What a dream, I can work from home with flexible hours and still put my family first! This is the promise of home based business opportunities, but not the truth for multi-level marketing schemes (MLMs). I fell victim to not just one, but TWO, multi-level marketing scams. The first is one that has been around for decades, the well-known cosmetic company Mary Kay. The second was the renaming of the old snake Amway, called Quixtar. Here is what happened, what I learned, and warning signs for you when you evaluate an “opportunity.”
First, each of these experiences occurred about five years ago as I now run a successful writing e-business. I can’t promise the policies and problems I ran into are still a part of the plans that are peddled in mass recruiting events. Even so, what happened to me can still save you! There are many other MLMs out there with similar complaints and problems.
Problems With the Mary Kay Opportunity
Mary Kay makes great cosmetics, I still use them today. I also loved selling them. I am an outgoing person with natural public speaking ability– getting orders wasn’t hard. I learned everything I could about the products, including the active ingredients, and made my demonstrations fun for customers.
The biggest complaint I have looking back on my Mary Kay business is my “mentors” were NOT business women, they were saleswomen just like me! They didn’t understand how their “suggested” inventory levels of only certain products were dooming new business owners. Every sales woman is different, and it takes a few demonstrations before it is clear which products the business owner is best at selling. I wanted to stock only a few of the cleansing products but mostly the color cosmetics as people my age didn’t care about anti-aging.
Instead, I was bullied and discouraged from deviating from THEIR tried and true inventory model. Now if this inventory model was actually based on their experience, that’s fine. But it wasn’t. No, the inventory I was told to start off with is what the Mary Kay company makes the most return on because they know very few of us starting out are going to be successful.
Another major problem was the lack of focus on true business skills. My recruiter was more interested in helping me make cutesy little programs for my hostesses that had no ROI analysis behind them. It’s not her fault, no one in her “up line” taught her about running a business either. Why? Because with Mary Kay you are not running a business, you are a door-to-door saleswoman of cosmetics.
Why Isn’t Mary Kay a REAL Business Opportunity?
In REAL business, the focus is on profits, NOT recruiting. Again, after the disastrous inventory level advice, and costly hostess incentive programs, the next complaint I have is where they did focus. I was pressured again and again to bring other women to our monthly meetings. Every month my “Red Jacket,” a saleswoman with three other saleswomen beneath her, wanted to know who my current “prospect” is. We never sat down and made a business plan or goals for selling Mary Kay. Nope, I was coached and coached again on how to sell the “business opportunity.”
Sure, in running a real business the possibilities of franchising out your successful model is lucrative. But this isn’t franchising. In fact, individual franchise owners have control over how they run their business. With Mary Kay, the saleswomen do not. The parent company says:
“You can’t sell Mary Kay products in any retail outlet, like shopping malls or salons.”
“You can’t market them online outside of our website service (which you must pay for) and cannot personalize or modify.”
“You can’t combine Mary Kay products with any other service or product promotion like spa treatments.”
It’s easy to fall for their nonsensical justification, too. For example, when I questioned the retail outlet sales I received a perfectly practiced response from my Team Leader. It was just rhetoric the Mary Kay company taught her to say.
I was told that the Mary Kay brand is all about enriching women and giving them personal beauty consultation. If I am just selling the cosmetics to a salon or at a mall booth, how can I give that “personal touch?” Oh, at first that sounded like a really good business model. Later I learned this was all a crock. Even though I was Mary Kay Beauty Consultant, my monthly training sessions did not allow me to apply makeup on anyone or give specialized advice for skin care outside of the product pamphlet. I spent more energy appearing to personalize the cosmetics, while constantly mitigating my risk of legal trouble for not holding a cosmetology license.
So think about this, as an IBO (Individual Business Owner), who they deem to be a “wholesaler” of Mary Kay products, I can’t sell products to a local beauty salon for them to mark up or give to their customers? I can ONLY sell this makeup in a private home setting? Imagine if Subway told it’s franchisees they can only sell Subway sandwiches out of their own kitchen? Or that they weren’t allowed to cater events?
Complaints About Mary Kay That Are Common MLM Red Flags
Here is what I learned as an entrepreneur from my failure of selling Mary Kay:
Beware any push for set inventory levels. Real business suppliers may have minimum order amounts, but they are never going to tell you to wait on buying certain products until later. Real wholesale suppliers make money on the products, and want you to stock as much as you can.
Run away from “business mentors” who do not, or cannot, use business terminology. We never spoke about profit, devising promotions for a high ROI (return on investment), or strategies to find more clients. Instead, the language was about how much I could make, gift incentives, and prospects to become down line Mary Kay business owners.
Never sign up for a business opportunity you do not need a business license to operate. Legitimate business owners must have a license to operate in their state or county. Not all business types require payment for this license, but registration with the state for tax purposes is necessary. How could I be a business owner, as Mary Kay called me, if they made all the decisions? Why would they say “Provide personalized cosmetic and skincare service.” but in the same breath tell me to never touch the client or apply anything as I do not have a cosmetology license? Even if I had one, the company policy still stood because they didn’t want to be responsible for my actions as a cosmetologist.
Avoid selling any type of product or service that is heavily restricted. I would have had my own pink Cadillac in a heart beat if I could have sold Mary Kay the way it should be sold. I had contacts with nail salons who wanted to use and sell the nail care products, and a massage therapist friend interested in the line of skin softening lotions. I knew I could distribute at least $1,000 of wholesale Mary Kay each month. But I wasn’t allowed. I wasn’t even allowed to sign them up as Mary Kay business owners because they wouldn’t be allowed to distribute or sell the products with their other services!
I don’t know why the Mary Kay parent company doesn’t let their “business owners” grow productive businesses and just keeps them saleswomen. My guess is the parent company markets and sells Mary Kay cosmetics under other names and doesn’t want any competition on their market shares there. Sure, to be legal and honest these other products would be slightly different formulations, and I have no proof this is what happens. It the only logical reason I can think of for how they operate as a company. However, real suppliers for wholesale and retail sales of products do not operate like this.
All I know is the Mary Kay “business opportunity” is not really a business, nor a franchise. Instead, it’s just a dressed up Multi-Level Marketing scam, trading on people singing up and buying that initial inventory, but with no real interest in further sales of the products. This is evident in the lack of business development and overabundance on sales force training. It is clear in how they restrict product sales but push signing up new “business owners.” Any one wishing to be a true entrepreneur and not just a sales lackey should avoid Mary Kay, and similar MLMs.
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