So everyone wants a side hustle (said the girl that is definitely in search of one). If you are like me, you sit there and think, do I really want a part-time job? Can I really leave the main job and go to a retail store for four hours? NOOOOO!! This is not for me, let me be clear, there is absolutely nothing wrong with working in retail (that’s how I started) but it is not for me at this time in my life. My next thought, what do I like to do and how can I get paid for drinking vodka or chardonnay (JK)? Now I have my brainstorm pad out and I am writing down things that I like to do that could potentially turn into a paycheck. I check my emails and see that I have an email from one of those cute organizer shops stating that I could join the team for $1 and this offer will end at the end of the month. I really like the products and have a few items, should I join? I mean, I like throwing parties and entertaining, throw in shopping and cocktails and I’m now getting paid to drink vodka or chardonnay! It’s on and popping! But wait, is this a realistic goal? I look into joining and I see a red flag, I have to be connected to a consultant, why I don’t know. Is this a pyramid scheme? What’s the difference? Know I’m thinking about LulaRoe and what happened to them. Here comes the research.
When I started looking into the individual companies, I found that there are several different models out there. Direct sales, multi-level marketing, and the age ole pyramid scheme. Now, in regards to direct sale companies they make money by having individuals sale their products. I’m pretty sure you know the big ones, Mary Kay, Avon, and Amway are all examples. These companies make a lot of money annually. Now don’t get me wrong there are tons of advantages in working for a direct sale company. You work at your own pace and you work remotely just to name a couple that I am interested in. Most direct sale companies have you purchase a starter kit which can range from $25 up to $200 depending upon the products being sold. Direct sale companies usually don’t have a brick and mortar location and each person is treated as an independent contractor. Again, most of the independent contractors work out of their homes.
Game changer, the only difference between a direct sale company and a multi-level marketing (MLM) company is that in the MLM model the independent contractor makes money from their sales and from recruiting others to work under them. For instance, if I recruited you to work for the company, I would get money from my sales and from your sales because you are one of my recruits. Some of the great companies like Avon and Thirty-One use the MLM model. There’s nothing wrong with the model and most independent contractors that recruit others become a company mentor, help newcomers get started, train them on the products, and how to sale. Just think about it, if I train you and you become a #1 seller, I benefit as well. Not a bad model.
Now let’s talk about the pyramid schemes. These are not legal in the United States or Canada. You’re probably wondering what’s the difference between a direct sale company, MLM company and a pyramid scheme. Well let me tell you, pyramid schemes take your cash, have you recruit others to take their cash and the focus is not selling products it’s all about the Benjamins. Here are a few red flags you should watch out for and will help you to determine if the MLM company is legit.
- Are you required to put in large amounts of cash upfront? Yes – RUN!
- If you have to purchase your own products (starter kits) will the company buy any unused products back? If not, this could be a problem.
- Is the company interested in the market you live in? If not, they probably just want to you purchase the starter kit.
- Is the main goal recruiting other contractors or is the main goal the sale of products? If the answer is recruiting, you should think again.
- Is the ROI designed around recruiting new members, meaning you get more money if you recruit over selling products? If yes, this is a major red flag and usually a good indication that the company is using the pyramid scheme model.
- Is there commission on recruiting new members? Again another red flag that the company is nothing but a pyramid scheme and someone is going to jail – RUN!!!
Now let’s be realistic, if you want to make sales your permanent job it all depends on how much you put into it and I’m not talking about cash. I’m talking about your motivation to sale the products. I remember seeing the famous pink Cadillac that the top sellers of Mary Kay receive, but do you know how much you have to sale in order to get the car? Research that….. Just kidding I did. In order to get the pink Cadillac you have to be a ‘grand achiever’ level of sales, each independent contractor must build a sales team of 12 or more members (recruits) and net a minimum of $18,000 in product orders within 4 months and can only contribute $4,000 of their own money toward the $18,000 requirement. Oh and by the way, this is a lease with option to buy. At the end of the lease you can sell the car back to the dealership or purchase. Sounds good on paper but are you that motivated (if something like a car is your goal).
Now to sum it up, I have decided that being an independent contractor for a direct sale or multi-level marketing company won’t be a good payoff for me. Especially since I have a full-time job and to make money as an independent contractor, I believe you will have to dedicate most of your time. Now like I stated earlier, there are advantages to being an independent contractor for a multi-level company or a direct sales company. A few are listed below. I will say, I do love the idea of getting a really good discount on products that I love.
- There is a low risk to starting the business and no penalty if you fail.
- You work for yourself and you don’t have staff to monitor.
- You can generate as much income as you want and no pressure if you don’t want to generate income at all. You set your own pace.
- Low operating costs, no office rent, no staff, low investment (starter kits if needed).
- Freedom and flexibility. You can come and go as please and work when you want to.
- Extremely portable. With social media, web pages, etc. you may not have to go door-to-door to sale your products and don’t get me started on the money apps.
- My favorite, you can purchase the products at a huge discount when you are an independent contractor for one of the companies.
Okay, let’s be honest, I might I have to try one in the name of research LOL.