone. Most people will walk away.

When evaluating an MLM plan to see if it’s worth investing in, try to make a reasonable estimate of how much product you, personally, can sell (not any of your downline, and not "recruitment bonuses" you might get from signing up somebody else, only what actual product you yourself can sell). Be brutally honest about how much you think you can move in a given month. If the profit you’ll make from that isn’t enough for you to get by, then you might need to consider a different path.

I mean, if you can’t reasonably expect to sell enough product yourself to make a living, what makes you think your downline will be able to sell enough product to generate commissions you can live on?

And if the "MLM" system you’re considering doesn’t seem to have any actual products to sell, and all your income comes from the membership fees of those you sign up — run away, as fast as you can! It’s likely that what you’ve found is a pyramid scheme (also known as a Ponzi scheme, named after a very famous such scam), and it’s illegal in the United States (and many other places as well).

It’s not impossible to do well with network marketing. But it does require hard work. Often a lot of hard work.

One last thing to look out for: programs and "systems" in which the promoters apparently can’t do basic math. I saw one like this recently. Their website swore, several times, that if you used their product, you could double your sales every month for as long as you wanted to.

Even a few minutes with some basic math skills should be enough to figure out it wouldn’t take too many months of doubling before you would have to be selling products to more people than exist on Earth.

It simply isn’t possible to actually double your sales each and every month indefinitely. That’s pure marketing hype, and it relies for its effectiveness on the fact that most people won’t sit down and do the math.

Their product may very well help you increase your sales, but you need to apply the "reasonableness test" to their claims before you lay down your hard-earned money to buy their "system." Don’t rely on marketing hype as the basis for your business plan!

In summary, the old adage is true: if it sounds too good to be true, it probably is. Exercise some care, apply your common sense, and take everybody’s hype with a very large grain of salt. You’ll be well on your way to avoiding scams and getting a real, successful home based business off the ground.

For more information and details of popular work at home scams, read this article — Federal Trade Commission: Business Opportunity Scams.


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