It is always important to shop local but this year this is more true than ever. Small local businesses keep our community going. There are many small businesses that are struggling because of Covid-19 and we can help by shopping their websites, liking their Facebook pages and sharing their information on social media. I hear many of my clients say that they are afraid a smaller local business might be more expensive but in my experience that usually isn’t the case. Most local businesses run specials and have sales and most have frequent customer discounts.
I have noticed that when speaking with people, it seems that for most people local business is synonymous with a brick and mortar establishment however that is not always the case. Our society has been conditioned to think that if a business isn’t a brick and mortar business it might not be a real business.
As a small business owner and networker, I come in contact with a larger amount of people from many different backgrounds and companies. Across the board one thing seems to be consistent and that is the idea that one category of small local business is suspect to them and that is the world of direct sales, network marketing or multi - level marketing. I have discovered that many people in the business world have a misconception about these businesses for a number of reasons. I can however assure you that these are real and valid businesses that contribute to our local economy and provide income for many, many people.
For over 20 years, I have owned my own direct sales business with two different companies and have made a terrific income. So I want to take this next few minutes to discuss where the negative perception of this type of business originates. First I want to say that there are poorly run businesses out there and it doesn’t matter whether they are a brick and mortar business or not.
First it is important to be sure that you understand what these businesses are. So here we go…
Direct sales refers to a business that has a parent company or home office and consultants who share the product with the consumer. Usually a direct sales company has a party plan and consultants rely on hosts getting friends together so the consultant can introduce them to the product and the host gets rewards for doing so. Direct sales refers to removing the middleman and the customer receives the product directly from the company therefore the customer can get a high quality product for less money than they would pay in a store. In addition they get personalized service from the consultant. There are generally a few ways that someone can become a consultant in direct sales. Usually a person can purchase a kit with tools to run their business or they can often earn a kit by being a host. Consultants get paid a percentage of the retail sales and can earn more by training others to do the same.
Next on the list is network marketing. Network marketing sometimes referred to as social marketing is a business where the person shares a product or service mainly through social media and one to one contact with other people. Generally these consultants make a percentage of sales but often their larger amount of money comes from signing up preferred customers who receive a discount on their product or service by placing orders through specialized website. Preferred customers are not consultants and don’t work the business but instead generally get a larger discount by setting up an autoship order that comes weekly or monthly.
Finally we will talk about multilevel marketing or MLM. An MLM profit is generally based on recruiting others to consult, creating legs of the business and the consultants profit is based on the number of people in each of the business legs and where someone falls in that leg. While the other 2 business models are focused on individual profit by selling product, MLM is focused on selling someone a kit for product or service, purchasing for themselves and getting others to do the same. The more people you have sharing and using for themselves, the more money you can make.
These are all great business models and I personally know many people who have made money and supported their families with a business that falls into one of these categories. I also personally know many people who have made six figures and much more in these businesses. When I am talking with people about these three business models, often the question comes up about how they are different from a pyramid scheme or business. Well my first response is that a pyramid business or scheme is illegal. Next I explain that in a pyramid scheme or business only the highest members can make money and no one can move up in the company past the person who recruited them. In a pyramid the only people who win or make money are the first people to join and invest in the business. They simply make money by signing people up and are paid from the new person’s investment and those they recruit.
So why the negative perception about these 3 legitimate business models? Here is my opinion based on my over 20 years of experience. First I want to be transparent in my success so I will say that I have made as much as $50,000 a year consistently as a consultant in both of the companies I have worked with. I have also helped over 300 people try the business and many of them have gone on to make great money and be successful. The most common phrase I hear from people I talk to is that no one really makes money and these are not real business opportunities. Here is what I believe to be the main reason. Anyone can try it. Yep that’s it… anyone can try it. The investment is usually minimal to get started and being a consultant usually includes a discount on the product or service so many decide to give it a try. In addition to that people start the business for different reasons ranging from just wanting to get out and meet people to earning a little extra money to creating a new career. Truly most people who start just want to dabble or do it very part time and generally quit within the first year or two because they get what they want from it. A smaller percentage of people go on to build a career or a legacy with their business. This is truly the beauty of these business models. In order to start a brick and mortar business, one must be committed, get a business loan, pay rent, taxes etc. I believe the statistic says that most small brick and mortar businesses don’t make a profit or often even last past 5 years. So these three business models give people the opportunity to try it with really nothing to lose. This is where the negative perception or misunderstanding comes in. Most people know someone or multiple someones who do this type of business and they quit or continuously jump from one company to the next. This gives the illusion that these businesses don’t work when in reality it is based on why the person started the business in the first place. When they quit or switch companies, their friends and family often see this as failure when in reality it is a choice. Anyone can try it but not everyone will like it or be good at it.
What I discovered in my 20 plus years is that many of my most successful team members had no idea that they wanted to start their own business let alone be incredibly successful. I have had people give the business a try and they quit because they didn’t want to put in the effort. I have had people quit because making phone calls and reaching out to potential clients wasn’t in their comfort zone. I have had consultants buy more than they sold and felt that they lost money. But truly these were the minority of situations. The majority of my team members felt that they achieved success regardless of how long they chose to stay in the business. I had a person start the business to simply make her car payment each month and once she paid off her car she went back to being a customer instead. One person started because she wanted to make extra money to buy a camper and she discovered she loved it so much that she continued to move up in the company. I have many stories of the people I have helped over the years. Most of the people I worked with would never say that they or the company failed but instead that they made a choice to do something different.
I will conclude by saying that when you are working to shop local, reach out to your friends and family who are trying one of these business models. Encourage them in their effort and support them emotionally. Ask the consultant why he/she is doing the business, what do they love about it and why you should buy from them. You might be surprised at the answer. To all of my direct sales, network marketing and multi level marketing friends out there, stand proud, share your why, share your expertise and value and reach out to the people you know!!!