Comparing Mary Kay to Other Small Businesses

Written by Lazy Gardens

I’ve seen this business cost comparison flyer on many director’s websites. I don’t know who developed it, but they are overestimating startup costs by about 2000% for at least one of the businesses. It makes Mary Kay look like a good deal by comparison and makes a large inventory order seem small. Is it a “lie”? You decide.

Here’s the flier (click on it to see it full-size):

 

Let’s look at the figures for the “Lawn Care Business.” I have been a landlord, I am a landscaper, so I know the “mow and go” business. I chat with the mowing teams. They usually follow a well-defined career path from part of a team for a large company, to a 1-man lawn service, and occasionally get big enough to manage multiple teams of their own. But they don’t spend tens of thousands of dollars getting started.

LAWN CARE BUSINESS
Commercial Lawn Mower: $10,000 (A commercial lawn mower is too large for residential jobs. All you need to start is a gas-powered mower, spare blades, push broom, rake, pruners, edger, trash cans. You can buy all of these for less than $200 used from Craigslist or yard sales.)

Pick Up: $16,000 ($1500 can buy a used 1993 Nissan from Craigslist. I drive an old truck and find a note under the wipers a couple of times a month from a landscaper who wants to buy it from me.)

Trailer: $5,000 (Not needed. You put the mower and tools in the bed of the truck.)

Advertising: $500 ($20 for 500 business cards from a local printer. Leave these at every house near your jobs, and have one in your pocket to hand to anyone who comes over to ask if you have room in your schedule for their yard.)

Permits and bond Ins. $500 (Not required here, may be required elsewhere.)

Workman’s Comp: $1,000 (Not required unless you have employees, and then it can sometimes be paid monthly, rather than paid up-front.)

TOTAL: $33,000 NO Guarantee of Success ($1800 for a low-budget startup, with no guarantee of success. But you will own the truck and equipment, and you can sell any time you want to, not just within the first 12 months.)

How successful can you be? How hard do you want to work, and how good are your business skills? I’ve seen three different men who drove up in a battered pickup to give me their first estimate driving a new pickup a few years later, with their own company logos on the side. Others have realized that they don’t have the business skills needed and go back to working for a landscaping company as an employee.

MARY KAY COSMETICS

Inventory $3,600 (full store, sold for $7,200 … This assumes that it can be sold, at full price, and this doesn’t include business supplies like sales tickets and catalogs.)

State Sales Tax $450 (repaid when retail is sold … taxes in Phoenix would be $580)

Hostess gifts/samples $300

Permits $0 Cost ($16 application fee, and $50 per year in Phoenix, if you make retail sales of products. There is no exemption for home-based businesses.)

Unlimited Training. $0 Cost (Many have commented that there is very little training beyond how to recruit at the meetings you pay to attend.)

Free Product Bonus $600 Retail Bonus sent to YOU!

TOTAL: $4,350 with 90% Buy Back Guarantee within 12 Months (NO Guarantee of Success! The 90% buy-back only applies to product, not Section 2, and will be reduced if any product is discontinued or discounted.)

40-50% Profit taken at 1st Appointment! (It’s not profit, it’s “gross margin”. Out of your gross margin you have to pay taxes and expenses, which includes product loan payments, auto expenses, meeting fees, seminar fees, conference fees, web site fees, customer mailings, etc. If there is anything left over for your family, that is real profit.)

See how, by omitting certain key information and by making other exaggerations, the Mary Kay opportunity looks so much better than it really is!

15 Comments

  1. Iescaped

    The first time I saw this flyer I was almost out of Mary Kay. I have to admit that I was so embarrassed (and still am) for ever falling for the MLM scam. My former SD/NSD wanted us to use this as a marketing tool. Sure, if I was recruiting 5th graders!

    Even looking at it quickly, anyone with a high school education is able to pick apart the flaws. The start up costs for the vegetable stand don’t even mention VEGETABLES! I guess those are just free! And somehow you must have a commercial lawn mower, expensive truck and trailer to start a lawn care business, but I guess any automobile costs in MK don’t count.

    And it is sort of funny how all the MKrap on MK Connections is just left out of the costs of a MK business (I should have known that ordering business cards was only going to fill garbage cans). What about the MK website and ProPay costs for all those on-line orders that are going to come in while you sleep?

    And did anyone ever really think that they could spend so much money at the Dollar Store buying everything and anything to “jazz” up the packaging for your hostess gifts to make everyone else so envious that they would have to book a party of their own just to get the googlely-eyed fuzzy lotion in a glove!!

    Yikes, Mary Kay cost me more than just money, it cost me my dignity and integrity. That was priceless.

  2. Ladybug

    I’ve been reading PinkTruth for a while, just never commented. I wanted to share that I own a small childcare business, and my startup costs were nowhere near what is shown here. When my first child was born, like many, I wanted to stay home with him but we needed me to bring in some income. A lot of people wanted me to join their “team”, but I just couldn’t figure out how anybody could make any money with it with selling such cheap unneeded stuff and EVERYONE seemed to own a “business”. Anyways, my childcare business started out with me just babysitting two other children. I can’t remember numbers, but my main start up costs were: fingerprinting/ background check, licensing, insurance, and painting a room of our house. As far as supplies and toys and stuff like that goes, I already had most of it from my son and when people heard what I was doing people would donate their kids old stuff to me. For advertising I just had some business cards made up and used word of mouth. So start up costs totaled a few hundred, nowhere near the 13,000 listed. Then I put aside some of my babysitting money each month for future business growth. . Now I’m making significantly more money than in my old job, and I love what I do! Yes, I work 10 hour days, but with work and commute most people are away from home for work for that long anyways, and I get to be with my kids all day, and my evenings are stress free with my family. Aside from it now being the main source of income for my family, I love that my kids have become such good friends with the daycare kids and I have become good friends with the parents I work with. I feel like what I do is meaningful and significant- I get to teach and nurture children in their formative years while giving parents peace of mind. When I started, I didn’t see it being a long term thing, just something to supplement our income until I reentered the work force, but now I plan on doing this until I retire.

    1. raisinberry

      Good point!

      And in what Universe is Mary Kay training free? Let’s see Monday night…$3-$5 per…
      Saturday’s “Breakfast and BS” at least once a month…$15….NSD in town, $7-15 depending and not counting the free product giveaway you’re supposed to bring…

      Then there’s all manner of shared fees for any gathering of consultants, under any styled training name…Muffins and makeovers..Pizza and Possibilities….Donuts and Debt…Omelets and Ordering

      And then the Big Kahuna’s…Seminar. Leadership, Retreat, Jubilee, Career Conference,,New Year New You..ad infinitum. Ain’t NONE of it “free”. But ya better “show up to go up”!

      So their indoctrination is free…but you have to pay for your chair.

      1. ShimmerAway

        I wanted to comment that the Breakfast and BS is now at least $20…but then I read “Donuts and Debt”! If I had been drinking something, I would have spit it out for sure! And then Omelets and Ordering…oh how it rings true! I’m dyin’ over here!

  3. mstar1125

    As someone who is married to someone with a lawn care business, I’ll agree that those costs in particular are way off. You’re not investing that much money in the business (or any business) until you have the client load to justify those expenses. You start small and build small. In contrast, in MK (and any other MLM) you invest everything up front with no guarantee that you will ever sell off the product to anyone.

    They are also missing a lot of expenses and behind-the-scenes work that is necessary to legally and legitimately start a business. Things like filing your business/LLC, paying quarterly taxes, licensing, etc., etc., which an independent consultant with an MLM is not required to do, and which to me falsifies the claim that you are a “small business owner”, as you are not required to follow any of the state or federal regulations required of actual small business owners. When all you need to do is purchase a starter kit, you are not a business owner; you are a distributor for a large corporation, plain and simple.

  4. Cindlu

    Also Mk isn’t a real business. You cannot advertise it anywhere. You always have to give away some product to suck others into buying something. You always have to sell the product at a discount because no intelligent woman would pay full price for this product when they know other consultants always reduce the price. There are the taxes, the shipping costs and the costs when the products are constantly changed by Corp. Never ever did I have the products I needed for the very few customers I managed to get. I often had to trade. Sometimes the products I traded from another consultant were barely sellable. Yes the dollar store sure profited from all the decorations I bought to try and convince other women that this skin care line was worth buying. Yes indeed the costs for meetings to brain wash women that this was a viable business sure did add up. The rah rah retreats, meetings or seminars with the expensive shared rooms, cost of food, transportation, ridiculous dresses etc. brought up the debt on credit cards. Fortunately I began to see that it all was make believe. The NSD’s made themselves believe this 1960’s mlm throw back party system might still work. The directors made themselves and their down line believe that this party class still worked. Even after the internet, they tried to make themselves and others believe that this was an actual business. Unfortunately thousands of women hurt by MK for 50 years knew better and warned others to avoid this scam. There just is too much to lose. Loss of money, loss of family time, loss of self esteem and the embarrassment of being taken in by fake slogans and predatory women. It isn’t a business. It is the start of being brain washed into a dead end money loss, soul sucking pit.

  5. My mother in law is an antiques dealer. When she started her business with her husband, the storefront they rented in the mall charged only a few hundred a month (this was in ’90s-era Texas) and the antiques they acquired to sell were purchased from a variety of yard sales and offloaded by friends and family, so the inventory wasn’t too costly to acquire. As for advertising, my mother in law now gets business cards printed out (it’s like $20 for a couple hundred cards or something like that) with the occasional fliers when they have sales, but the majority of her business was built using word of mouth since both her and her husband have a wide social network of people in the city. I know she had to get a retail permit from the city where her mall is, but I don’t know how much it cost her or if there are any renewal fees she has to pay to keep it up.

    I don’t know all the specifics, but I know that her startup costs were far less than the resale shop used as an example in this bit of Pink Propaganda. Even now, it’s still less than what MK would have you believe

  6. Dawn Williams

    I have a question about the sales tax?

    Why are you (an IBC) paying the tax if you aren’t “the final customer?”, I was always told (by my accountant father), that taxes are paid by the FINAL CUSTOMER, not a retailer. I’m a bartender, my bar doesn’t pay tax on the liquor we order, the guest does when I pour their drink. I thought that was why some things say “not for retail sale”

    1. MLM Radar

      The bar also has an EIN, separately accounts for the collection of sales tax, files sales tax returns on a monthly basis, and remits the tax money to the state and county on the predetermined schedule.

      Mary Kay ladies and other such “home-based business” folks are lucky if they can figure out what a Schedule C is. Therefore the states have an alternate way for making sure they collect sales tax. The government allows the would-be MLM seller to pre-pay sales tax based on anticipated final selling price when they purchase their inventory. Mary Kay / Amway / Herbalife / whomever collects the sales tax up front and then mass-files the tax returns on behalf of the consultants/distributors.

      If you return your inventory Mary Kay refunds the or use it for samples instead of selling it, you then file a form with the company for a refund.

    2. Lazy Gardens

      Why are you (an IBC) paying the tax if you aren’t “the final customer?”

      States were having a HORRIBLE time collecting sales tax from these manufacturers resellers … typically they would not keep good records, collect and spend the tax, or otherwise screw things up.

      So they went to a plan where the manufacturer collects the sales tax UP FRONT and it’s up to the reseller to collect it from the final customer. That also runs into a problem, because most states don’t let you collect full retail sales tax on a discounted product … but these women have not been told that they can get the tax back from Mary Kay for discoubnt sales, obsolete products and the stuff given away or broken.

      Mary Kay will NOT tell them how to get a refund of excess taxes because it requires GOOD bookkeeping and then women would realize they aren’t making any money.

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