Direct Sales: Think Your Friend’s Small Business Is a Pyramid Scheme? Think Again! by Ann Marie Patitucci

Career Parenting
7 years ago

Direct Sales: Think Your Friend’s Small Business Is a Pyramid Scheme? Think Again!

So many of us live paycheck to paycheck, struggling to make ends meet and spend more time with our families. Have you noticed that many parents, mothers in particular, are becoming their own bosses? 

You may have heard direct sales businesses referred to as pyramid schemes. But pyramid schemes are illegal. Many of these companies are multi-level marketing businesses, not much different than a bricks and mortar store with associates, an assistant manager, manager, etc. 

Wouldn’t you rather support your friend’s small business than a large chain store? I know I’d rather support a friend who is trying to pay for her child’s swim lessons than help a billionaire CEO buy another home. 

So the next time your friends post about their small businesses on social media, whether they're in direct sales or not, consider supporting them.

Are you a small business owner? Tell us about it below!

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Heather Murphy-Fritz
Thanks so much for showcasing this, Ann Marie Gardinier Halstead! I love supporting my family from home.
Ann Marie Patitucci
Thanks for your comment, Heather! I think a lot of mothers feel the same way. I know I feel good when I can support a small business. When I need something I often ask myself if I know someone who sells a similar product before I head to the mall!
Tori Ulrich
Even without it being a pyramid scheme, I still sometimes get frustrated feeling like I'm constantly being sold something every time I open a social media something. But, hearing it put in terms of 'swim lessons' and remembering that my small business just happens to run differently, helps me to remember we're all just trying to make $&*+ happen and doing our best along the way. This is an awesome reminder. 😊
Ann Marie Patitucci
Well put, Tori Ulrich! I love supporting fellow women who are just trying to make $&*+ happen! :) We can accomplish so much more when we support each other!
Meredith Schneider
Thanks for sharing this Ann Marie Gardinier Halstead ! Having been on many sides of different fences 15 yrs corporate world as an executive assistant. During part of that time I was pregnant with our 2nd child while my husband was in Iraq. 5 yrs of our own brick and mortar owning our restaurant. Then home grateful with more time with our kids but after many life changes, closing restaurant and having a 4th child can be a culture shock and led to me gaining weight and becoming an emotional mess. After having hit rock bottom I started working on me and began helping others work on themselves inside and out too. Being able to be a wellness coach from where ever I am is incredible and fuels me to keep being a better version of me everday and being able to provide the tools no matter anyone's goals from an amazing company like Herbalife is priceless. And being able to cover kids sports activities is a bonus. Love love love supporting fellow moms trying to make $&*+ happen everyday! Love you all I've got your back!
BeHappy. BeHealthy. BeFit. BeYOU. It's Your Turn!
Ann Marie Patitucci
Thanks for sharing your story, Meredith Schneider ! What an amazing journey! Love our 30 Seconds tribe!
Elisa Schmitz
This is such a much-needed perspective on the direct sales industry, Ann Marie Gardinier Halstead ! Many people don't understand it or make assumptions about it. Thank you for clarifying and putting it into real focus so we think twice about "shopping local" in every sense of that phrase. Hugs to all the hard-working small businesses owners out there. We see you and appreciate you! Way to go, Heather Murphy-Fritz Tori Ulrich Meredith Schneider and so many others in our amazing #30Seconds tribe!
Ann Marie Patitucci
I always feel so much better about a purchase when I've shopped local, especially if I can speak to or message with the business owner when shopping! There's just something about building community wherever you are, even if it's while buying skincare or leggings via facebook. :)
Laura Greenwald
Thanks Ann Marie Gardinier Halstead for such an insightful tip. I completely agree and am loving the time I've been spending as a distributor for Nu Skin. Hiring a company instead of having to wait for a company to hire you is a life changer.
Laurel Smith
I have no way of working outside the home. I have 2 young teens but they are both developmentally delayed. I cannot leave them home alone. Working from home, selling to friends, is the best way for me to make some extra money to cover things like meds, clothes, food for their growing appetites! LOL!
Forgive my ignorance. Where you say 'I’d rather support a friend who is trying to pay for her child’s swim lessons than help a billionaire CEO buy another home' take Arbonne as an example, when a consultant pays the sign up fee and has to purchase a stock inventory to sell on, they are helping the billionaire CEO who owns Arbonne to buy another home, so I am not sure how it can be classed as their 'small business'.

I've seen, and heard from ex-consultants, that once a consultant purchases the stock, in the long run, they actually make very little, even if they do it for a couple of years and get promoted through the ranks. The promotion is more of a tool to keep up the momentum rather than genuinely recognising the persons worth. Has anyone read this FTC document?

I'd be interested to hear peoples thoughts. From reading this myself it seems like, in the majority of cases, only 0.5% of people actually make any profit, and that doesn't necessarily mean good profit, they just aren't losing money like the other 99.95%. That is a frightening statistic. I am actually more inclined to help my fellow mom to try and get out of the MLM before she breaks down in a couple of years from stress and becoming broke.
Janine Owens
I think it all depends on the company or the person. I have friends who do MLM who thrive in that role. They wouldn't do very well in trying to start their own business from the ground up, but having that guidance and direction is helpful and invaluable to them. So while I do support their part of the business, perhaps I am also supporting the big CEO. But I don't generally differentiate between the two if I know my friend is where she/he is thriving and succeeding.
The majority don’t thrive and succeed. I couldn’t be proud to be part of a business where the majority of people fail at it. And there are a lot of fake it till you make it reps. They say they are succeeding because they need to lure other people to sign up under them in order to make any profit (or indeed, to claw the money back that they’ve invested). It wouldn’t work to say ‘I’m not making much money from this, but would you like to join my team’. They are told by their upline to feed people positively, that the business is life changing and that they are doing well. I wouldn’t want to be a part of that and I couldn’t support it
Cassandra Lee Jones
onedayatatime Each company is different, each has different return rates or profit rates. I am not familiar with arbonne but I know that a friend of mine who sells pure romance was able to quit her full time job to sell and is currently making more than her previous job. I have another friend who sells lipsense to make "extra money" for her childs future college fund and she says she makes roughly 30% of what she sells. I personally sell young living oils and for now it is a hobby because I don't make as much but the more people on my downline the more I will make someday. This model doesn't work for everyone but for those it does its nice to have the independence and a little extra cash.
You’ve hit the nail on the head ‘the more people on my down line the more I will make someday’. This sits on a very very fine line between being a legitimate product selling business and being a pyramid scheme.
Julee Evans
Not all direct sales companies make you buy inventory. After the birth of my first child I stayed home and was a sales rep for Kelly's kids for 15 years until they did away with in-home parties and reps. That spun into a Brick and Mortar business I opened 8 years ago. I started my business with $1200 commission check from Kelly's Kids sales. My daughter is now 17 and bought her 1st car with money she has on over the years of helping me in the store and other jobs she's had. Shopping local and supporting small businesses helps me support my 2 kids. It had been hard, my ex husband repeatedly takes me to court trying force me to close my store and reduce his support payments. So far he has not been successful but has racked up huge legal fees that I am struggling to pay off. So yes please support your friends. One thing I realized as a sales rep for Kelly's kids. over 15 years I only had one friend host a party. The rest were people either the company sent to me or I had to recruit. However I would say that the majority of my current friends started as customers. Happy Shopping! And come check out my page I can ship and accept PayPal.
Scam Alert: Even though MLM reps advertise themselves as "small business owners", don't be fooled. MLM participants market another corporation's products and call themselves a "small business", when in fact, they are independent contractors for a big corporation. They receive commission from re-selling a product they didn't make, at a price they can't control, from a company they don't own.

MLM reps are not small businesses, and even worse, the MLM model is indistinguishable from a pyramid scheme, as it is financially irresponsible, mathematically unsustainable, and downright exploitative, especially for women and mothers.

To #ShopSmall, buy from legitimate small businesses, either in-person or online, and be alert of MLMs and their false claims. #SmallBusiness #SmallBusinessSaturday #mlm #MultiLevelMarketing #scamalert
Hershey Rosen
Thanks for sharing : *)

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