If you are a mom and one of your New Year Resolutions is to add more income to your family, you may be looking at a Multi-Level Marketing company (AKA a "home party business") as a way to help your family. We have all been invited to those fun (and sometimes not-so-fun) home parties where we socialized with friends, ate some yummy snacks and oftentimes ordered some great products.
FULL DISCLOSURE: I was consultant for a well-known kitchen MLM/Home Party Company as well as an even more well-known skincare and cosmetics company. I worked my rather ample behind off at both companies..and I am here to tell you - MLM/"home party" companies are NOT an easy way to make money (but in some cases, they are an easy way to LOSE money)!
Reason #1: The Falsehoods About Ease of Earning
One of the first things that you are told is about how much money you can make if you "just follow their plan". In too many cases, the "plan" is based on unrealistic and outdated models - that everyone is DYING to book a home party or that you can easily recruit 10-50 consultants underneath you. Think about it...out of the last 10 home parties you have been to, how many of them were you just DYING to become a consultant or host a home party? And yet, I bet most recruiters tell you how easy it will be to book your parties! I avoid the "wouldn't you like to host a party yourself?" question like the PLAGUE at parties. I still haven't figured out why I thought "I would be different"!
Reason #2: MLMs are a Pyramid Scheme
The ones making the money are the ones at the "top" who have recruited 50-1000 people beneath them. They make money by recruiting other people to sell product, and then they then make a commission off that product. While they will be quick to tell you about the 5 to 20 people they recruited who ARE doing well (and most of them are doing well because they recruited other people), they won't tell you about the other 75-90% who have lost money or quit before they did so.
Reason #3: Most MLMs Rely on Your "Feminine Side" to Get You
In both MLMs in which I have been involved and in almost EVERY MLM in which a consultant has tried to recruit me, the "sisterhood of the consultants" has been promoted. To me (at the ripe-old age of 42) this is a HUGE red flag. I am over 18. I don't need a sorority!
Your recruiter is in many cases going to present herself as your new best friend. Then you get the call from HER upline promising to be your new best friend. Trust me - NONE of these people want to be your Best Friend. Home party/MLM businesses have a "Churn & Burn" attitude. If you aren't producing, they train their Directors to just say "NEXT!".
Reason #4: You Are Encouraged To Lie To Customers and Recruits
"Fake It Until You Make It". While this might be a popular saying in business cultures, when you boil it down in the MLM world, it means "Lie about how you are doing so that you can recruit more people". If you get a few drinks in almost any "top level" MLM person (the ones making the 6-figure salary you were promised..and I HAVE gotten a few drinks in more than a few of them), they will tell you there is NO money in just selling product (unless you are just looking to support your Starbucks habit). The money is in getting OTHER people to sell the product. Yet, you are told to tell everyone how easy it is to make money by just selling the product.
And as an aside, isn't "Fake It Until You Make It" one of the mindsets that got us IN to the mortgage and credit crisis in which we now find ourselves?
Reason #5: Inventory Purchases That Collect Dust
With many companies, you have to (or are encouraged to, "for the sake of your business") pre-order inventory to sell. If you don’t sell anything, you could end up losing money, or using your excess inventory as gifts. Best case scenario? You can sell that inventory back to the company....at a significant discount (for them)
Reason #6: Straining Family Relationships
This ties back in to Reason #3, but one of the big thing that you hear (once you sign up) is that "if your family and friends truly support you, they will want to host a party!". I am here to tell you...your family and friends support you, but they do NOT want to host a party...nor do they want to "help you reach your minimum that quarter"...or pass your name on to all of their friends. If your sister works for "XYZ Company" - is she always asking you to promote her company? Just because you are in the "home party business" doesn't mean that the rules go out the window!
Your friends and family will soon tire of you asking them to host a party or place an order.
With all this being said, if you are looking to get in to a Home Party business/company as a way to supplement your family income, there is a chance that you can do so without losing your money, your friends or your sanity. Do your research, make sure you know what you’re getting in to and make a safe and informed decision!
Becky Fritz via Facebook
Where was this when I tried (and lost money on) a very well know. Cosmetic company and a very well known silver jewelry company? I did okay with the Scrapbooking company because I can actually USE the inventory I bought to make gifts, cards and scrapbook pages!
Michelle Houser via Facebook
That was really informative- thanks for sharing that!
abby-grace
Couldn't agree with you more. I am sure you are going to get some nasty comments disagreeing with you too. As a young, stay-at-home mom, I used to get so irritated at my other stay-at-home mom friends who would become consultants for a home party business. I am very careful with our money so I can stay at home--I don't particularly care to spend double/triple the money for products from my other stay-at-home friends who want to make an extra buck. I make money by NOT going to your parties. I would purposely avoid becoming friends with people whom I knew had home party businesses which is sad.
Jean Avery via Facebook
Some valid points, but also I think an unfair portrait blaming companies for people who choose not to do real homework before and during the running of their business. I have an Ivy League degree and I made more money per hour 'hosting parties' as you put it than I did at my professional 9-to-5 job. I had an extremely successful career and I was never pressured to do anything inappropriate, I received outstanding training and support and it was a great experience all around. But my financial expectations were realistic. I bought inventory proportional to the time and effort *I* was willing to put in. It's a business, not a 'free lunch', and while there are some shady businesses out there, most disappointment comes from people who believe they will make money with little or no effort, which is simply not the case in ANY kind of business. The key is to find a product you love and use *anyway*, a company with a variety of options and support, so that if team-building is not your focus, you can still have a successful and profitable business. If a business is promising something for nothing, then yes, run. But if a business tells you, if you do X, you get Y, and you choose to do something else, you will achieve something different.
Jennifer Beattie via Facebook
I totally agree with Jean Avery above. I have been a consultant for a direct sales company for 4 1/2 years and have not have any of the problems listed in this article. I loved the products before I sold them and used them daily. Actually I didn't tell my friends that I signed up until I was a consultant for over 1 year. I didn't want to bother them or make them feel like I was hounding them for a party. Now that they know they love the products and they appreciate that I don't bother them. They come to me when they want to order products or have a party. I have signed up numberous consultants without even trying because they loved the product and wanted to see if selling it was a good fit for them. I am huge on telling my recruits not to spend any money on their business until they figure out how commited they want to be with their new business. The company I sell for tells us NOT to carry inventory. The quota is easy to make with one party a quarter if someone does not want this as a business and onlysigned up for the discount. They offer ample free training for those that do want a business. Also, all my local consultants are always willing to help each other even though they aren't getting any benefit. Direct sales has been a great source of income for myself, a stay at home mom to 4 kids under 8. I'm so glad it looks like I found a great company to be a consultant for. I'm sorry you had a couple horrible experiences with the companies you sold for but not all of them are the same. People do need to do their research and not label all companies under the same label.
Jennifer Beattie via Facebook
I totally agree with Jean Avery above. I have been a consultant for a direct sales company for 4 1/2 years and have not have any of the problems listed in this article. I loved the products before I sold them and used them daily. Actually I didn't tell my friends that I signed up until I was a consultant for over 1 year. I didn't want to bother them or make them feel like I was hounding them for a party. Now that they know they love the products and they appreciate that I don't bother them. They come to me when they want to order products or have a party. I have signed up numberous consultants without even trying because they loved the product and wanted to see if selling it was a good fit for them. I am huge on telling my recruits not to spend any money on their business until they figure out how commited they want to be with their new business. The company I sell for tells us NOT to carry inventory. The quota is easy to make with one party a quarter if someone does not want this as a business and onlysigned up for the discount. They offer ample free training for those that do want a business. Also, all my local consultants are always willing to help each other even though they aren't getting any benefit. Direct sales has been a great source of income for myself, a stay at home mom to 4 kids under 8. I'm so glad it looks like I found a great company to be a consultant for. I'm sorry you had a couple horrible experiences with the companies you sold for but not all of them are the same. People do need to do their research and not label all companies under the same label.
Kelly Shepherd Billman via Facebook
thanks for the info. I have been praying about joing a company to make some extra money & get discounted products. haven't signed any paper work yet. This info gives me some more things to think & ask about. Thanks for all the comments too!
Jordan
Hi Kelly - Please don't let this article be your end all be all as to whether or not to join the company. This article is completely biased. If you are looking for a Network Marketing or Direct Sales Company, you want to make sure these 3 things align; 1) Products, 2) Systems, 3) Compensation. You never want to join a company you want to be successful in (by which I mean you are looking to replace your income or turn this into your primary income stream) just because you'll get a discount on their products. YOu want to treat this like a real business decision and do your due diligence and research. 1) Products, are they consumable, will they run out so people have to re-order? (you want this) 2) Systems; is there a business building system that is simple and duplicable? 3) Comp Plan, there are so many out there, some way more lucrative than others. You want Bonuses, Retail Profits, and Residual Commissions (money you make while out with your kids b/c someone is ordering products in the comfort of their home)
I am a part of the NWM industry and absolutely LOVE it! I've had a bad experience with my previous company and have now found one that is a perfect fit (and it fits all three categories I mentioned above!) So I've experienced the good and the bad and I still recommend it to everyone. I hope this helps in your decision :o)
Heather Robertson
I've been a Pampered Chef consultant for 2 years now. I'm a SAHM as well. I really take offense to the comments in the article that we are in need of acceptance and have low self-esteem. Perhaps the author was talking about herself when she began Pampered Chef? That's the only thing I can figure. I'm sorry you had a negative experience, but I love my PC family - and we are just that. Do I feel that my director doesn't have time for me unless I'm selling? Of couse. That's HER job. I've told her it's not my interest to make director, and that was that. I love selling because I get in front of people, make friends, get out of the house, and have a crap ton of product that I never paid for. The money is just a bonus. The tax write offs are where it's at. I guess it just depends on what you're in it for, and how much work you put into it. Just like anything in life; you get out of it what you put into it.
Cassie
That was a seriously biased article. You could have made some very informative points to your readers without being so negative. I am currently a consultant for Creative Memories for 3.5 years, and before that, Tastefully Simple for about 18 months. Selling products only? Of course it is only a way to give yourself a little bit of spending money (or for me, pay for my own scrapbooking habit). But to say, "You are encouraged to lie to your customers and new recruits"? NEVER. I tell people that if you work HARD at it, there is a lot of potential. We are encouraged to share with people the potential for when you work your business hard, but never to lie to people. Just because YOU were encouraged to lie, does mean that all DS businesses/uplines encourage people to lie too.
Jordan
as I read this, I could not help but laugh at EVERY misconception about NWM that was written. First, according to financial experts and economist such as Paul Zane Pilzer . Second, Robert Kiyosaki Author and Expert and lastly, Warren Buffet, richest man owns 3 NWM companies. If anybody has their facts wrong it is http://www.momsneedtoknow.com. Clearly, this is your opinion and have NO facts that back up your claims. I am sorry you had a bad experience with your company. When you find the right company, you will know you are in the business of the 21st century! Thanks for the laugh Bargains to Bounty I love being able to provide validity and credibility for this Industry b/c it changes and enhances the lives and provides lifestyles most only dream about.
Not all companies are party companies....those are what you call "direct sales" in NWM we show people how to buy superior products at WHOLESALE pricing, saving them money. They shop when they want and products come shipped to them. My company, Isagenix is a NWM (and by the way, who calls NWM companies MLM companies anymore???) We have NO inventory, no parties, 98% of our work is from our labtop and cell phone. We introduce people to the product and then THEY buy it, direct from the company. Isagenix pays out referral bonuses to their consultants and to their customers. Why would you NOT want to get paid for referring someone to a product that works for you. If you see a movie and like it, what do you do, you tell others, but do you get paid? That's the difference!
Mindi Cherry
Isagenix is not a home-party business.
I have not done sufficient research in to non-home-party-but-still-network-marketing companies to form an opinion. However, I WILL say that I have seen plenty of complaints about Isagenix in the past.
And of course, I didn't even get in to how my father as well as my mother and stepfather lost a MINT on Amway (a company so tainted with a bad rep for fleecing Distributors that they had to change their name)
Do not assume that I am misinformed.
Jordan
You're right, it's not. However I was a part of one that was and although I left my former "party company" the claims you make about the industry as a whole is what is so biased b/c you had a bad experience. I know of others who have and that is just unfortunate, but it does not represent the entire industry. If that were the case, you would not have Kiyosaki, Trump, Pilzer, and Buffet endorsing the industry.
As for Isagenix, you're right, it's not a home-party based business. Tell me a little more about the complaints you have heard about Isagenix? No offense, but after your article above with absolutely no supporting facts to the claims and it merely being your own opinion, I can hardly trust anything you found about Isagenix is "proof" If it were, we would not be the youngest company who made ranked #6 in the top 25 NWM companies in the world. But please enlightened me with complaints from fellow bloggers
Mindi Cherry
Jordan - this is my site and my purpose is not to argue with you while you promote your affiliate links to sign up under you (which I have deleted, in case you didn't notice)
You are clearly so entrenched in the MLM/NWM mindset that I cannot do anything to change your mind. I have neither the time nor the energy to debate you. I am sure that you will take that as a "win" for your side....if that makes you feel better, have at it!
That being said, for 1/2 the price, one could just take some extra vitamins and drink more grapefruit juice/eat more fiber/drink more cranberry juice to get the same "benefits" that they get from Isagenix. Google it
Jordan
Although I appreciate your blog and what appears to be a genuine concern for others, I just think that in the future when posting something what appears like it could be a real article (vs a blog) that you specify what is opinion and what is fact. I'm not responding so I can "win" an argument or so I can promote my business, I don't have to do that on a blog. But your readers deserve facts like I had provided when someone slanders an entire industry based on their own personal experiences.
Jordan
btw....all three "affiliated links" as you called them are 3rd party facts in which support my initial comments above and have no affiliation with the company I represent. I'm sorry you felt the need to take off the facts that do not support your personal opinions above.
Mindi Cherry
No - I'm talking about the affiliate link that you left when you registered each of your comments: team$$$.isagenix.XX (obviously, the link has been edited by me)
Mindi Cherry
Thank you for your input. You are clearly a strong supporter of MLM/Network Marketing
I happen to believe that 90% of it is a scam.
Fortunately, this is my blog and I am free to express it as I see fit. I never purported to be a news media outlet, like CNN, Fox, etc. That is the beauty of blogs...I am free to express my opinion and you are free to find another blog that better reinforces your opinion!
Best of luck to you!
Wendi
The MLM companies I've experienced don't encourage you to lie, exactly, because you can make money just by selling product. But it's tiddliwinks compared to the carrots they dangle in front of you in their marketing materials (like the featured director interviews in the sidebars of their catalogs). Yeah, I can make $200-$300-$400 per month no problem, but how do I pull down $60,000+ per year? I have yet to encounter a company that TRAINS you for recruiting, retention, people management, meeting management, marketing... all the skills you'd actually need to be truly successful. Instead it's all "Welcome to the family! Don't you want to be just like Sheila, the executive director for this region?... See how successful she is?..." And then they throw some free crap at you and tell you to book parties. When really, they should be showing you how to recruit new consultants, and then train and lead the new consultants so they can recruit more new consultants. That's how you get full-time income. So I guess if you have an Ivy League education or an MBA, you can be successful in a MLM quite easily because you already have the business skills necessary. But the majority of us should steer clear. Unfortunately, SAHM's or undereducated individuals who want to help provide "freedom for their families" are often the targets of MLM recruitment campaigns. I agree with Mindi's summation, and I also agree with her closing paragraph. If you're going to start a business, do your research. Be informed. And don't rely on the BUSINESS to inform you fully. Ask around, gauge the experiences of others.
Julie
I've never been part of a MLM company, but a close friend was for many years. I admit I have done no research into these kind of companies, but here are my observations:
In addition to the time she spent going to "parties," I watched her spend hours doing paperwork and even more hours preparing for training/recruiting meetings. I don't know how much it cost her, but I heard about the two-day-or-more conventions and training sessions that were far enough away from home that they required hotel stays. I got the requests to place an order so she could meet a goal or quota. I saw her team leader (or whatever she was called) pretty much drop her as a friend after she decided to get out of the business. Oh, and she still has a basement full of product she can't even get rid of at yard sales.
sarah
Everyone is attacking the author when obviously this is the opinion...... I hate these companies to. I run when people want me to attend parties. The only stuff I have purchased is out of guilt. Moneysavingmom.com opened this up for discussion awhile ago, and overwhelmingly the response from sellers and buyers was negative. CPA's. (Read numerous). Even said that they had NEVER seen tax forms from anyone who was really making money from selling this junk.
Janice K.
I applaud you for writing this article. While getting wrapped up in these businesses is very tempting, I have always steered clear from them. Why would I want to host parties, when I don't like going to them myself? I'm a SAHM and have chosen other avenues that probably require less time or less time away from home. I watch other children and refer clients to Real Estate agents using my Real Estate license. Your points are valid and appreciated. Thank you!
Michelle
I agree with this article 100%. http://www.pinktruth.com opened my eyes after I lost money and hounded family and friend to a small extent for a fee years. People didn't want to book and wouldn't have guest at the ones that did. Bridal shows were a rip off and calling those leads with a script was a waste of time.
Kim S.
I don't have a strong opinion either way since I've never researched these companies or been interested in joining up with any. I do attend some home parties and buy products, but only if I have extra money to spend and the time to go, otherwise I politely decline. My MIL however, does sell Stampin' Up. She got involved only because she really enjoys rubber stamping and wanted the discount on the items. Without trying that hard, she's actually been pretty successful with it, in terms of getting a good group of people under her. Which is funny because she is the last person to try and sell products or pick up recruits. However, she's the first to tell you that doing SU does take up a lot of her time and she doesn't make much money as most of the money she does make, she puts back into the business. However, she's not doing this as a way to make some extra cash, she does it because she enjoys making cards and stuff and she's made a good group of friends that meet every month to do some fun stamping projects. She has fun with it. I'm sure if she only did it as a source of income, I don't think she'd be happy with it at all. But as for making friends and doing something she enjoys, she loves it a lot. And I always enjoy the neat homemade cards I receive from her all the time.
Melonie W, M.
Thank you, thank you thank you, for writing this. I was beginning to think I was the only one on earth who felt that way. I'm an extreme introvert, so anything that involves selling of any kind ( except selling my house or my used car) has me runny for the hills!!!!! I have a friend SAHM friend who's into this and I stay clear of that topic when we talk. I just hate in person sales pitches and don't like mixing business and friendships. Are their some people who do well this this kind of industry? Sure. But they ARE THE EXPECTATION!
Melonie W, M.
I ment they are the exception
Steph
And now your selling essential oils in an MLM company.