Is it your dream this the year you finally make the leap and become an entrepreneur? Before you start a new company, have you ever thought about joining a direct sales organization? There are so many excellent reasons to join a direct sales company (aka MLM–multi-level marketing). Some very bright people have joined an MLM because the opportunity can be so incredible. Even experts such as Tony Robbins and Guy Kawasaki suggest starting a home-based business through an established direct sales company.
Right off the bat, there is the low cost to entry. Where else can you get a “Business in a Box” for $99? Have you checked into the cost of a franchise lately? Whoa. Some of them are hundreds of thousands of dollars plus the astronomical monthly fees. For a mere $99, you can jump into a new career.
Another benefit of joining a direct sales organization is the training. If you’re lucky, you get paid while you learn by earning a commission after selling the company’s products or services to friends, family, and neighbors.
There are so many companies from which to choose, and some even complement one another so a person can easily benefit from being a part of two companies. Love candles and wine? Pair them up for double the sales!
The direct sales company produces all the marketing materials so you don’t have to go out and find a website developer, hire a flyer maker, or make a single product — it is all done for you.
The bottom line is that after you read all the 37 questions you need to ask yourself before joining a direct sales company, and arrive at satisfactory answers, feel confident to jump in with both feet. You have plenty of company! There are literally millions of people in direct sales. According to DirectSelling411.com, “An estimated 15.6 million people are involved in direct selling in the United States and more than 92 million worldwide.”
A word of caution, however. So often we get caught up in the heat of the moment. We talk ourselves into selling at home parties because the person in front of us makes it look so easy. Before you sign on the digital dotted line, stop for a second, take a deep breath, hold two seconds, and exhale. Now repeat that breathing exercise again and then honestly answer the following questions before throwing your hat in the ring along with your precious savings.
Question 1: How much is the cost to get in?
The cost to entry can be anything from nothing to $999 (or more). You must be comfortable with the amount of money it costs to enter your new field but also know there are probably more fees associated with joining, so be careful. In this case, hearing, “But, wait, there’s more (costs)” seems appropriate. You may want to ask if there’s a monthly website fee and/or a yearly re-signing fee.
Question 2: What do you get for the initial start-up cost?
An important question, to be sure. Do you get samples to use and demonstrate? Do you get a replicated website and at what cost (yearly or monthly)? Do you get a bunch of CDs and training manuals? Will you actually listen to the CDs and read the manuals?
Question 3: Do you like the products?
I joined an MLM company without first seeing the jewelry. The gal who was to be my upline was fabulous at what she does — recruiting; however, I had never seen the junk, I mean, ahem, “jewelry” in person. It was so poorly made and of a very low quality but I didn’t know this until the pieces arrived in my kit. I could not imagine placing the objects on my party hostess’s table and let the party guests pay $60 for something they could get at Target for $10 or maybe even the dollar store. Lesson learned the very, very hard and expensive way.
Question 4: Is there a monthly minimum to keep your active status?
Many MLMs say that in order to collect commissions on your downline, you need to purchase a certain number of points worth of product every month, order a minimum of $75 per month, or whatever their minimum. Each direct sales organization has its own way of making money off of its members. Some are worse offenders than others. And each party plan uses its own language to explain its requirements. It’s almost like going to a new country and trying to figure out the exchange rate. It’s important to figure out how much you will be charged each month in the form of products and websites.
Question 5: Would you use the products even if you didn’t have to?
Every time I walked out my door to attend a home party at a friend’s house, my husband yelled after me, “You know it’s okay to just buy the products.” One very important thing to ask yourself is would you buy this company’s products and use them over your usual brand, or is it easier to buy your regular brand at XYZ store?
Also, is the product something worth waiting for? Many times the products take three days or more to arrive at your home AND you have to pay for shipping.
Question 6: Can you be a preferred member rather than become a full distributor?
Many companies allow you to receive a lower cost for the products if you agree to a monthly auto-ship or if you join as a member. That way, you get to try even more products before you buy the whole package. By going more slowly, you can further see if this company has something you really want to promote. You can always become a distributor later after doing your full due diligence.
Question 7: Do you like working from home?
A better question may also be, are you conscientious enough to work on your own? Will you follow-through on your goals of calling 5 potential party hostesses each and every day or, are you more like me who finds the overflowing laundry basket far too interesting to ignore. I’ll call all those people later…and then later never quite happens. It’s a vicious cycle!
Question 8: How much training can you expect to receive?
Does your upline hold weekly meetings? Monthly? Does he or she have a set time for the meetings and are you available at that time? If not, is she willing to train you alone?
Question 9: What are the incentives for a ‘fast start’?
Many direct sales companies provide incentives for having 6 parties in 60 days (or whatever). You may want to know what the prizes are for being a ‘go getter.’ Some companies give credit towards business building products, cash prizes, a discount on products, new iPads and cars. Fast start time periods are usually a set time period that starts the moment you sign up and before you get your kit (not truly fair, but…). You should know what you’re working so hard for!
Question 10: Do you like going into strangers’ homes and presenting a product to a (potentially) less-than-enthusiastic crowd?
Many party guests feel they have to attend the neighborhood gathering. It’s a way to keep the peace in their cul-de-sac. They have no interest in what you have to say or sell, they are just there to hear the latest gossip about so-and-so’s ugly divorce. The friends and neighbors are former class clowns and Chatty Cathy’s so watch out. Are you able to effectively handle a heckler? Yes, it happens. Also be on the look-out for Negative Nelly who once read an article that the products you’re selling were produced by orphans in Yucatan that make an 1/8 of a cent per day. These can also take the form of Know-it-All-Nellies whose only goal is to make you look bad. Add alcohol to the above mentioned scenarios and you have a toxic combination of overwhelm for an introverted direct seller.
Question 11: Do you feel there is a demand for the product?
I’ve joined a couple companies where I could not give the products away for free. Sure, I was enthusiastic about what I was selling but nobody else was. ‘Nuff said.
Question 12: Do you have any sales experience?
I debated putting this question in this post because I do have a friend or two who are insanely successful with a direct sales company and not only had no sales experience but they were incredibly shy. I am not saying that sales techniques cannot be learned but it certainly helps starting out with the necessary skills which leads nicely into question 13!
Question 13: How long can you go without making any money?
One question you need to ask is, “When will I be paid?” You would ask that if you were applying for a job, so it’s very appropriate for a direct sales career. Will you receive your money the moment someone buys something at a party or do you have to wait until the corporate office sends you a check? Some companies prefer to transfer your money to a plastic card which you spend like cash anywhere a Visa or Mastercard is taken. You may have to wait some time before your plastic card shows up in your mailbox.
Question 14: Do you have to keep products on hand?
How often have you been to a friend’s house that had a tower of products in her dining room or a guest room overtaken by scented body lotion? If you have to keep products on hand, do you have the room? And will this room stay the appropriate temperature so that the products don’t melt or go bad? I know some distributors store products in their garage; just be sure your garage is free of vermin.
Question 15: Will an experienced member help you select the most popular products?
Buying 20 purple eyelash curlers that don’t sell and eventually end up in either the donation pile or at a garage sale is disheartening and a waste of money. Talk to someone about what sells before placing a stock order. You may still opt to take a chance on those 20 purple eyelash curlers but at least you have no one to blame but yourself for the wasted cash.
Question 16: Can you buy these products anywhere (and for less)?
No doubt it helps your sales if the products you are selling are not readily available at any local store or peddled on HSN or QVC. Does the company have a policy about selling on eBay, Amazon.com, or other sites? Are the products unique?
Question 17: Who can you recruit? What methods can you use to recruit new members?
Two questions you absolutely must have an answer to is who can you recruit and what methods can you use to recruit new members. Some companies only allow individuals to become a part of their sales teams, but other companies allow you to sign up businesses.
For example, one of my favorite direct party sales companies allows members to go into any business and reap the benefits of the exposure because the business owner can sign up and sell the company products. That’s good for everyone involved — more eyeballs and interest in the products.
Question 18: Are the products consumable?
One important aspect about sales is having repeat customers. If your products aren’t consumable you will constantly be out there trying to get new customers. There’s power in repeat business. Some examples of consumable products include make-up, anti-aging products, specialty foods and drinks, and detergents/soaps/lotions.
Question 19: Is there a yearly fee required to remain a member?
Ugh. This was an annoying lesson to learn. Many companies are requiring a yearly membership fee and likening it to a Costco membership. The only thing they fail to mention is that with Costco, products are cheaper than anywhere else, not more expensive! With a Costco membership, I know I can make my money back on one or two purchases, whereas an MLM, I’ll probably never make it up!
Question 20: Do you get a website and how much does it cost monthly, yearly, or is it a one-time fee?
This is just a part of doing your due diligence — does the company provide a replicated website with a shopping cart for free or is there a fee? Because so many purchases are made online, I would think hard about getting a website. They usually have amazing back offices complete with marketing materials already done for you. I know that just having a basic flyer designed costs about $50 (or more), so oftentimes, even though the website is replicated, it is worth the expense.
Question 21: Are you able to take credit cards and who pays the transaction fee?
Businesses that are able to take credit cards sell more stuff. One question you need to know the answer to is can you take credit cards from your customers and who pays the transaction fee? A transaction fee is the amount of money the credit card company takes in exchange for processing the purchase. It is usually 3-5% so you will want to know who pays for that additional expense. If it is you, you may want to consider accepting cash only until you get bigger. After you’re making enough money, you can look into a company like Square to take credit cards via your iPhone or iPad.
Question 22: Are there hostess gifts and who pays for them?
Oftentimes, hostesses are given gifts as an incentive to hold a party in their home (or at work). It is usually a major discount on the hostess’s own purchase. For example, say your hostess has a party where her friends end up buying $1000 worth of products. Some companies will allow her $200 off her own purchases for such a party, and then a certain percentage off for every incremental increase. You will want to know if the company pays for that or is it coming out of your pocket.
Question 23: What is your percentage?
At many of the direct sales companies, everyone starts off at xyz% and as you recruit more people and sell more product, you move up in your commission earned. What is your commission at the outset and how can you generate more?
Question 24: Do you want to create a team and be a leader?
Do you enjoy helping people become their personal best or are you better as a lone wolf? You must enjoy working with people and motivating them even when they don’t want to do what they need to do to succeed. Oftentimes, you will become either the person they always call so they can complain about the company or how they can’t sell anything because of the price/quality/shipping time, or they will be the type of person who avoids your call at all costs. They’re the women and men who will cringe when they see your name come up on their smart phones and will scamper down a different aisle at the grocery store if they run into you there.
Question 25: Are you a leader?
Some people are born to lead, others are better at following. Do you find yourself taking over for others or do you prefer to take the back seat? You can still do well in MLM as a follower but it will be easier if you are willing to talk to many people, and even easier if you can handle hearing a no from a potential recruit and not crumble. Another question to ask yourself is, “Are you willing to become a leader?”
Question 26: Can you commit to this MLM like it’s your job?
Once the excitement of starting a new at home biz passes, the real work begins. The saying many companies have, “You’re in business but you’re not in business alone” is malarky. The only person who will have to pick up the phone and call her friends is you. The person who will have to plan, attend, and run parties is you. You’re the one who will be sending out flyers, postcards, making donations to the school, and networking. How many hours can you realistically work your new business each and every day?
Question 27: Do you see yourself doing this a year from now? 5 years from now? 10?
If you look into the future and see yourself driving around town with your company’s name on a magnet on your car, congratulations, you should probably join!
Question 28: Do you truly understand what you will be paid for your efforts and those of your downline?
One of the most confusing aspects of a multi-level marketing company is usually its compensation plan. I don’t think I have successfully explained any of the plans of any company I have ever joined to anyone. I relied too much on assuming that the company would know what it owed me. I know many people realize the benefits of putting one person on Level One and another on Level Two and thought the whole pay plan was a game, but I personally never understood any one of them. You should at least have someone explain it to you a couple times until you know what you have to do to have the biggest monthly payouts. Don’t follow my lead — the math hurt my head, and here I sit writing about my experience rather than reaping the rewards of a well oiled downline.
Question 29: Have you seen the quality of the products in person?
After learning the hard way that the products didn’t look anything like what was in a jewelry catalogue, I attended another jewelry party to check out the line before I signed on the dotted line. The jewels in the catalogue were gorgeous — they glistened and gleamed. They appeared to be well made and top materials were used; however, when I arrived at the party, it was clear the photos didn’t do the jewelry line justice but in the wrong way. I did a ‘pity’ purchase and went home without signing up to become a distributor.
Question 30: What is the company’s return policy?
Way back in the day, I joined a company because it had an “empty bottle return policy” which meant that if I didn’t like the product but I had managed to use the entire bottle, they’d still refund my money to me. Sweet! This sounded like a no-brainer until I discovered that I didn’t like very many of their products and when I returned them, they gave me a credit at THEIR store to buy more of their stuff. Sure, I got MY money back but in the form of a credit for products I would never use or buy.
Question 31: What happens if you get cold feet and decide you’ve made a mistake?
Now is the time, before you sign up, to see what will happen if you change your mind. Say it’s Day Two and you now realize you’ve made a mistake. Find out what you need to do to get your money back. If all you’re out is the shipping cost of the kit, consider yourself lucky!
Question 32: Will your husband or significant other support your decision to start this business?
A huge component of being in business is having the full support of one’s significant other. He or she will have to cover when you have parties at night or conference calls. You may even want him to put out flyers or business cards for you at his work. Here’s a huge piece of advice, don’t just sign-up and hide the new business from your spouse. It’s unfair just to spring the new business on him/her. Treat this as a joint venture. Pretend you are buying into a franchise which you really are if you think about it. If you have to hide the box after the UPS guy leaves, you are in trouble!
Question 33: Is the company social media savvy?
Nowadays everyone needs, at the minimum, to be on Facebook and Twitter but it’s even better if they have a presence on Pinterest, Instagram, Tumblr, and SnapChat. You want a company that is current in its sales and marketing programs — not a brand that is doing it the “old-fashioned” way.
Question 34: Who gets the leads from the company website?
Sometimes people are looking for a home-based business and find the company you’re thinking of joining on the company’s main site. They don’t technically have a sponsor. Are these leads divvied out and who do they go to? Find out how you can get the leads. Do you have to achieve a certain rank or can you buy the leads?
Question 35: Does the company sell the products through other channels like QVC, HSN, or Amazon?
How can you compete with a TV station and Amazon.com? Answer: you can’t! Find out if the company sells its wares on HSN or QVC and then do a quick search on Amazon.com. Maybe the company itself is not selling its products on Amazon but are a lot of the distributors attempting to get rid of their overstock through Amazon? If so, you will need to evaluate if you can compete with these megabusinesses.
Question 36: Does your potential new company allow you to be a part of two direct sales organizations?
Remember when I said that if you liked wine and candles, you could earn more commissions? Well, that’s only if the company is ok with you being a part of two companies. Be sure you know their policy prior to joining two MLMs.
Question 37: How long has the company been in business?
Although I agree it’s great to get in on the ‘ground-floor’ of a brand new business, sometimes it’s even better to get in with a company after it’s gotten past its growing pains, and has demonstrated that it will probably be around in the next couple years. So many direct sales companies start and then fail. Make sure you’re around a company that has staying power.
Does it update its catalogue regularly? Are new products being added? Make sure your company is a viable one.
There you have it, folks, my many, many years of mistakes all summed up in 37 questions. The questions are meant to slow you down so that you can make an intelligent decision about whether or not to get into business with a direct sales organization. No doubt, I have many friends who have earned significant incomes from MLMs but the question is can YOU?