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What’s so bad about direct selling?

Direct selling is a great vehicle as a home-based business. That said, why does it get such a negative vibe?  You mention “direct selling” to someone and they squish up their face as if they’ve just bitten into an unripe lemon [which is a truly bad taste].  However, people all over the world purchase products from direct sellers every day of the week, every week of the year.  Products like cosmetics and functional beverages and vitamin supplements and baskets and food containers and scrap-booking supplies and home decorative elements and health and life insurance are all examples of direct selling products.  In fact, some of the most well-known products in the world cannot be purchased in a retail store…they have to be purchased from an independent contractor [or consultant or distributor or agent].  Billions of dollars in sales every year are generated through direct selling.

So what’s so bad about direct selling as a home-based business?  Here are some of the inaccuracies I’ve heard:

  • I don’t want to go door-to-door.  If you were interested in my product, you would never hear about it because I knocked on your front door.  Most products sold by direct selling independent contractors are done by invitation and referral.  In fact, the income opportunities with which I’m affiliated discourage this type of selling mechanism…it’s a pure waste of time and effort.
  • I can’t sell. Good, then don’t.  As sales guru Jeffrey Gitomer says, people don’t want to be sold they want to buy.  Don’t “sell” something, share information.  Ask questions.  Let’s say you are in conversation with someone and the subject of health comes up and your product is a vitamin supplement; ask the person how they are managing that aspect of their health maintenance and would they be interested in some information about your product?  Give them the information and let them make their own decisions.
  • I can’t represent something I don’t believe in. Well then, don’t.  You can’t get excited about something you aren’t excited about.  For instance, I could never talk passionately to you about the juice product I represent if I was not already passionate about it.  And I’m passionate about it because I use my own product for my own health benefit.  And because I do benefit from it [and so does my family] then I’m quite excited to tell you about it.
  • I can’t afford a large inventory.  That’s a good thing because now-a-days not only don’t you need one, with many direct selling companies you ought not to have one.  With the internet and the availability of sales websites, your customers have the convenience of shopping online and having their orders drop-shipped to them.  You don’t have to stock your garage with product that you aren’t sure will move.   To me, in my business, this means I have the assurance that my customers are getting the freshest product direct from the distribution point…not from stock I’ve had sitting in my garage.
  • It’s too expensive to start a business.  Depending upon the product or service, this may not be true.  There are some direct selling companies that cost in the $200-300 range to enroll [which includes kits/samples] and there are direct selling companies that cost far less to enroll [one of the two income opportunities with which I’m involved is offering no-cost enrollment this year as example].
  • I don’t have the time.  Time spent working your business is a personal choice.  A direct selling home-based business differs from a “job” where it is your employer who sets your work hours.  With your own business, you decide how many hours per day/week you’ll work, what time during the day – when you start, when you stop…you even decide if you don’t work at all any given day.  It’s your business.

There is, in actuality much that is great about direct selling…so much so that about 59 million people worldwide are involved in this industry.   If you are among the thousands of people wondering if a direct selling income opportunity would help you in your current financial situation, then give it a look.  It costs nothing to look and the benefits of involvement are rich.

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Still hung up on the “downline” thing?

Have you been looking into a business you can do from home, in your own time, but get turned off by what you consider to be mlm lingo?  Does the term downline both confuse and bother you?  It shouldn’t.  It’s just a word.

All businesses have their own terminology.  My brother is a business consultant specializing in organizational ontology, which is terminology right there.  In his business he uses words like valuenets, holagents, work fractals and other such lingo.  In context it all makes perfect sense.

The word downline is not at all scary…in fact it is a word common to all businesses.  Let me show you.

In a typical corporation you have the perfect example of downline.  Start with the CEO and go down the line to vice president, to department manager, to project manager, to job foreman to worker to the guy in the mailroom.  Downline is simply an organization chart designation.

In a network marketing business, downline indicates people you have personally sponsored into your same business.  Network Marketing, or direct selling, businesses operate as a business model that requires every person to join the company as an independent contractor.  In order to join the company, someone who is already an active independent contractor must sponsor you.  So, people you sponsor become your downline.

Depending upon the type of compensation plan your company offers, your downline plays an important role in your business.  In the case of the company with which I’m an independent distributor, the sales volume of my downline [people I’ve personally sponsored and people they’ve personally sponsored] determines my bonuses and commissions.  I earn nothing from the process of sponsoring – the person pays their new distributor fee [in the case of my company the new distributor fee has been waived for the remainder of this year as its way of helping in this economy] to the company and then is in business for themselves…just not by themselves.

Obviously I am downline from my sponsor…who is downline from her sponsor and so on.  What I really like about this type of downline is that each and every person is in business independently.   In the corporation example, the CEO may or may not be the owner of the business…in fact, many CEOs are merely employees – just like everyone downline from them.

So – don’t let the terminology of a particular business model deter you from what might be the answer you seek for meeting whatever financial needs you may have.  Even the moniker “mlm” simply means multi-level marketing and this has to do with the type of compensation plan.  And, remember, even a corporation has multi-levels of compensation for its various employees.

A networking marketing, or direct selling business just might offer you the extra income you need to:

  • meet your mortgage payment
  • take up the slack if you are laid off or downsized
  • purchase the extras your current paycheck just won’t allow
  • help you get out of crippling debt
  • let you take a vacation this year
  • do whatever is your dream

Downline – just a word.

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A network marketing biz is a no-collar biz

In our industrial age world, which is now morphing into a knowledge age world, levels of the working class have been categorized by the color of their collars: blue and white.  A blue collar worker generally is someone who works for an hourly wage, punches a time clock, literally works with their hands and often, wears a blue shirt.

A white collar worker signifies those working in offices…those who must wear dress shirts, usually white, those who attend meetings, push papers and talk on phones, punch pda’s and pound keyboards.  One change has been the computer age…many of these people…my husband [a senior software engineer] included, wouldn’t wear a dress shirt and suit to work if you paid him to.  The computer age brought workplaces where jeans and tee’s are the norm for work attire…I’ll call them the round collar.

So we have the blue collar, mostly hourly wage workers; the white collar, both hourly wage and salaried; and the round collar, both hourly wage and salaried.

I’d like to introduce a new collar: no collar.  The owner of a home-based business.  A network marketer who has built their business to a point where they now have residual passive income and enjoy time freedom.  They don’t wear a collar anymore because they don’t “work” anymore. 

Residual passive income is money you enjoy as a result of work you’ve already done.  A network marketing [or direct selling]  business can give you that.  In a good direct selling compensation plan, for instance, you earn income from:

  1. retail profit through the direct sale of product
  2. commissions and bonuses based on the sales volume of the people in your downline

The passive income will come when your organization is large enough to be self-sustaining.  If you’ve chosen a great product, a good and solid company with potential for financial freedom, then working until you don’t have to anymore is attainable.

Let’s say you join a company upon the recommendation of a friend.  You try the product and discover that you truly like it and can get passionate about it.  You’ve done your due diligence on the corporation and found it to be sound.  The company and your upline sponsor have all the tools necessary to help you get started.  [all of this is real and true right now with many different direct selling companies.]

Now you begin to market your product.  You begin to have retail customers.  You tell people who are interested in a business of their own about yours and you begin to sponsor them.  They begin to retail the product and they begin to sponsor people into a business of their own.  Over time, as your downline organization grows, those sales volume numbers will grow and you’ll begin to earn bonuses and commissions.  At some point, the organization will grow to a point where you will continue to receive bonuses and commissions regardless of whether you spend 10 hours a week or 1 hour a week on your own business efforts.   Why?  Because in a network marketing/direct selling income opportunity, each and every person is their own businessperson…each one has their own business and they, too, desire to grow their business.  So each person will retail and sponsor…those people will retail and sponsor and so on.

It’s a great business model.  There are good, sound network marketing/direct selling companies out there offering good, competitive products with good, sound compensation plans.  If you like the idea of a no collar lifestyle, this type of business could be just what you need.

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Multi-level – just another type of compensation plan

Some people get up a head of steam when they hear the term “multi-level marketing.”  For some reason it conjures up for them a spectre of scams or schemes.  Nothing could be further from the truth.

“Multi-level marketing” is a type of compensation plan.  Everyone who earns income derives that income from some type of compensation plan.  Compensation is what you are paid [in money and benefits] for work you do whether as an employee or as an independent contractor.  And, in most all cases of compensation plans, they are all multi-faceted

Take for instance:

Employee compensation plans: employees are people who are hired by a company/business to do specific job tasks – whether that person is hired as the mail room clerk or the Chief Executive Officer, they are employees.  Each employee of a company/business has a compensation plan that may include a combination of:

  1. salary or hourly wage [depending upon the job description an employee could be offered an annual salary, paid by dividing that salary into monthly paycheck amounts to someone paid-by-the-hour worked]
  2. incentives and bonus plans [could be anything from a year-end bonus based on overall company profit and divided among the employees to performance-based incentives to stock shares to car allowances to health club memberships and more]
  3. non-payroll items [meaning you don’t take this money and put it in your bank account] such as health and/or life insurance benefits and/or retirement benefits [not seen so much anymore]

Sales compensation plans: sometimes a type of employee position may have its own compensation plan format within a company, such as for sales employees.  Their compensation structure might include [following list from compensationresources.com]:

  1.  
    • Base Salary [sometimes a small salary, one that is small enough the salesperson would need to fullfill sales quotas in order to achieve commissions and incentives to make a livable wage]
    • Periodic incentives tied to short-term goals [some companies will hold sales contests]
    • Annual Incentives tied to longer-term sales activities [an example might be “x” number of type ‘A’ car sold in a 12-month time-frame]
    • Commission-based incentives [a percentage of an individual product sale]
    • Perquisites to facilitate sales efforts [I think this might be something like everyone getting a certain bonus who meets the sales quota on a certain product or product line]

Multi-level marketing[MLM] compensation plans are those types of plans devised by direct selling companies for the people who contract with them [as independent distributors/contractors, not employees] to sell their products or services.  A simple definition of a single-level compensation plan [from directselling411.com]:

  • a structure in which a representative is compensated based solely on his or her individual product sales [this is strictly commission-based and direct retail sales…as example: I buy product wholesale from the company and sell it at retail cost to you – part of my compensation is the difference between the wholesale and retail price, and part of my compensation is based on a volume-sold commission structure]

A simple definition of a multi-level compensation plan [again from directselling411.com]:

  •  a multilevel compensation plan pays its representatives based on the individual’s product sales as well as that of their “downline,” which refers to a group of people that consultants bring into a company to generate sales

Now here is where that head of steam I mentioned at the beginning comes from…a misunderstandingof this type of compensation structure.  Direct selling companies can choose between the single- or multi-level plan.  The way the multi-level plan works – very simplified – is this: let’s say I become an independent distributor for a direct selling company with a binary multi-level compensation structure.  Here’s how this might look:

  • the first way of being compensated is strictly retail sales – I buy the product wholesale and sell it at retail – the difference between wholesale and retail is part of my compensation.
  • I interest someone else into joining the company.  I DO NOT receive any incentive commission for recruitment – the signin fee goes directly to the company, not to me.  So, why do I want to encourage others to become independent distributors?  Because in a binary multi-level compensation structure, the person I sponsored will generate sales just like I did – that person will receive their retail portion of the compensation plan.  The incentive for me is that my downline’s [the person I sponsored] sales volume will be tracked and I can earn bonuses and commissions on total sales volumeof my downline organization.  [Note: my downline can do the exact same thing.  Any sales volume that I generate through my retail sales is utilized by my upline sponsors for their sales volume bonus and commission structure.]

Multi-level compensation plans are attractive for direct selling companies – in my opinion – because they are in existence to sell their products.  Just like McDonald’s  is in the business of selling hamburgers, fries and other foodstuffs – only they chose to sell it using the franchise business model – direct selling companies are in the business to sell their products – only they choose to use the single- or multi-level business model of person-to-person selling.

Multi-level compensation plans in direct selling companies are no different in idea than multi-faceted compensation plans for employees of any other type of business.  It’s just a different way to earn income.

**I chose a direct selling company to be an independent distributor with and I like it’s compensation plan very much.  If you’d like to have information about it, email me – I’d love to tell you about it.

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2 points about direct selling

Two big points about direct selling are: 1) what it is…and 2) what it isn’t.   And what direct selling is…is so much more than what it isn’t. 

First, what direct selling is not:

  • direct selling is NOT a get-rich-quick-scheme.  Besides con games by professional con artists or out-and-out thieves [and they are criminals by-the-way] , there are no get-rich-quick-schemes.  You might make a profit one day on the stock market, but you’ll lose another day.  You don’t sign on with a direct selling company hoping that magically you’ll quickly get rich.
  • That’s it to what direct selling is not…not a scheme, scam or illegal operation of any kind.  It’s just a business model – a way of doing commerce.

What direct selling is:

  • a way of doing commerce: selling a product or service person-to-person.  You can literally do this one person at a time, or hold a meeting or party in someone’s home or office and demonstrate your product(s).  Direct selling contractors are independent business people who do not have a brick ‘n mortar storefront. 
  • direct selling is a business, and like any other business, your success will depend upon what work you put into it.
  • a direct selling business is an opportunity…a way to earn for yourself either 1)extra money to supplement what you are currently doing, or 2)replace what you’re currently doing altogether [again, depending upon your work ethic and willingness to learn business acumen and selling skills], or 3)be its own opportunity – you don’t currently have income but are in need of some and want the leverage of a business with which you call the shots.

There are many direct selling businesses that are right now offering millions of people around the world the opportunity to either add a little extra income each month or a lot.  Such companies as Avon, B’s Purses and Accessories, Creative Memories, Discovery Toys, Inc., The Kirby Company, The Longaberger Company….there are hundreds.  The Direct Selling Association at this time lists over 200. 

Direct selling…as a phrase…is also not a compensation plan, nor is it catalogue sales.  Phrases such as direct marketing tend to indicate that the message about products or services are directed at end users – definitions vary.   If I were to put a brochure about my product into your hands, then I am directly marketing [literally means informing] you about my product.  It is a function of selling – whether you are in the direct selling industry or any other type of retail sales industry. 

Multi-level marketing, single-level marketing – these are phrases that have to do with compensation plans [how you are paid] of a direct selling company.  The ways of compensating independent distributors vary from company to company.  You would need to do your research and due diligence on the type of product/service and direct selling company you are interested in and then to determine which type of compensation plan appeals to you.  Again, there is nothing evil about the phrases multi-level marketing, they are simply descriptive of a compensation plan.

One other phrase heard a lot is network marketing…again it is a phrase used to describe selling person-to-person.  You build a network of contacts through which you market [inform people] about your product or service.  No mystery here.

Back to my 2 points about direct selling.  1.  direct selling is not something bad that makes your forehead crinkle.  2. direct selling is selling products/services person-to-person.

I am an independent distributor for a direct selling company and love the freedom this type of income opportunity allows.  I did my due diligence.  I found a product I love, a company with which I’m pleased to be associated [as my grandfather used to say: never work for or with something or someone that you can’t hold your head up in society]; and I love the potential for income that this compensation plan shows.  The company with which I’m associated is exciting and right now is offering some pretty exciting things.  If you’d like to know about it, please send me an email.

Have an awesome day.

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Upline, Downline all around the town

Sometimes it’s the language of a business model that is the sticky wicket  keeping people from successfully going forward.  It could be language like “network marketing;” or “multi-level marketing;” or “upline,” or “downline.”

It could be the term “direct selling” that keeps people from looking closely at an income opportunity that could provide them with additional help every month meeting financial needs.

In the world of home-based businesses, some business models do have terms like “upline” and “downline.”  These terms are easy to understand and in no way inherently infer anything about an independent contractor’s income potential.

Take hypothetical business model ABC.  ABC  is a direct selling, network marketing income opportunity.  “Direct Selling” simply means that the independent contractor [or distributor] sells products directly to the end user – the customer – rather than the customer going to a retail store to purchase that brand of proudcts.  For instance, Avon is a direct selling business – Avon representatives sell their products directly to end use customers. The company for which I am an independent distributor is also a direct selling opportunity – I sell products directly to end use customers.  [to check out my company, see the Business Links at left]

Network marketing” is a term that describes many kinds of business models in my opinion.  “Networking” is the process by which people connect with one another.  “Marketing” is sharing/telling information about a business and or its products/services.  Nothing mysterious about this term.  In my younger days, I worked as a staff person for a chamber of commerce.  One of my job duties was to network in the community – to connect with other businesses to tell them about the chamber and benefits of membership…a classic example of network marketing.

So then, why do the terms “upline” and “downline” make people nervous?

  • In a direct marketing business model the way to become an independent contractor is to be sponsored by someone already in that position.  Creative Memories [direct selling scrapbooking company] is one such example.  If you were interested in becoming an independent consultant, and didn’t already know a consultant, the company would locate one for you and you would be sponsored by that person.  That person is your upline sponsor.
  • Your upline sponsor is just the person on the organizational tree model who sponsored you or is higher on the tree.  It is not an income dependent graphic, rather it is an organizational graphic.  To put it honestly, if you were to sell your little heart out one month and make all kinds of retail profit and sponsor three new consultants, and your upline sponsor did ziltch…you would have made the income wouldn’t you?  See, the organizational tree graphic is not an indicator of income…just organization.

What about “downline?”

  • This one couldn’t be easier – the people you sponsor are downline on the organizational graphic from you.  Again it is not an indicator of income because you might be stagnant in your selling and sponsoring yet the people you’ve previously sponsored are selling like mad – they make the commissions, you don’t if you aren’t active in your business.

Don’t let the language of the direct selling business model scare you off.  There are many wonderful companies with great products and income opportunities.  Get past the strangeness of the terms and give this type of home-based income opportunity a chance.  You could be quite surprised.

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Why the sour face when mlm mentioned?

Dear readers, I’m taking a bit of a stand today in reaction to some comments online recently that lumped mlm-types of businesses in with illegal scams and other things to be avoided.

Let’s clear the air…mlm or multi-level marketing…is not a bad word, phrase or thing.  It is a business model.  A system of doing business. Period.  That’s it. 

What it is: The Linda’s Business Blog definition: 

  • multi-level marketing  is a network or relationship business model that utilizes a team design to maximize the sale of product(s)
  • product(s) are sold person-to-person
  • team growth is achieved by one person telling another person about the income opportunity
  • income is generated through direct retail sale profit and through total team sales volume

Each and every person in the team is an independent business person (distributor, contractor).  However, the team generates team sales volume for which team members are compensated with commissions.  Here’s how one example might work:

  1. I am sponsored into Business A.  I buy the product and use it myself.  I don’t get sales commission for what I buy for personal use, but my sponsor does get sales commission because I’m on her team (downline).  However, my personal use volume is used to my advantage to qualify me to receive commissions should I have a team.
  2. I also sell product to retail customers. These are people who have no interest in being business people, they just like my product and to get it, they have to buy from me [because this product is not sold through a retail brick-n-mortar store].  I receive retail profit [difference between the retail price and the wholesale price].
  3. I sponsor Joe Person.  Joe Person buys the product and uses it personally.  Joe also sells retail.  And Joe sponsors someone.  Joe will receive sales commission on that person’s sales volume (both personal and retail) and I will receive sales commission on Joe’s total team volume.  Hence the whole idea of a downline.

The KEY here is sales volume.  A multi-level marketing business or network marketing business or direct selling business relies on sales of product.  No sales of product, no commissions.  Also…and this is key…it is each distributor’s choice on how to build his or her business: you can, if you wish, have a strictly retail business – never have a downline…it is your choice.  Yes, there are incentives to sponsor – why wouldn’t there be?  The goal of the parent company is to, after all, sell its products…the more distributors, the more product is sold.  So, you can choose to build your business with a downline – or team as well as retail sales.

I personally think that this business model has been tainted by the spector of pyramid and ponzi schemes.  Good grief ladies and gentlemen, there will always be bad people who do their utmost to dirty the pond for the rest of us.  That doesn’t mean the pond was bad, only those who put their dirty boots into it.  The pond can be cleaned.

Funny thing is, there are two ways of thinking about pyramid models.  One is actually the epitome of the corporate structure: CEO sits on the top making the largest paycheck, and the foundation of the pyramid are the hundreds or thousands making minimum wage.  Now that’s a pyramid. 

The bad pyramid or ponzi schemes are perpetrated by nefarious people who only want your money.  They say it’s a business but require a large buy-in and want you to recruit people because that’s how you’ll make your money.  Well, in a legitimate business you make no money whatever for sponsoring…the signin fee goes not to you, it goes to the parent company.  You only make money by working your business – generating sales volume.

Now here’s another point: an mlm, network marketing business, direct selling business…is a business.  It’s not a get-rich-quick scheme because you actually have to work at it.  There’s nothing magic or automatic about it.  For instance, to make a retail profit, you actually have to sell your product to someone.  To make a sales volume commission you actually have to sponsor people who themselves are interested in a business for themselves.

Scott Allen, over at About.com has a great article about this very issue.  He says “…Network marketers who are serious about building a business should be reading and learning about business fundamentals, the latest sales and marketing techniques, strategies for networking and business development, etc…. Act like a small business owner, and people will treat you like one….”

  • yes there are people who do not make much money with a network marketing business…the flaw is not in the business model, but in the ways in which the individual person approaches their business
  • yes you do have to sell product(s) – to make retail profit you have to sell your product to someone; if this is the type of business you want to have, you will have to learn how to sell
  • yes you will have to share the income opportunity with other people IF you want to build a downline team

Scott Allen also says that the “…interest in network marketing is at an all time high….”

Here’s the thing: yes, some people have had bad experiences with mlm-types of businesses. [Some people have had bad experiences in a corporate business.]  That does not make mlm a bad business model because millions of people are selling millions of dollars of products and services through network marketing businesses.  If you are interested in knowing more about the legality of mlm check out the U.S. Federal Trade Commission website.

Comments?

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