Business to Consider: Direct Selling/Network Marketing

May 27, 2010

In its simplest form, direct selling (aka network marketing) is nothing more than one person promoting or selling a product or service directly to another. Today, an endless variety of products are distributed using the direct selling business model, including vitamins, weight-loss aids, cleaning products, clothing, jewelry, home décor, cookware, legal insurance, travel services, financial products, books, toys, educational and motivational products… and the list goes on. If you have an interest in a particular industry, chances are there’s a direct selling company that supplies products in that category.

Rather than paying for massive advertising efforts and retail outlets, direct selling companies rely on an independent sales force to spread the word about them and their products. Many companies have added social media, print and broadcast advertising campaigns, but most advertising is done person to person, face to face… or Facebook to Facebook.

Perks of becoming a distributor include deep discounts on products and compensation for helping the company attract other distributors. Those who develop a network of independent representatives can leverage their time and maximize their earning potential. Not only are they paid for their own sales, they’re paid a percentage of the sales made by members of their organization (or downline). The more people a direct seller brings into the company, the greater his or her earning potential.

Other benefits can include bonuses and prizes for a job well done. These can include luxury travel, fine jewelry, cash or cars. Beyond the tangible rewards, direct sellers gain other benefits, such as communication and sales skills, greater self-confidence and leadership capabilities.

Getting started as a direct selling representative involves signing on with a company and purchasing a startup kit with brochures, access to online resources and product samples. In many cases, free local training, webinars and teleconferences are available to help representatives learn more. Many companies also hold annual conferences where they offer additional training and recognition.

The Bottom Line

You will need to purchase a startup kit and sign an agreement to become part of a direct selling company. To receive full commissions, you may be required to purchase products on a monthly, bimonthly, quarterly or annual basis, depending on the company.

This type of business can be done in as many or as few hours a week as you choose, which makes it ideal as an income supplement or for building up to a certain level of earnings before leaving a full-time job. That said, to earn a substantial regular commission check, you must commit to treating this opportunity as seriously as you would any other job or business endeavor. You are the boss… your hours are flexible, but not optional.

Is It Right for You?

Recommended skill set: People skills, consistency, self-confidence, drive to grow and market business, belief in the product or service you are promoting.

Risks: With some companies, representatives are expected to stock inventory or receive regular shipments of product. If you do not use or sell the products consistently, you could end up with a garage full of boxes. False expectations are one of the greatest risks.

Potential income: Varies greatly (from $0 to $10,000 or more per month), depending on your level of effort, skill and the company’s compensation plan.

 

Pros and Cons at a Glance

1. Minimal investment

1. No guaranteed income

2. Easy to fit into an already busy schedule

2. You may have to regularly place orders to receive commissions

3. Residual income

3. Overcoming misconceptions about the industry

4. Maximum control over your time and income

4. It may take months to build to a substantial level of income

5. Built-in personal growth opportunities

5. Products or services without a unique selling position may be difficult to sell

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