Top up your income with direct selling

From The Sunday Times
May 3, 2009
Top up your income with direct selling
Carly Chynoweth looks at a business that allows you to do as much or as little as you have time for

Hilary Waite spent two decades working in the City as a commodities broker but when she was made redundant last summer she decided to give up the world of six-figure salaries, 12-hour days and long commutes. “I did it for 20 years and I loved it,” said the 44-year-old. “But now I want to spend more time with my children.” Rather than looking for traditional part-time employment, last September Waite, who has four-year-old twins, became one of 400,000 people who sell goods and services to their friends, families and other contacts through the direct-sales industry.

It’s a popular option at the moment, said Richard Berry, director of the Direct Selling Association (DSA), which represents businesses that have signed up to the industry’s code of conduct. “In the past few months we have seen an increase of at least 15% over the same time last year,” he said. He attributed the sector’s popularity to its low start-up costs of between £75 and £100, flexible hours and to sales holding up despite the downturn.

Waite certainly likes the flexible hours. “It’s much easier to fit around the twins,” she said. “I do a lot of work in the evening - you can do some of it while watching telly with a glass of wine.”

She became a distributor for Phoenix cards and stationery because she had bought them from a friend in the past. She is realistic about how much she can make, and how fast. “Financially I am not making as much as in the City because I have not built up the business yet, but there is the opportunity to move forwards,” she said. “It’s not a get-rich-quick scheme by any stretch of the imagination but there is a direct correlation between how hard you work and how much you earn.”

Indeed, anyone thinking of moving into this sector should be wary of companies that offer easy money. “Direct selling is like any business - it requires hard work. There are no r e w a r d s s i m p l y f o r g e t t i n g involved,” said Berry. “Anyone who claims it is possible to earn lots of money just by getting involved is deluded.” The average amount earned by each of the UK’s 400,000 direct sellers - including the many part-timers - is about £1,000-£2,000 a year but the top 20,000 or so earn a substantial full-time income.

Peter Rea is comfortably inside this category. The 45-year-old and his wife, Claire, signed up with Kleeneze, a cleaning-products business, after being made redundant in 1999. After five months they were earning £1,000 a month; today they make about £100,000 a year by selling products direct and by earning a percentage on the products sold by the 400 or so people in their network. (You don’t get paid simply for signing people up - that’s pyramid selling, which is illegal.)

Suzy Major, 36, who was made redundant from Northern Rock last year, is building up her own Avon network. She started with the cosmetics company in February and has already been made a sales leader, which means that she manages eight other representatives as well as looking after her own customers. However, she won’t actually see any of the commission on what she and they sell until the end of the campaign. “I know it’s not about overnight success,” she said.

Some other direct-sales companies use a slightly different model. For example, Waite pays up front for Phoenix’s products then gets the cash, including a profit of about 30%, as soon as she sells them.

Sales are still strong despite the recession. Anna Segatti, president of Avon UK, said that business is good because consumers are still willing to buy small luxuries - a new lipstick, say - even if they are cutting back on holidays and cars. “There is an increase in interest and responses to our advertising campaign, not only in Avon but across the industry,” said Segatti.

That’s more than can be said for Marie Smith’s old industry. The 32-year-old was made redundant in November from her job selling cars to corporate fleet managers. She decided there was little point applying for a new job, partly because of the state of the market and partly because, although she had spent many years working six days a week, she needed a part-time position because of her two children.

She decided to combine a new job as a support assistant at a local school with selling Pampered Chef kitchen equipment. The school job is rewarding, but it doesn’t pay enough to replace her old perks such as having a new car. “It does not pay as well as the other job did but it’s more convenient . . . and Pampered Chef tops up my salary so that I can have a nice new car,” she said.

Amy Carroll is in a similar position. The 25-year-old signed up with Herbalife, a nutrition supplement business, after being made redundant from a job in finance. “I had been at the bank for six years and had worked my way up to team leader, so I was on quite a good salary for my age,” she said. “When I found myself facing redundancy I realised that I would have to take a pay cut of at least £5,000 [to find another job].”

She spent six months working full time on building her Herbalife business while looking for work, and plans to keep it up in her spare time now that she has found a job. “I do want to stay in finance and, even though the money is not anything near what I was on, I was able to take it because I am also earning money through Herbalife,” she said.

WHAT TO LOOK FOR WHEN SIGNING UP
Choose a company that sells products that you like and that you believe are fairly priced.

Beware of businesses that promise big returns for little work. High earnings are possible but take a huge effort.

Be wary of companies that require you to make a large investment in stock. Good opportunities should require a very small outlay, typically less than £100.

Get a proper written contract and make sure that you understand it. Check that any opportunities for recruiting other people are legal. Membership of the Direct Selling Association (DSA) is a useful indicator of legal compliance.

Source: DSA.org.uk