“Mine your own business” (Sales rep opportunities)

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There are glitzy Internet and TV promotions that ostentatiously tout an “outstanding business opportunity,” and they deliver on that promise. But it’s the person selling the opportunity, not buying it, who reaps the profits and enjoys sustained success.

These “opportunities” mangle the usual relationship between a company and its sales representatives. Normally, companies selling products employ salespeople or contractors, who are paid a percentage of their completed orders.

But when accepting an “opportunity” rather than a job, the salesperson still completes orders but pays indirectly for doing so. An example of how it works: For $600, you can become an authorized sales agent for Bilbo Widgets. For this $600, Bilbo Widgets will provide you with leads on prospective customers, which you pursue at your expense and on your time. Since Bilbo owns the widgets, the supposed salesperson is required to spend a portion of their income buying the product and selling it to the customer for more. In the loud, proud ads, this business relationship it is pitched thusly: The customer gets a widget, the rep makes a profit, and Bilbo gets a sale.

By way of comparison, let’s see how it’s done in a traditional business. Gandalf works for Frodo Widgets, where he has an office and the same list of leads the Bilbo rep paid for. Gandalf has use of the company’s time and resources, which assist him in reaching prospective clients. Frodo gives Gandalf a commission, of which the company keeps nothing. Our working wizard puts in predictable hours and enjoys a base salary and an employee benefits package.

The Bilbo rep counters that he has the freedom of self-employment and never has to deal with a pedantic boss or overbearing co-worker. But neither do independent sales reps who hawk products from various companies and earn a commission on every sale. But they are being paid to be sales representatives, not paying the companies for this “opportunity.” Meanwhile, Bilbo Widgets has convinced its sales agents to work at his expense, on his time, and fork over $600 for the privilege. 

By contrast, an authentic company like McDonald’s allows franchisees to benefit from a time-honored, ubiquitous brand. It licenses a supremely successful name and business model, and the company provides the patties, fries, utensils, uniforms, advertising, cleaning supplies, and everything else needed to run a fast food operation. Everyone knows McDonald’s, while almost no one outside of the five people the opportunist has managed to track down has ever heard of Bilbo Widgets. Such companies, in truth, merely sell these business “opportunities” to supplement product sales, if they have any of those.

There are many organizations who run this ruse, and I’ve had long-lost friends and long-lost barely-know-thems try and pitch the products to me on Facebook. I never responded, nor likely has anyone else, but Bilbo still makes money because its profits comes from the persons who are futilely trying to sell its product.

While $600 was the sample figure used here, some companies charge much more than that. So much more, in fact, that most persons don’t have that much money on hand. No problem, for some of these companies offer financing.

So not only do they charge you money for the right to sell their stuff, they also make money on the cash they loan so you can do so. When a company offers financing on its product, the financing is likely the company’s true business. There are a few exceptions, such as car dealerships, which makes money if they provide the financing, but also turn a profit if they sell a new Escalade for cash. Not everyone has $30,000 handy for a new ride, so financing is a legitimate option that benefits both parties.

But for the most part, a company offering financing for its product is a red flag that the business and product are illegitimate. There are many better ways to spend money. And certainly, no one should ever be buying their job.

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