A Second Act

A Second Act

entrepreneurs by Mark Gordon | Managing Editor

The multi-level marketing, mail-order vitamin business doesn't have the most stellar reputation. But for one desperate, riches-to rags entrepreneurial couple, it was the million-dollar answer.

When life was good for Tony and Tammy Daum, it was really good. In the mid 1990s, the couple owned a thriving aviation repair and flight school outside Orlando, which provided them money for many expensive toys.

There was a $125,000 airplane. There were two homes, including one in an exclusive neighborhood off Lake Dora. And there were cars. Lots of cars. Two of Tony Daum's favorites were a Firebird Formula and a custom made 1969 Outlaw Camaro, where the 1,400 horsepower engine alone cost $30,000.

But then, in 1997, when he was just 30 years old, Tony Daum was diagnosed with Type 2 diabetes. The fun times, along with the toys, were about to end.

The couple's 12-employee company, Leesburg-based Daum's Aircraft, began suffering, as Tony Daum was a do-everything type of entrepreneur, from marketing to accounting to flying the planes. When he couldn't work, the business hovered, then crashed.

"Everything evaporated in a matter of months," Tony Daum says. "But the overhead of the business didn't go away."

Not only didn't the overhead go away, it nearly drowned the couple that met in 1986, when they were freshmen at the Cincinnati Bible College.

The couple soon sold off all their assets, including the cars and homes, both to pay back debt and to pay for Tony Daum's medical care. The Daums, along with their two young children, moved into a considerably smaller home - where they struggled just to pay rent and buy groceries. Tony Daum began driving a beat-down 1980 Ford Econoline Van.

The Daums story though, isn't a reverse rags-to-riches tale. Instead, it's a story about how the entrepreneurial couple went into the home-based direct marketing industry - something they initially thought of as tacky and desperate - and found a way to turn it into their Second Act.

They did it, friends and associates say, through a combination of hard work and by following a key sales rule for selling any product: Always be networking.

Indeed, things have been so good the second time around, the Daums have bought some new toys. They moved from the Orlando-area to a new home on the water in Terra Ceia Bay in Palmetto, with a view of the Sunshine Skyway Bridge. New toys and cars include a red 2007 Z06 Corvette for Tony Daum and a GMC Yukon for Tammy Daum.

Tony Daum is even considering buying another airplane, too.

"I know what it's like to have nothing and I know what's is like to have everything," says Daum, now 41. "And I prefer everything."

True health

The Daums source for everything is USANA Health Sciences, a publicly traded, Salt Lake City, Utah-based company that sells vitamins and other skin and health care products through an international distributor network of home-based businesses. The company takes its name from the Greek and Latin words for true health.

The Daums, however, after hearing about the company's vitamins and home-based marketing and sales approach from Tammy Daum's parents, weren't too sure at first. The idea of a home-based business seemed beneath them.

Still, the couple had few choices. "We were starting with nothing," Tammy Daum says. "We were dead broke."

Then, after a few months of networking and selling the products in and around Orlando, Tony Daum thought he might be on to something. He started by meeting with potential customers in their homes and worked his way up to hotel-based seminars.

The key, Daum realized, was he wasn't only selling multivitamins with antioxidants and patented skin care creams. Instead, by constantly promoting and networking and by using USANA's binary and tiered sales system, also known as multilevel marketing, the Daums thought their niche could be in finding scores of distributors nationwide to sell the products under their flagship business.

Overall, USANA has nearly 180,000 distributors worldwide. A potential USANA distributor gets started with the company by paying an entry fee of $20 to $50 and then agreeing to buy about $100 of products a month, either for personal use or for selling.

It's a system that on its face opens itself up to accusations of being the typical MLM pyramid scheme. Indeed, the company was accused of just that last year during an eight-month SEC investigation - a probe that was closed in January with a finding that no enforcement action be taken against the company.

"It's not a get-rich-quick scheme," says Tony Daum. "If you join our business and don't open your mouth, you won't make any money."

The Daums though, got rich pretty quick. They started their USANA business in 2002. By late 2007, the couple passed $1 million in commissions, an occasion marked by an all-expenses paid, rock-star treatment trip to USANA's headquarters.

Not bad for a business where the average income for a sales associate in 2006 was $658, according to USANA Web site, while the average take for a commission-qualified associate, such as the Daums, was $1,578. It usually takes three years of constant selling and networking just to get to the point where the business becomes full-time income as opposed to just extra cash, says Dan Macuga, USANA's vice president for network development and public relations.

"For them to get to get to this level so quickly is pretty remarkable," says Macuga, who has gotten know the Daums personally over the past year. "This is not something that just happens. You have to be willing to do the work."

Potential leads

Tony Daum says he's always had that type of work ethic, going as far back as when he was 12 years old growing up in a rural area outside Cincinnati. He recalls watching a few of his friends bailing hay for a measly few bucks an hour.

Daum trumped them by starting his own lawn-mowing business. Says Daum: "I figured out I could make more money working for myself."

By the time he was 18, Daum was reading Donald Trump's paean to business, The Art of the Deal. When he and Tammy Daum moved to Florida in the late 1980s, he took a job as a paramedic and firefighter in Orlando, partially to help people, he says, and partially to have some consecutive days off to hone his entrepreneurial skills. His businesses included car-detailing and car stereo installation. Then he moved on to the airplane business, where he even dabbled in stunt flying.

The USANA business, though, is where the Daums say they have found their calling. All told, under USANA's sales system, the couple has over 2,000 associates nationwide, as well as a few in some foreign countries.

The majority of those sales associates, Tony Daum says, are in it mostly to get a discount on the vitamins and other products. But a few dozen distributors on the Daum's team are in it full-time.

For those, the Daums use an online sales tracking program to see how the associates are doing every day. Then the couple regularly calls and e-mails the top sales associates, to see how things are going. Most of the rest of the Daum's time is spent networking with new potential sales associates.

The Daums take the approach that every lead has a potential. For example, in March the couple plans on hosting another couple from Ohio - strangers that were referred to them by a sales associate - where they will provide a crash-training course in everything USANA.

"Word of mouth," Tony Daum says, "is everything." That, and hard work.

REVIEW SUMMARY

Who. Tony and Tammy Daum, Palmetto

Business. USANA

Key. The Daums recently passed $1 million in annual commissions with the home-based, direct-marketing vitamin sales and manufacturing company.