Myth: Most Direct Selling Companies are Pyramid Schemes Doomed To Fail

Posted on July 5th, 2013 by Deb Bixler

The business world is filled with myths and misconceptions that can often prevent entrepreneurs from giving a new business idea a try. The smart, successful and proactive entrepreneur does research and finds out the facts before deciding whether or not a business idea is worth exploring.

One of the most common myths in the business world is that direct selling organizations are nothing but pyramid schemes that offer more failure than success.

A Pyramid Scheme

This statement is usually made by people who do not understand direct selling or pyramid schemes. It is time to set the record straight so that proactive entrepreneurs can get the facts they need to make the right decisions.

A pyramid scheme usually involves paying money to get into a group and then making more money by ONLY recruiting more members.

The way that you can tell when something is a pyramid scheme is that a pyramid scheme will often have nothing of value to offer people. The products sold in a pyramid scheme are often secondary to the task of getting more people involved in the scheme.

Pyramid scheme

Direct Selling

Direct selling professionals represent a variety of companies and sell a wide array of products.

Direct selling companies are run by experienced professionals who are just as interested in the satisfaction of their customers as they are in selling more product. With direct selling companies, the focus is on offering quality products and customer service that creates a long-term relationship with repeat clients.

The Products

If a pyramid scheme sells products, those products are usually introduced later in the training process for new members.

A pyramid scheme gets its new members motivated by explaining how they can make more money by getting more people involved in the scheme.

Direct selling professionals are completely focused on the products and spend a great deal of their time learning new product features and developing new ways to sell products. When a direct selling associate recruits a new member, that new member will be expected to learn the product information and understand how to sell the products in order to make an income.

The Biggest Difference

The reason that pyramid schemes collapse is because the people involved in them realize that the only people making money are the people at the top of the pyramid.

In direct selling, everyone makes money so long as they work hard to sell products. There is a commission paid to the professionals who bring in new associates, but those professionals also spend a great deal of time and effort training their new associates to sell products and offer superior customer service.

The only way you could confuse a pyramid scheme with direct selling is if you do not take the time to learn the facts. Once you compare the two side by side, you will see that direct selling offers opportunity that a pyramid scheme lacks.

For more information on how to tell a pyramid scam and print downloads to use for scripting out the answer to that dreaded question or statement visit Deb’s Cash Flow Show website and read more about “What Is A Pyramid Scheme“.

About the Author

Deb Bixler is the 2011 DSWA Speaker Of The Year and the DSWA party plan adviser.

Visit her party plan training center for real action steps to grow your business: or learn more about hiring Deb as a speaker for your group at: