If you’re like blogger Kate Sitarz, your friends constantly pitch home-business products in your social media feeds —and the opportunity to become a seller yourself. But does this business model actually work? And should you join your friends?
If you’re like me, your friends post a ton of pitches for home-business products (think jewelry, cosmetics, and dietary supplements) in your social media feeds. And the pitch isn’t just for the products themselves, but the opportunity to become a seller yourself.
But does this business model actually work? And should you join your friends in hawking cosmetics or leggings? Here’s what you need to consider.
No, it’s not a pyramid scheme…
Like many others, I questioned whether these businesses were not just viable, but valid.
First, they’re not pyramid schemes. (Those are illegal, and unsustainable because profits are based solely on recruitment, not product sales.) Businesses like Beachbody and Jamberry are multi-level marketing (MLM) organizations that pay via binary compensation plans. This means these organizations must make it clear that you may not make a profit and are compensated based on sales versus recruitment, even though recruitment can lead to bigger profits.
Do your research and make sure the opportunity that you think is there is actually there. The possibility of traveling to incredible destinations (complete with tantalizing YouTube videos) is just that: a possibility.
…But you’re (probably) not going to make six figures
Realistically, you may not be able to rely solely on your income from these businesses. That said, an extra $20 each month is extremely valuable to some people. For others, the profits (or lack thereof) may not be worth the time.
As Nicole Linzey, a Rodan + Fields consultant, says, “If you treat it like a hobby, it pays like a hobby. If you treat it like a job, it pays like a job.” For Linzey, the supplemental income is great, but the fact that she can set her own hours and spend time with her two girls is even more valuable. “The work I put in two years ago is finally catching up to me,” she explains. “People get discouraged when they don’t see immediate success.”
Most of these companies publish average earnings and compensation plans, though they are somewhat confusing and you may have to dig to find them. Beachbody, the company that sells dietary supplements and workout programs, released earnings for 2015 that show nearly 70 percent of all coach levels make an average of $502 each year. Similarly, the majority of Jamberry’s active consultants, just shy of 70 percent, average $219 each year.
It may not be worth the discount
Many sellers I interviewed originally signed up solely to get discounts on products they already use. But as one involved with Beachbody put it, “Ultimately, it was still way too expensive compared to generic shakes with similar nutrition.”
Joining for a discount seems like a good idea—until you learn that the procedure of getting out of some of these businesses is “ridiculous”, as another Beachbody coach described it. “The information about canceling as a coach is buried on the website,” she explained. “I had to go to a third-party site to find directions on how to do it. It was incredibly convoluted.”
Getting started is (sometimes) simple
For the most part, if you want to get involved with an MLM organization, the companies make it easy for you to seemingly start your own business overnight.
However, some organizations like LuLaRoe require a nearly $6,000 investment for items they say retail at more than $13,000. This information, found on the Lula in Love blog, doesn’t appear on the actual website.
Other companies are more transparent about startup costs. Rodan + Fields requires consultants to purchase a $45 business portfolio with optional monthly add-ons, like an online account, and a customer tracker that Linzey says she wouldn’t be able to work without.
You run a business and work for yourself…Sort of
With built-in marketing materials and a support network, the companies make it easy to leverage your network versus creating business materials from scratch.
Even though she is part of a larger business, Linzey, to some extent, can make her own decisions for how she runs her portion of it. The top leaders on her team share best practices, such as how often to post on social media. Ultimately, if she doesn’t agree with something her team recommends, she doesn’t have to do it. “I don’t want to reinvent the wheel, but I see what works with my network,” she says. “My friends may not respond the same way as their friends.”
Buy or sell products that actually work
If you’re going to get into a business, or are simply considering making a purchase from a friend, knowing what you’re selling or being sold is critical.
For sellers, Linzey recommends choosing “something that people keep buying,” she says. “How much jewelry, how many bags will your network continue to buy from you?”
Another former Beachbody coach, who is also a certified personal trainer and group fitness instructor, points out the importance of seeing the science behind the products. From a consumer standpoint, she looks at products from the likes of LuLaRoe or Rodan + Fields and thinks, “I could buy something similar at the store, but why not help a friend? Sometimes it works out, sometimes it doesn’t,” she admits. “But I want my friends to succeed at the things they do.”
Be careful about your title
Every MLM organization I found has a specific name for its sellers. For Beachbody and Herbalife, it’s coaches. But “coach” is a misleading label for someone who doesn’t necessarily have certifications in nutrition or fitness.
The personal trainer, who is also working on becoming a registered dietician, points out her credentials aren’t the norm. “Coaches are often someone who did the program that got results and now feels equipped to lead,” she observes. “That’s not how it works.”
Get good at saying (and accepting) “no”
If you want to succeed as a seller, consider your personality. Despite the easy integration into her everyday life with ready customers sitting in her classes, the personal trainer said she wasn’t comfortable doing the hard sell.
On the other hand, the word-of-mouth nature of the business got Linzey out of her comfort zone and helped her improve conversations in both personal and business settings. However, finding the sweet spot between being a friend and running her business was a process. “I don’t want people to see me and run the other way,” she laughs. “I feel like I get ignored a lot. I’d rather be told no than hear crickets. It’s not going to hurt my feelings.”
For consumer Grownups, that’s good advice: If you’re not interested, just let your friends know. And for seller Grownups, do your research first—and be prepared to hustle.
Kate Sitarz is a freelance writer living in Germany. Her work has been featured on Yahoo Travel!, The Huffington Post, and USAToday, among other outlets.