My neighbor invited me to a trunk show at her home for a jewelry company called Stella & Dot. I like my neighbor and I like jewelry so I accepted the invitation.
With Multi-Level Marketing, you get recruited to work for a company. You buy the "starter" sales kit. You convince your friend to host a party at her house. Her friends buy from you and you receive a percentage of the sales. In order to build your sales, you recruit more friends so that you get a percentage of their sales. Then, your recruits convince their friends to host parties and recruit more friends and on and on.
These companies also generally wrap themselves in patriotism and freedom (Amway) or in the case of Stella & Dot there is a huge dose of female empowerment. The words are pretty and the concept of working from home and setting your own hours is so seductive.
That said, the only people who make money in MLM's are the people at the top of the organization. Yes, I know there are tons of pages in google search that say that is not true. However, the fact that I have a basic understanding of both business and arithmetic allows me deduce that only the people at the top can make real money. When you recruit your friends, you are cannibalizing your own business. The business model does not work.
I went to the "trunk show" which is technically not really a trunk show. I could have described the "stylist" before I met her. Middle to late 20's. Married with children. Adorable. I loved her. I loved the jewelry. I loved the women there. I learned all about a trend called an "Arm Party". An arm party is when you fill up your wrists with watches, bangles and chains.
It is hard to be cruel, but I have to. This is a business model that does not work. Only the people at the top make money. Don't watch the empowering videos or the "but this is different" speeches. Do the math!
The jewelry is great, expensive, but great!
Please spread the word about the Knoxville Small Business Examiner. I would love to tell your story!