As our personal business goes international I have put together 10 questions that are frequently directed to players of the direct selling industry. These are directed either because of being less or misinformed or due purely to prejudices. I am sure many of you have come across some or all of these.
Here are some usual answers to them:
1. Do network marketing and pyramid scheme mean the same thing?
No! They might seem similar but they are very different from each other. The participants’ incomes depend upon retailing of goods and services in the network marketing model. In a pyramid scheme on the other hand, it is dependent only on the inflow of new participants.
2. What is a “ Ponzi Scheme ”?
In short, it is the finance industry’s pyramid scheme. Here, participants’ incomes are paid not from the profits generated through their own investments, but through the investments of newcomers. Needless to say, the system collapses shortly when there are fewer newcomers.
3. Is direct selling a sustainable business model?
I will answer this by giving some examples to direct selling companies operating at the moment, mentioning when they were established: Southwestern (1855), J.R. Watkins (1868), Vorwerk (1883) , Avon (1886), Kleeneze (1923), Tupperware (1946), Shaklee (1956), Amway (1959), Mary Kay (1963), Oriflame (1967) and Natura (1969). (1978) Forever Living Products
4. Is this channel only good for beauty products and food supplements?
Beauty, personal care and food supplements altogether is estimated to be generating more than half of the global revenue in direct selling. That being said, all categories that one can think of are making very good use of this channel: Jewelry and accessories, coffee and tea, kitchenware, phone services, financial products, books and toys, to name a few. With the incoming of more and more new categories in the developed markets, the total share of cosmetics and nutritional products is lower than the world average.
5. Is direct selling an opportunity for individuals to get rich quick?
Direct selling provides an opportunity to individuals to reach very high income levels regardless of what their educational backgrounds and work experiences may be. In economic terms, it is a micro-entrepreneurship model. However, one should not expect to achieve a very high income in a short time. Just like it is in any other business, here too, effort, sacrifice and time are required.
6. How important is being one of the first members of a network marketing organization?
There is no direct link between being one of the founding members of a field organization and high earnings. In other words, this does not guarantee a higher income. Looking from another perspective, if this was true who would want to join an organization after a while?
7. Can individuals make a career in direct selling, working for many years?
Absolutely! They can work for many years and their businesses can be inherited after they pass way. I personally know many people who have been doing direct selling for over 20 years now. This is a career!
8. Is direct selling more suitable for women?
Globally, it is estimated that 75% of direct sellers are women and 25% are men. Direct selling can be easily done on a part-time basis. And this characteristic appeals to women very much. There are many organizations where there are much more men than there are women. Being a typical micro-entrepreneurship, we cannot say direct selling is more suitable to women or men.
9. What is a compensation plan?
A compensation plan shows how a direct seller will be compensated against meeting certain criteria of success. Some of these plans are quite simple while some are really complicated. The complexity of a compensation plan does not necessarily show it is a solid one.
10. Do the advances in the digital world pose a threat to direct selling future?
Some thought they would. However, especially the developments in social media showed the opposite. Contrary to this belief, we see that the Internet provides very powerful tools to support the activities on the field.
Some say Network Marketing is fast becoming the new franchise of the 21st century. Mainly down to the industry cleaning its act up over the past 15 years along being in reach to any individual with the desire and wish to build a profitable home based business with very little capital required.
With the right frame of mind and the right company many people up and down the UK have transformed their lives by building a residual-passive income with the majority doing so along their current commitments on a part time level.
So will the industry work for you?
Well to be honest, that decision is down to the individual as many people give up at the first sign of difficulty forgetting its a business “your business” so choosing the right company you is very important
Top 5 tips
1.What are the products offered? do they interest you, will you use them, is it in growing market sector.
2. What does the program place emphasis on? Product sales or recruits? there should be a balance of recruiting and sales you need both however if the products do not stand out then you my need to reconsider your choice of company!!
3. What is the commission structure like? is it easy to follow and explain to you new team members, is the emphasis of the commission bult of product turnover or recruiting again if the emphasis is on recruiting than this to me rings alarm bells.
4. For how long has this company been in business? To me this is very simple I need a company with good foundations and experience within this market, as for the business failure rate is no different than any other mainstream businesses today. so for me 8 to 10 years plus is a good indicator that the business is being well run. This doesn’t mean younger companies won’t stand the test of time as all companies start from a beginning “due diligence is key”.
5. What are people saying about this company? what’s the buzz on the street, remembering all companies will have good or bad press. what’s the management team like, are they investing regularly in their own business. are they approachable, training, people skills, product investment working within the local community.. its has to fit in with you and what you’re really looking for
Being in the firing line of negative comments for the first 6-12 months while you build your reputation as a local business owners and this can come from close family and friends. Yes you need to treat this as a business and not a hobby. The other downside is the lack of expectations, as most people still treat their new venture as a job expecting a weekly salaries.
The real expectation is to set your plans of 2 to 5 years to see a significant change in lifestyle, but this only comes with commitment and the right business plan, training and plugging into the company plan, remembering all companies regularly review their products and operational procedures. So embrace any changes that may happen and implement straight away within your business and your team.
This industry is remarkable and for those who embrace a new way of working will reap the rewards. Granted it’s not for everyone but getting the facts upon if it’s right for you is vital and not the opinions of those who just don’t quite get it or failed within it.