Direct Sales companies are everywhere you look. Your friend sells; your cousin sells; the neighbors sell. Can you really make money from selling with a direct sales company in this multimillion-dollar industry? How do you know which company is right for you?
Now more than ever, people seem to be looking for ways to make money. Direct Sales companies have been around for a long time. Chances are, you know someone who has involvement in one of these companies. Starting one of these businesses can be easier than you think.
But, are all Direct Sales companies created equally?
Not hardly.
Regardless of how you may feel about these companies, there are people seeing real success from selling with this model. Let’s take a closer look to see if you can find a company that will fit your lifestyle, income demands, and your family’s needs.
Find the right Direct Sales Company
Your success with a Direct Sales company (also called Network Marketing) is only as good as the company itself. There is a company for almost anything you can think of.
The appealing thing about Direct Sales is the ability to make money from your home, low upfront costs, and the discount that is associated when you join.
It sounds like a dream come true, right?
Companies and their leaders will use a few special statements to be less intimidating to appeal to even the most introvert person they are trying to reach:
You don’t have to be a salesperson to do this!
Work your own flexible hours!
This product sells itself!
You will pay for the starter kit in your first month!
The list goes on and on.
No matter what the company says, or how much money you could make, your success comes down to one thing: you. You have to work your business to make money.
Finding the right company for you will take a little research. But, before you start your new business adventure, you need to figure out your Why.
Your Why
The thrill of starting something new will carry you for a limited amount of time. When sales are low or the leads run out, you will have to have something that keeps you going. Your ‘Why’ will also play a key part in the money you spend vs the money you invest.
Here are a few thoughts to get you started:
Do you want to work from home?
Do you want to make $_______ / month?
Will this job pay for preschool tuition or daycare?
Do you want to quit your full-time job?
Do you want to have money to pay for a vacation?
Think about the reason you have started to look into Direct Sales. What is the most important reason you want to pursue this? This has to be a powerful reason. Starting a business like this is still a business. You will experience ups and downs along the way. Your ‘Why’ will pull you through and help you make decisions along your career path.
Company Values
When selecting a company to work with, it is always easier to market products that you feel good about. Many companies have charities they support or missions they feel strongly about.
Matching up with a Direct Sales Company that reflects your values and ethics will make selling more fun and inspiring.
Upfront Costs
The pitch that companies often lead with is:
“This business costs less than opening a brick and mortar business.
A statement like this is often true. You purchase the company’s kit, and they will send you on your way with “everything you need to start your business.”
{Side note: The more you pay for your kit, the more items or higher-priced items you will have to sell to have a return on your initial investment.}
Minimum Sales to Stay Active
Most Direct Sales Companies have a minimum monthly or yearly sales quota you must meet to stay active with their company. If you choose to grow a team, your sales and your team’s sales must meet a quota as well to keep your ranking with the company.
Divide out the monthly amount you have to meet into bite-sized amounts. For example:
Quarterly Minimum to Stay Active: $250
$250 ÷ 3 months = about $84/month in sales
$84 / month ÷ 4 weeks / month = $21 / week in sales
$21 / week ÷ 7 days / week = $3 / day in sales
This may not seem like a lot, but it is still the amount you have to sell every quarter in order to stay active with the company. Minimums will vary by company.
{Side note: Do not fall into the dangerous trap of buying your own products to make your minimum. You will always rely on this as a fallback and will have a hard time pushing yourself to make real sales.}
Consumable vs Nonconsumable Products
When choosing a company, the merchandise you are selling plays an important roll in how your products will sell. Products that are gone when used (skincare, oils, wax melts, wine, etc.) will have to be replaced frequently by one customer.
Other “lifetime” products (books, bags, jewelry, cookware, etc.) can be harder to sell since they will last a long time. But, these products are easier to offer as gifts.
What items would you be the best at selling?
{Side note: Selling items that you love will make it easier for you to sell and inspire you to learn more about the products. Increased knowledge about the products will improve your selling skills. You will have more information readily available to your customers to increase their likelihood of purchase. Upselling will also be easier since you will know what products to pair for the sale}
Inventory
There are companies that require you to carry inventory for your orders. This means that you will fulfill customers’ orders from your home and hand-deliver or ship their items to them. The tricky thing about inventory is there is no guarantee you will have everything on hand a customer is looking for. You will then have to place another order to fill in whatever it is that you are missing.
Do you have space for inventory?
Will you have a system for delivering orders?
How will you pay for inventory upfront?
With items that are perishable, you will be responsible for keeping fresh products on hand. Companies will change their design packaging from time to time. Cosmetic and skincare companies will often update their colors and regimens.
You will have to continuously keep your inventory up-to-date. If you do not frequently move your product inventory, you could end up spending more to keep your products in-date and in up-to-date packaging.
Website Orders
Direct Sales Companies have been rolling out online shopping platforms for years. This is a great tool to help you reach customers outside of your local neighborhood.
Keep in mind, there is usually a yearly or monthly cost to this tool. This will be an additional cost that you will have to pay for every time it comes due to keep your website active.
How much will your website cost you?
{Side note: You will have to promote your selling link to increase the sales you have to your website. Business cards, social media, and word of mouth will help your customers locate your site. With most sites, the customer must have your full name and location to access your exact website, if they do not remember your shopping URL. Placing your information or business cards on products when you sell them, will help them become returning customers.}
Travel or Online Sales
Even if the company you want to work with offers a website for sales, you will still have to find customers to get to your site. This may mean traveling to vendor events.
Are you willing to travel to events?
How much will you budget for gas to these events?
How many events will you attend each month?
What are you willing to spend for each event space?
How much will you spend on your display?
How much will you spend on product display inventory?
What will you spend on samples and sample tools? (Skincare requires single-use, disposable tools.)
If this will be a big part of your selling plan, be sure to check the bylaws of the company. Some companies do not allow you to sell at events. Others may only allow one seller per event/area.
Knowing this before you choose a company will help you with your selling plan. If there are multiple members of the same company in your area, you could have a harder time carving out your spot in your local community.
Company Conferences
Direct Sales Companies will have a minimum of one company-wide conference per year. There are companies that will hold large quarterly conferences. There are often incentives to attend; product credits, first peek at new products and “blingy” badges to entice you to come.
Keep in mind, it will cost you money to go to these conferences. Make sure the reward outweighs the cost. Companies will make their important information available for all of their consultants. They want to make sure their sellers have everything they need to make a great sale and keep customers.
Here are a few expenses you may come across:
How much will the conference cost you?
Will you have to stay in a hotel?
What will your travel costs be?
How far will you travel?
{Side note: Finding out the details of the companies conference before you sign up will help you make the decision to go. Make sure the conference will benefit your “why” before you sign up to go.}
Team Meetings
Leaders will often hold team meetings. Their paycheck is earned by the percentage you sell. With a weekly or monthly team meeting, they can check-in and help you hands-on with any problems you may have. Introduction to products and new information will be done at these meetings.
For the people who join network marking to meet new people, these meetings are also a time to bond and cheer each other on. That being said, there are leaders who will use these meetings to pressure you into “doing more.”
Stick to your “why” and sell for your reasons. These meetings will take time. You will drive to a meeting, or meet over a video conference. Finding out how these meetings are run will help you determine your time commitment.
Will these be in-person or internet meetings?
Do you have the equipment (computer/internet/smartphone) to make an online meeting?
When do these meetings take place?
How long will they last?
Babysitting Cost
Once you have figured out your time commitments to your business, will you need a babysitter? Because of the ability to be time-flexible, Direct Sales Companies are often sought after by mothers. The promise of making money from home is what draws most mothers in. After looking over your time and travel needs:
Will you need to pay a babysitter for any part of your business?
About how much will this cost you?
How often will you need a babysitter?
Unfortunately, after doing the math, a babysitter may cost more than the commissions you bring in. As a result, you could go into personal debt trying to make more money.
Taxes
A convincing selling point I have heard in the past to join a Direct Selling Company is:
Use this as a tax write off! You can’t go wrong!
**** I am NOT a CPA or an Accountant****
That being said, I know the IRS is not happy if your business is constantly losing money. You and your CPA will have to determine if this is a business or a hobby. Please do not let your potential upline convince you otherwise.
If you are unfamiliar with “tax talk”, I strongly encourage you to speak to your CPA before signing up. There are rules to this side hustle. It is a business and the IRS expects it to be treated like one.
Be prepared to track all of your expenses and incomes with detail. Travel to and from any company related events or sales should also be recorded. These are just a few important things to take note of.
Again, I encourage you to have a discussion with your tax advisor before signing up for a Direct Sales business.
Can you collect Email Addresses?
One of the most important things business owners hold in priority is starting an email list. Regardless if you believe email is dead, it is a platform you own. Having a social media marketing plan is great, but if your account is hacked or something goes wrong with the platform, how will you reach your audience about an amazing sale?
Some companies will send out newsletters for you. This may be a cost per email sent or a monthly fee. If the company allows you to collect your own addresses from sales and parties, you may be able to set up your own email list to communicate with your customers. This will be a bylaw in the Direct Sales Companies rules.
What will your commission be?
The commission is the amount you receive for selling an item for the Network Marketing company. This is predetermined before you sign up with the company. There may be different levels of commission you receive based on an amount you sell or the size of the team you build.
What will your starting commission be?
Because of the increased commission when you build a team, people will often recruit their best customers to be on their team.
It is important to remember, the commission is your paycheck, but it is the way you will pay for all other expenses you have for being a part of the company. After calculating your expenses:
How much do you have to sell to cover your costs?
How much more will you have to sell to reach your “why” goal amount?
Are you Passionate about Selling
After you have done all your research, it is time to decide if joining a Direct Sales Company is right for you. It all comes down to one thing:
Will you be able to sell your products?
Contrary to popular belief, not everyone is born with a “sales” ability. You have to have a solid mindset that you can work this and be smart about it. If your “why” is a strong one, it will help you power through difficult times.
Keep in mind, it is important to have an audience outside of your family and friends. It is comfortable to sell to a “warm market”, but is that where your money will be? What will you do when you outsell your circle?
Time to Decide: Is a Direct Sales Company Right for You?
Because this is a new business, be sure to speak to your family about your new idea. Their support will be needed just like any other business you start. As a result, you will have a new home “cheering squad” to help you celebrate your milestones.
To sum it up, you have a lot of thinking to do! Don’t let anyone pressure you into joining a company. Evaluate these important points to determine if you can make money by joining a Direct Sales Company.
resources
Check out these additional resources to help you with your Direct Sales Business:
