Wife determined to do multi-level marketing, key risks?

[glenn1]

My wife has been increasingly expressing interest in a multi-level marketing business. I've expressed my concern with her involvement in this since I don't see where she has the bandwidth to devote to a business in addition to a full time job, a part time job with some on-call requirements, a toddler at home, and an expressed desire to begin nursing grad school in the summer. I'm also concerned that she has no direct experience with the business line she's chosen (nutritional supplements). She also has no experience in business, writing a business plan, bookkeeping, or doing sales. She has now decided to proceed with it despite my misgivings. That being said, I'm trying to be supportive as I can if for no other reason than to keep peace in the household; I'm not going to file divorce papers over this.

That being said, the biggest thing I need to know is what is our all-in risk in such a venture? She keeps citing a $100 initial "investment" and I have trouble believing that's all we would be on the hook for. If that's all there is that's fine, I can almost write it off as an entertainment expense if things go pear shaped. However I want to shield our family (me and daughter) from larger financial problems should this venture not succeed since the statistics about business failures aren't good. We're doing OK but not great financially, so it's not like we are in huge need of a new revenue stream and wife could keep any profit for her own purposes.




Locked at OP's request.


esquared
Anandtech Forum Director

 

[Ns1]

Depends on the MLM

some mlm's have a mandatory monthly order. If you don't make enough in sales then you pretty much have to buy the product for yourself.

 

[SSSnail]

With these "Multi-level Marketing" scheme, you'll have to determine where you are on the pyramid, and whether it's worth it to get in, and that there are enough "investors" around you go build up that pyramid.

 

[LTC8K6]

It will be a financial mistake, so stand by for the crash.

 

[tcsenter]

Key risks:

- Your wife using her magical powers to keep increasing the 'initial investment' to which you've agreed (magical powers = vagina, silence, and the prospect of divorce)

Srsly, she needs to have the stones to sell the product. I once tried MLM for a reputable company who happens to have a really good product (Amsoil Lubricants). But it wasn't so great of a product that it clearly was better than competing products, or even a better value in the long term than lesser products that were significantly less. You have to sell the "marketing merits" of the product as if you personally believe in them, even if you personally do not believe they are merits or feel they are diminished by other factors. I couldn't sell myself on the products over competing or alternative products (except for a couple), so how could I sell them to someone else? I didn't have it "in" me to sell it, it made me feel creepy.

- Not having the knowledge to sell the product. Awareness about nutrition and supplements is becoming more sophisticated. There are companies whose products are scoffed at by informed persons. There are companies whose products are considered to be 'high quality' by informed persons. Does your wife know enough to tell who is who in the industry? Can she already articulate some of the biochemistry and current science on nutrition and supplements or will she need to rely completely on some marketing manual?

If she's going to do MLM, she needs to be able to sell it, and KNOW the product. Learning as she goes is possible, but exceptionally difficult.

 

[lxskllr]

Depends on the MLM

some mlm's have a mandatory monthly order. If you don't make enough in sales then you pretty much have to buy the product for yourself.

^^^This. You know you're gonna get fucked. If you're lucky, it's only a little bit of time, money, and some disappointment. It could be worse though. Read the fine print carefully, and if you think anything's ambiguous, you need to interpret it in the least favorable position for you.

 

[drebo]

The only way to make money from any of these schemes is to get people down-line from you.

If you don't have down-lines, all you'll be doing is making someone else rich.

Also, as stated, read the fine print to make sure there are no quotas that MUST be met. Some of them will just say "if you don't make this every two quarters, you're out." Some may require you to cover your short fall.

My wife did a multi-level marketing thing for a few years. She probably ended up costing us a few hundred dollars over the time. We were definitely net negative. But, she enjoyed it and she got a lot of stuff that I otherwise wouldn't have let her buy. So, w/e. A few hundred over a couple years was worth it to see her happy.

 

[clamum]

I've always considered these "multi-level marketing" schemes another way to say "fucking scam," but I'll admit I'm no expert on them.

 

[Rumpltzer]

Control your woman.

 

[Greenman]

I doubt there is any real risk, just read everything before you sign. Though you should have your wife find out what the average person in the business makes.
Some years back a fellow I know got into an MLM deal, might have been amway, he discovered that the average income was around $80 a month.
My wife tried it once as well, ended up costing me a thousand bucks, relatively cheap as lessons go.

 

[silverpig]

Prepare for all your friends and family to not want to hang out with you anymore because they don't want to have to buy some herbal foot powder every time they see you.

The financial risks are usually pretty low. It's not like she's opening up a B&M store with a $3k monthly lease.

That said... Okay. If I go to someone's house for dinner and they overcook the Kraft Dinner, I'm sure not going to buy their cookbook. They have to be a good cook in order for me to buy their method of cooking.

So... would you buy health supplements from your wife if she tried to sell them to you?

 

[BoberFett]

Wife determined to do multi-level marketing, key risks?

Seriously?

Other than alienating your friends and family, along with losing a bit of money unless you can find enough gullible people, and generally losing all self respect, there aren't really any risks.

If you're in it because you like products, just buy the products. The $2.71 check you get each month isn't going to pay back your "starter kit" fee.

For the record, I worked on the corporate side of a multi-level marketing company for a few years, got to know a lot of people in the industry. It's a sleazy business, top to bottom, no matter what company you're involved with. Feel free to ask me questions, I know people in the industry who have been at some of the market leaders, Amway, Mona Vie, etc.

 

[OverVolt]

She is doing herbalife. Um, make a secret bank account I guess. It'll be all you have left.

Just kidding...

Thats not good enough you'll have to get an accountant to help you with that.

 

[kyrax12]

Is being in multi-leveling marketing basically means that person is an independent contractor?

 

[Rakehellion]

These MLM guys make a great sales pitch and tell you about all the money you can make, emphasizing over and over how easy it is. It isn't.

Some people make a lot of money doing these things, most don't. You'll invest a lot of time and money and make very little in return. Chances are she'll make her initial investment and a few months later realize it isn't going anywhere.

 

[Doppel]

Nothing says best friends forever like "Hey, Sally, let's meet up for coffee. Also, I am going to spend 15 minutes trying to convince you to buy something. Oh, you can't make it today? Why not?" I personally hate these things and on principle I never do them. I know others who do the same; we don't want to be monetized by people we know, they introduce hugely awkward relationship dynamics.

Look up multi level marketing scheme on wiki. You'll see that in the huge majority of cases the people involved make no money and or the equivalent to pennies an hour.

 

[dabuddha]

Yeah it's a bad bad bad bad bad idea unless you don't like your friends anymore. I've unfortunately "dumped" 3 friends in the past 10 years because of this bullshit. One guy I rode the shuttle bus with always kept trying to get me and the wife to come over for dinner (I knew what he wanted). He'd call me throughout the day trying to schedule a get together. /shudder. Fuck that guy.

 

[kranky]

I think the biggest risk is if there's a requirement to buy $X per month of product to remain "active".

Maybe a good approach would be to tell her you will support her efforts while you both agree up front on a maximum out-of-pocket amount to be spent on the MLM effort. That way the plug will pull itself when that day comes, and you won't be the bad guy who jumps in to tell her "no mas!"

Just set up a checking account with the predetermined amount you are funding, and when it's gone, game over. Might want to think about whether mileage will count as part of the cost. Probably better to let that go, it will fail soon enough.

The non-monetary risks are potential alienation of friends due to badgering about the products and how much time will be sucked up by the MLM program.

 

[gorcorps]

I don't understand how people would have any desire to do the MLM thing when it's pretty universally known as a waste of time and damn near a scam. Why does your wife think she's going to break the cycle and actually make money off of it?

 

[Jimzz]

TL/DR version of what's been said.

1: It WILL cost you/her more money than you think.

2: You/she will piss off friends who will never come around.

 

[Tweak155]

My wife has been increasingly expressing interest in a multi-level marketing business. I've expressed my concern with her involvement in this since I don't see where she has the bandwidth to devote to a business in addition to a full time job, a part time job with some on-call requirements, a toddler at home, and an expressed desire to begin nursing grad school in the summer. I'm also concerned that she has no direct experience with the business line she's chosen (nutritional supplements). She also has no experience in business, writing a business plan, bookkeeping, or doing sales. She has now decided to proceed with it despite my misgivings. That being said, I'm trying to be supportive as I can if for no other reason than to keep peace in the household; I'm not going to file divorce papers over this.

That being said, the biggest thing I need to know is what is our all-in risk in such a venture? She keeps citing a $100 initial "investment" and I have trouble believing that's all we would be on the hook for. If that's all there is that's fine, I can almost write it off as an entertainment expense if things go pear shaped. However I want to shield our family (me and daughter) from larger financial problems should this venture not succeed since the statistics about business failures aren't good. We're doing OK but not great financially, so it's not like we are in huge need of a new revenue stream and wife could keep any profit for her own purposes.

As with most negative comments above, MLM's are a hard thing to get into. However, you highlighting all the reasons your wife CAN'T do something is pretty bogus. Don't continue to be the negative influence in her life.

Rather, why don't you help her find something she can do? Identify her strengths and push her towards that.

That said, I personally did fairly well with my first MLM, so well in fact it is what ended my doing it. I decided to join a 2nd one and my first MLM found out and terminated me, even though my last month of (personal) sales was $12,000, on top of what my downline was doing. The 2nd MLM proved to be a wasted effort, thus I have essentially stopped but still generate minimal business due to no additional effort being put in.

My personal recommendation is to set a spending limit and go at it and see what you can learn. I learned A LOT that I still use in my every day life. So, at minimum, you can look at it like paying for a class. You may only learn things you don't like to do, but you may also learn something positive like I did. My suggestion is to help her along the way, be encouraging instead of discouraging. It will better increase her chance of success, even if it still ends up minimal or doesn't happen.

 

[gorcorps]

As with most negative comments above, MLM's are a hard thing to get into. However, you highlighting all the reasons your wife CAN'T do something is pretty bogus. Don't continue to be the negative influence in her life.

Rather, why don't you help her find something she can do? Identify her strengths and push her towards that.

That said, I personally did fairly well with my first MLM, so well in fact it is what ended my doing it. I decided to join a 2nd one and my first MLM found out and terminated me, even though my last month of (personal) sales was $12,000, on top of what my downline was doing. The 2nd MLM proved to be a wasted effort, thus I have essentially stopped but still generate minimal business due to no additional effort being put in.

My personal recommendation is to set a spending limit and go at it and see what you can learn. I learned A LOT that I still use in my every day life. So, at minimum, you can look at it like paying for a class. You may only learn things you don't like to do, but you may also learn something positive like I did. My suggestion is to help her along the way, be encouraging instead of discouraging. It will better increase her chance of success, even if it still ends up minimal or doesn't happen.

Now you've got my curious. Not sure how much info you're willing to give, but I'm wondering why your second venture failed when the first one went well. Different product that just didn't sell as well? Poorly managed?

 

[Tweak155]

Now you've got my curious. Not sure how much info you're willing to give, but I'm wondering why your second venture failed when the first one went well. Different product that just didn't sell as well? Poorly managed?

It was a directly competing product that was just getting off the ground, whereas my first company had been in business for several years.

It is still possible the 2nd company will take off at some point, but it has been 2 and a half years now and it has had quite a few troubles. I am sticking with it, but waiting for the popularity to rise like the previous company. It just recently made a major turn for the positive, so we'll see.

 

[SandEagle]

i would rather work at Taco Bell than be with some stank MLM company.

 

[Tweak155]

I should also add that I didn't chase family and friends like most MLM's suggest. My $12,000 in sales were all online to people I've never met. I mainly invested heavily in advertising and it was paying off. I did a few other tricks which I believe fully helped me achieve increase in sales month over month (when I was terminated, I was in my first full year with the company). Had it been my 2nd year, I have no doubt I'd have been much higher at that point and it would have hurt a lot more.