What Are Direct Sales Opportunities

Direct sales opportunity

As already mentioned that direct sales is a very popular business opportunity with people looking for lots of time and flexible business. Some of the best-known companies in America including Avon, Mary Kay cosmetics and Tupperware fall under the category of direct selling business opportunities.

Whether direct selling, you will usually allow us to build a business on your own. There is very little interference from the parent company except that there may be infrequent reminders or e-mails to encourage you to sell more.

Direct selling business opportunities mostly offer low upfront investment opportunities which require the purchase of a product sample kit. You make money now for the selling this for the client to your family, friends and personal contacts.

However, in order to succeed, you need to expand your customer base to people other than who you know personally. Most of the direct selling programs also ask the participants to recruit other sales representatives under them. These constitute representatives and downline and their sales generate a commission for those above them.

However, you should know that a direct sales business opportunity that compensates participants primarily for recruiting others rather than for selling the company’s products can be considered an illegal pyramid scheme. These flourished a few years back and were basically judged to be scams by the Federal Trade Commission because there was no real business involved. The only money that people were earning was when they recruited other people under them and then those people repeated the process. There was not much sale of products involved just one person paying the one above them to join. It was the same cycle which was basically a scam because it was not the business.

Direct selling programs are usually exempt from business opportunity regulations and are not defined as franchisees under state and federal franchise laws. For this reason they enjoy it a certain degree of freedom from any regulation and sanctions. It is important you do your own investigation before you invest money in any direct selling business opportunity. For more information you can check out the direct selling Association’s website.

Summary

  1. Relatively cheap to buy in. 
  2. Many big names like Amway, Avon,Tupperware. 
  3. Good for people wanting to work independently and part time of full time. 
  4. Sell product line to direct contacts as well as through marketing. 
  5. Recruiting other sales reps in downline. 
  6. The potential of income should me more from selling products rather than downline recruitment. If not, could be illegal pyramid scheme. 
  7. Exempt from business opportunity regulation. 
  8. Not defined under franchise laws. 
  9. Do your research.

Definition Of A Business Opportunity

what is a business opportunity

A business opportunity is between starting your own business and a franchise.

If buying a franchise sounds too restrictive and starting a business from scratch sounds too risky, then the option for you might be to purchase a business opportunity. A business opportunity can be defined as a packaged business which is ready for purchase and investment. It allows the buyer to go into business on his own without much control or regulation by the parent company. Technically speaking all franchise are business opportunities but not all business opportunities are franchises.

A business opportunity usually exercises no control over the person who purchases it. He is free to do business in the manner that the best sees fit in order to generate sales and profit. Because there is no continuing relationship the buyer of the business opportunity has a greater degree of freedom and it is something that can be used to one’s advantage by those people who desire independence in running their own business.

Business startup

A business opportunity is usually also not a high scale opportunity on its own after for example when you buy a franchise you are buying into the business system that allows you to set up shop to sell products and services. Setting a franchise from major companies such as McDonald’s, Kentucky fried chicken etc. are major business models. Whereas the business opportunity can be a very non-assuming and can be started at a very low level.

In fact in most of the circumstances person buying a business opportunity is under no obligation to do anything to promote the business after he has bought the opportunity. You are not obligated to follow a strict specifications for a detailed program.

All you need to do in most cases is purchase a starter kit that contains enough material to get you started on a small scale and operate a business in your own name with an affiliation to the parent company mentioned if you so choose. There are also no ongoing royalties in most cases just that you may be required to the purchase of materials when you run out.

While the lack of support can be an advantage, it is also the business opportunity’s chief disadvantage. Many people buy into several business opportunities getting inspired by some seminar all of that talk by someone who is already doing it but failed to make anything of it because of lack of effort and the lack of drive.

Since a business owner can make whatever and however he chooses from a business opportunity, many fail at the very outset of it because they do not know how to go about it in the first place and give up easy enough. Selling and marketing products is never easy and it requires a proper know-how and training. Many people rely on the selling a business opportunity and its products to their personal contacts, family and friends.

But once these sources or point of sales get exhausted, so does the business. Also, because of no long-term commitment from the parent company, business opportunities have their share of con artists who promote fraudulent work-at-home offers with the promise of instant success and income. Increased regulation of business opportunities has dramatically lessened these scam offers but you must still investigate a business opportunity thoroughly before you invest any money.

Along with investigating the business opportunity to know if it’s genuine, you must also consider the fact that it is something that you can do. For example, a very popular example of a business opportunity is direct sales. Before you buy into any one of these opportunities with direct selling business, you have to be absolutely sure that you are comfortable with selling to people, generating new customers. Simply counting on selling to your friends family and personal contacts is not enough to have a good business.

Highlights of a Business Opportunity

  • No support from the parent business.
  • More freedom for the buyer.
  • Cheaper than franchise.
  • Package business investment.
  • Scams and con artists because of lack of contact between buyer and business.
  • Common examples, distributorship and dealers and direct sales.

Popular Business Opportunities 

Dealership / distributorship – Right to sell a product without use of the company trademark. Distributor sell to many dealers. Dealers sell direct to consumers and retailers.

Licenses. – right to use product technology and trademark from the business company.

Vending machines. – setup vending machines. Help with finding locations. Restock yourself and collect money. The business may provide product for restocking.

Cooperatives. – allow a business to join other businesses in a network mainly for the purpose of advertising and promotion.

Direct sales.

How To Research A Business Opportunity 

Keep the following points in mind to effectively research a business opportunity.

  • More challenging than franchise.
  • Lack of disclosure statement might make things more difficult.
  • Follow the same steps as evaluating a franchise.
  • Better Business Bureau and D&B. Possible to get a complete report if registered with D&B.
  • Compliance with laws and regulations.
  • Lawsuit or bankruptcies? Details about lawsuits. What was the violation?
  • Provide you with list of people working with the business opportunity. Ask for a full list in your state.Talk to as many people as possible.
  • Business opportunity not as clearly defined as franchise but allows more freedom.