Friday 31 August 2018

Finance Fridays – Multi Level Marketing (MLM) and Direct Selling

We were looking at the cost of going to university for last week's Finance Fridays. This week we are talking about multi level marketing (MLM) businesses and direct selling (DS). Many people find they are a handy and flexible way of making money while others will tell you to steer clear of them altogether. So, what are they and would they work for you?

What is MLM and DS? - In MLM companies the people running the franchises earn money not only through commission on the products they sell but also by for the sales generated by people they recruit to the scheme – this is the 'multi level' part of it. Some companies have been criticised for concentrating more on getting people to recruit more sellers than selling the actual products. Direct selling alone concentrates more on the products. In both cases you sell the products from home, on internet or social media groups and at specially arranged parties.

Are you are seller? - Even if you plan to market mainly through the internet or social media you need to be a good salesperson. Can you describe the goods well, see the main selling points but don't rub people up the wrong way?

Would you buy or use the produce yourself? - If you are going to put time and effort into selling something make sure you are passionate or at least interested in what you are going to be selling. Don't expect people to buy a lipstick or mascara if you aren't prepared to use it yourself.

Is it sustainable? - Many MLM and DS companies spring up because they are latest craze. You could be putting time, energy and money into something which by next year is totally out of fashion or overtaken by another product. Also think if you can keep selling the same products over and over again. If you use make-up think how often you buy it and do you buy the same make each time?

Set-up costs – Every business costs something to set up so don't be surprised if you need to pay a start-up fee or initial stock pack. What you do need to think about is can you handle the financial loss if it doesn't work out? Most kits are around the £100 mark and the law surrounding direct selling states you can't be asked to make an investment of more than £200 in the first seven days.

Don't be the last to join in for MLM – In most cases you would see joining an established company as something more secure but in MLM cases the further down the chain you are the less money you will make. This is because the people at the top of the chain earn commission from the people below them. If you are at the bottom you won't be earning this commission and will find it harder to recruit new people.

Be savvy with social media
– Although having sales parties is still popular most selling these days is done through Facebook groups. At first it can be tempting to keep putting everything on your personal profile but this will quickly irritate your friends who are not interested in it. Also don't believe everything you see on social media. Only the small percentage of top sellers will be making lots of money and the glamorous lifestyle they portray might not necessarily be funded solely by MLM or DS or indeed it might not exist at all.

Only a few hours a week...- One of the main attractions of MLM or DS companies is that you can work from home in your own time. If you can only put a few hours in a week you will only make a very limited amount of money so do be prepared to devote some time to it. Also in some MLM companies you will be pressured to make extra sales by the person in the tier above you as they will be wanting their commission.

DSA registered
– There are lots of companies promising the world but many of them aren't what make out to be. Before you sign up to any companies get lots of independent views on them and check they are registered with the Direct Selling Association.

We've been joined by Emma at Bee Money Savvy who has listed 22 Ways to Save Money (and the Environment). Emma goes through the house looking for ethical savings.

If you want to join in with this week's Finance Fridays then add your link to the linky below. Any post concerning financial matters is allowed. Full details here. It doesn't have to be published today as you have until 23.55 on Tuesday 4th September 2018 to join in.

Finance Fridays



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