The Danger of Selling to Your Friends and Family

As I alluded to on Twitter a while back, a friend of mine started selling Amway recently. She sent me a long sales pitch via email, outlining the great products she was selling.

I flatly said “no” and deleted the email.

I didn’t even hesitate. Why? Over the years, many of my friends have pitched various direct sales products to me, my wife, and other family members. I’ve seen a lot of them – Amway, Mary Kay, Princess House, Pampered Chef, Tupperware, the list goes on and on.

I’m not criticizing the quality of the products they sell in any way – that’s an entirely separate issue, one that varies from product to product. What I do question is the true cost of the sale.

Here’s the scoop: if you’re looking to make money by having products pitched to and sold to your friends, you run the risk of damaging those friendships.

Quite often, you put the friends in the uncomfortable position of feeling obligated to buy an item that they don’t want in order to please you. You’re directly exchanging the value of your friendship for the small commission you get for your sale.

A close friend won’t mind too much. They’re likely to understand completely what you’re doing and will support you no matter what you choose.

But is this really something you want to ask of the people you care about the most? Do you want your best friend to feel obligated to buy something from you?

On the other hand, your more distant connections will likely not appreciate it nearly as much. The “cost” you’re asking from them – buying a product they don’t want at an exorbitant price – is often enough to seriously damage the relatively weak connection you have.

What about other people, ones you don’t have a connection with at all? Sure, they’re great guilt-free sales targets, but they’re very difficult sales targets. Unless you’re a professional salesperson, well-trained in convincing people to buy, you’ll not see much success with that avenue.

Here’s the honest truth. I’ve run the numbers on many different programs and listened to the amount of time people have invested in these programs. Almost always, unless they’ve got exceptional sales skills, their earnings for the time invested are significantly below minimum wage. Sometimes, when they’ve paid to participate, they’re actually at a net loss. For that money, they’ve had to essentially call in a favor from many of their friends as well.

In short, there’s a lot more value in working a minimum wage job than there is selling to your friends. You’re not alienating friends and you’re likely earning more per hour than you are from selling the products.

What if you’re asked to buy? My solution is simple. Unless it’s a really close friend who clearly needs the help, I’ll just say “no” to their invitation to buy their products or attend their “product party.” If it is a really close friend, I’ll have a talk with them about it. Why are they selling this product? How much can they actually make? What will they have to give up to make that amount? I’ll run through the numbers with them so they can see how much they’ll realistically earn in exchange for these negative trades on their friendships and relationships.

Many people want “easy entrepreneurship,” and when they see the numbers provided by programs like these, it’s easy to see a big profit. What they don’t see is how it taps out friendships and how it eats enough time that the profit per hour of effort is really pretty tiny.

Successful entrepreneurship is never easy and it doesn’t need to rely on the giving nature of your friends to succeed. It’s a much harder road, but it’s a sustainable road, one that your friends and family will be happy to see you succeed on.

Good luck.

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

Loading Disqus Comments ...