The Truth Behind Direct Sales

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martinis and your money

The Truth Behind Direct Sales

On this episode of Martinis and Your Money, I’m talking to Brian from Lazy Man and Money about direct sales and multi-level marketing. Brian couldn’t believe a friend tried to sell him a bottle of juice for $45. He began looking into it, only to discover unusual sales techniques used by direct sales companies to get people into multi-level marketing opportunities. Over the past few years, he has written over 30 reviews of such companies, some no longer exist, and exposes the real methods behind the business. Thanks to listener Jamie for suggesting this topic!

As a side note: the first Financial Gym location has opened in New York City at 226 5th Avenue, 5th Floor. Please stop by and have a drink with us if you are in the area or check out The Financial Gym online for its tools and resources to help you break free from your financial challenges and live a financially healthier life! We’ll kick your assets into shape!

What are we drinking?

Brian — Diet Coke with rum (maybe)

Shannon — Vodka & tonic

Podcast Notes

  • Brian started blogging in 2006 at Lazy Man and Money to create a community focused on early retirement while he was striving towards that goal.
  • In 2008, his blog started focusing on expanding awareness of Multi-Level Marketing (MLM).
  • Because “multi-level marketing” has a negative connotation now, direct selling and network marketing are used interchangeably to explain the selling technique.
  • Multi-level marketing companies use disinformation to generate profits.
  • Brian names some MLM companies—including some that are very well-known.
    • Beach Body—Shakeology
    • It Works!
    • Herbalife
    • Vemma
  • MLM companies don’t reveal that 99% of the people who become their sales people actually will lose money.
  • Some people compare MLM companies to cults.
  • The selling and sellers of skincare products from MLM companies are referenced as “lotions & potions.”
  • Shannon says she once purchased weight-loss products from an MLM company and did not see results at all.
  • Distributors of the products essentially own their own businesses yet have no control over the business.
  • Brian has written about 20-30 different MLM companies and the first company he wrote about is now out-of-business.
  • Anyone still considering pursuing this business needs to think about what they expect to get out of it and how they expect to do it.
  • Put parameters around it and if you are not making money, get out of it!
  • TAKEAWAY: Remember to always proceed with caution whether you are buying from a multi-level marketing company or selling for them. If you don’t feel really good about your investment, then it is a waste of your time and money.

Random Three Questions

  1. What is your most recent financial indulgence?
  2. What is a TV show you could binge on?
  3. If you could live anywhere else in the country or the world, where would you live?

Connect with Brian:

Website: Lazy Man and Money

Have you ever purchased something from a MLM or had a friend become a salesperson for one?

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Shannon is a financial planner who left a “traditional” financial services firm to start her own company, The Financial Gym, because she felt traditional financial services firms did not have the tools or resources to help people in their 20s and 30s who are starting out and trying to build assets while also managing debt. She realized that the key to long-term personal financial success is a commitment to financial fitness and making smart financial choices. Through her blog, Financially Blonde, her book, Train Your Way To Financial Fitness, her podcast, Martinis and Your Money and The Financial Gym, Shannon is committed to making financial fitness fun, easy and accessible for everyone.

3 COMMENTS

  1. I bought nice shades. I love Breaking Bad, and I never get bored watching the series. I’d probably choose Malaysia, Spain, or Panama because of their very distinct culture, lower cost of living, and more affordable cheaper spot.

  2. Wow, I LOVED this podcast. As a small business finance coach, it frustrates me to find people getting into direct sales to try to make money to get out of debt…but go into MORE DEBT.

    It’s important to run the numbers and have a full understanding of how much you need to pay in initial investment fees, required monthly fees (to stay eligible), and costs associated with networking and getting the word out there about what you’re selling.

  3. I had a conversation this week with an entrepreneur who isn’t profitable with MLM due to requirements to purchase over $500 in inventory….EACH MONTH. She can’t sell enough each month to offset the minimum monthly order required to stay in “good standing.” She is accumulating inventory…and debt.

    Everyone needs to make sure they don’t confuse sales $ with actual profit leftover each month. Make sure you fully understand the monthly financial obligations before joining a direct sales company. I find most people are better off freelancing and starting a side business to earn extra money and/or leave their corporate jobs to start small business.

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