5 questions to ask yourself before you consider joining a direct selling business

From health supplements and skincare products to cooking appliances and even travel packages, direct selling business, commonly known as Multi-Level Marketing, is often touted as a channel to earn extra side income, or perhaps an alternative to the typical 9-to-5 job.

You might have also found inspiration to join the business after coming across your friends and relatives who have either successfully carved out a niche in this business full-time or juggling between a full-time job and the side gig with ease.

However, just as with considering starting your own business or an investment, you should always ask yourself if joining a direct selling business is for you, and also consider the costs involved.

We take a closer look at the five questions you should ask yourself before signing up with any direct selling business.

#1 DO I UNDERSTAND THE PRODUCT/SERVICE OR THE COMPANY? 

For any direct selling business to work long-term for you, you must have a good understanding of the products or services that is being offered by the company.

It is also a natural reaction for you to share and talk about the things you enjoy and love. Hence, you should also use, enjoy, or even like the product that you are selling to succeed in the business. Otherwise, you are most likely to face difficulties in growing your customer base.

Given these factors, it is essential for you to understand the business by researching the market for similar products, competitors and the channels of obtaining the products before joining. By knowing your market before you get into it, you will stand to understand and benefit from the business.

In addition, you should find out the reputation of the company online before making any commitment. Does the company have more negative feedback than the positive ones? How long has the company been around? The answers to these questions should give you a good idea of the company.

Lastly, you should also ask yourself if the company is one that you would feel proud of representing? If your answer is a "no", then it is best to move on and find something else.

#2 IS THE TEAM I AM JOINING FOCUSING ON PRODUCT KNOWLEDGE OR RECRUITMENT? 

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If you have decided on joining the company, you are most likely to look for your friend or relative who is in the business and join their team.

But before that, it is good to ask yourself if the team is placing their focus on product knowledge because they enjoy using the product, or do they harp on "business opportunity" even before you can try the product.

In any transaction, people would want to feel good about using a product or enjoy the purchasing process and experience, and not to be pushed into doing something. This applies to joining a direct selling team too. After all, there is a myriad of ways to present and sell a product and being pushy is not one of them.

#3 DO I KNOW THE STARTING COSTS AND REMUNERATION PACKAGE OF THE BUSINESS? 

Before joining any direct selling company, you must have a clear idea of how much it is going to cost you before you can start selling any products.

For instance, some company will charge new entrants start-up costs, which usually includes a welcome kit to get started with the business. Some companies may also set a minimum requirement of buying stocks of products upon joining.

These costs can go anywhere from a few hundred dollars to a few thousands of dollars, and you must be mentally prepared to spend first before you can start making it back.

Besides the cost of joining the business, you need to consider other expenses, such as brochures, catalogues and conventions. Also, any business convention held out-of-town will also increase your out-of-pocket expenses.

In addition, you also need to have a good understanding of the remuneration package. Some have a straightforward structure of remuneration by means of commission for every product sold, while others have a tiered or structured payout plan, which requires an in-depth explanation.

#4 HOW MUCH MONEY CAN I MAKE? 

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Besides understanding the initial costs of joining and the remuneration package of the business, you should also know the potential income you stand to make for your effort by asking yourself the time and effort it requires you to reach your desired revenue.

Let us take an example by assuming you want to make $500 a month from selling Product A, which is sold for $20 to your direct customers but costs you $16 each from bulk purchase.

If we include an additional expense of $200 for brochures, you will need to hit a revenue of $700 each month. That would mean selling 175 of the products worth $3,500 every month to sustain a profit of $500.

With that, you will also need to think about effective ways to market your products, such as organising parties or managing a website to get people's attention to your products.

#5 IS TRAINING PROVIDED? 

By training, we do not mean motivational talks. Rather, we mean sessions on imparting skills to help you market the product.

For instance, if you are encouraged by your team to use social media to promote your product, is there any training on how to do it?

If you are encouraged to organise parties to showcase your product, does your team offer a training session on effective party management and a way that will make you feel good and excited to share about your product?

Some businesses do provide their direct sellers with a website to promote their products. Are there training sessions provided to guide you on getting the site visible on search engines?

After asking yourself these questions, you should have probably figured out if direct selling business is for you or not. If it is, then go ahead and pursue what you were looking for. However, if you don't feel confident about it, you can always find something else.

In addition, before joining the business, you may like to call your family and friends and ask if they would be interested in buying anything from you. That should provide you with a good gauge if you can succeed in this business.

This article was first published in Dollars and Sense.