Some of you may have heard me mention I used to work in direct sales. I did it twice in my life. The first time I bombed horribly, the second time, a decade later, I rocked the business so much people were shocked to learn that I decided to shut the doors to my business. The reason I stopped selling has nothing to do with the business, because I loved it, it made me smile, I was honestly sharing those positive life moments with hundreds of people, and they loved me for it. It has everything to do with my own situation and personal life, but, that’s a story for another day.
Today I want to share some questions you need to ask before you decide to start up a direct sales business. These questions will help you gain insight into the business so you can make a well informed business decision before you sign those papers and make your initial investment.
Questions to Ask Before Starting a Direct Sales Business
Do I have a passion for this product line and business? One of the biggest factors in your direct sales success will be how much you believe in the product you are selling. If you try to sell a product you don’t love, the lack of enthusiasm will show, or if you’re a great actress and fake your love for it, eventually people will figure it out and you won’t come across as authentic. Make sure you love the product and love the business! Do you use this product? Do you think this product is worth the price in the catalog? Do you think nothing else works better? Have you researched the business practices of this particular business to find out how they treat their consultants? What about charity? Do they donate? Think of all the things you would want to know about a business and start researching. Ask current consultants and ex-consultants from that business to get the inside scoop, remembering that a lot of current consultants will give you the extreme positive and some ex-consultants who couldn’t get the business working for them will probably give you extreme negatives. Try to find the balance in between their opinions and ask follow up questions to learn more.
What is my commission? Along with this one you’ll also want to know what the maximum commission is as well as how you can move up into different commission levels. Most direct sales companies will pay you a percentage of your retail sales. So if a catalog has the product listed at $100 and you have a 35% commission, you’ll get $35 from that sale. Make sure you find out how much shipping costs and how much you charge customers for shipping. With your commission remember you’ll also be making other business purchases, so your actual income on that $100 sale that has a $35 commission will be less. You’ll also need to purchase catalogs, order forms, and bags for your customers to take their orders home, at the very least.
With all of that said, have an idea of how much you want to earn in one month, and be realistic, there is a learning curve. Do you want to earn $100, $200, $300? Do the math to see how much retail product you’ll need to sell, minus necessary supplies, to earn the dollar amount you want to make (keep in mind tax, shipping to the customer if you mail it and shipping to you from the company to make sure all of those are covered in the shipping and tax fees you’re charging the customer, or if you need to take some of it out of your own commission)
Example, let’s assume taxes and shipping fees all equal out so you don’t have to spend any extra there, and you’ll need to spend $50 on your business supplies to earn your goal of $200. Your commission is 35%. You’ll want to sell around $750 retail in one month in order to make $200, which will leave you with $62.50 for supplies.
Having your specific goals outlined before you sign up is a great way to determine before hand if this particular direct sales business is going to be the right one for you.
What incentives does the company offer? Incentives are the fun little extras. Can you earn a car? What about a vacation? Do they have a board of directors or any other boards or clubs you can become a member to and what does that status offer you? Is there a way for you to earn free product? What if you recruit new consultants, what is the incentive for that? I’ll be honest, while I never pushed myself to do as well as I needed to earn the big vacations (and yes, it does take a lot of time and work to make the big bucks in the beginning), but I did earn a lot of free product, and that’s how I gave my hostess incentives, which again, came out of my commission so that was another knock there, so if I could earn them free it helped.
Do I have the time to dedicate to this business. As I mentioned before, don’t let anyone fool you, you are running a business and you get out of it what you put in. If you want to make money, you’ll need to take the time to promote your product, usually by doing parties for people. Then you’ll also want to make follow up phone calls, take care of your business data entry and record keeping, placing orders, shipping or delivering orders, and anything else you decide to do with your business. It takes time. The more you put into it, the more you can make. Once you get moving in the business, sure it takes less time then, but to begin with, it takes quite a bit of time. Look at your lifestyle and realistically determine how much time you want to offer this new business endeavor. Find out how much time a party takes, then determine how long you’ll spend on phone calls and data entry each week. Do you think that will be enough to reach the profit goal you have for the month?
What is the demand for this product in my area? Who do you know that would be interested in this product, and more importantly who don’t you know in the area that would be interested in it? Sure your friends and family are a great place to start, but never expect them to be your customers. Some consultants I know refuse to sell to friends and family because they don’t want to have any business conflicts come between them. Even with that idea aside, you won’t build your business to make the money you probably want if you’re just pushing to your friends and family, and honestly, they may not have the money to buy from you repeatedly, and may not be interested in the product. And that’s okay. Never try to force your product on anyone, it can burn bridges. You’ll want to get creative about talking to people about your product to get them interested and make new customers. I’ll talk more about this in another post where I can go into specific tips.
In addition to knowing who your customers will be, in general, that is, you’ll also want to know how saturated your area currently is with consultants. If there are hundreds of consultants in your area and everyone you talk to already has a consultant, you may have trouble finding customers.
What requirements do I need to maintain to remain a consultant? Every direct sales business has it’s own requirements. You’ll need to place so many orders from the company in a certain time frame. You’ll have certain required sales behavior, some stricter than others. You’ll have certain ethics specific to that particular business, not just regular business ethics. For example, some direct sales businesses require you to wear certain types of clothes when you present their products, some will say if someone has a consultant you can’t touch that customer, but others will say it’s up to the customer if they want a new consultant. Talk to different people in the business and ask to see the business policies and requirements so you know exactly what you are walking into.
These aren’t the only questions you’ll be asking. I’m sure you have a few of your own, and I may have missed some others. But, these questions should help you determine if starting a direct sales business is going to be right for you.
- Do I love the product?
- How much money will I make?
- What extras can I earn to motivate me and help me along?
- How much time will it take.
- What is the demand for the product in my area?
- What do I need to do to remain a consultant?
What other questions would you ask before signing up to be a direct sales consultant? Share your ideas in the comments below.