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Have you been thinking about direct sales as a way to make a little extra cash while still being your own boss? Direct sales can be the ultimate in supported flexibility. You have the marketing, accounting, and production support of a big company behind you, but still get to set your own hours and run your business how you want to in many ways. However, there are some pitfalls to watch out for. Here are my rules to live by in direct sales:
Rule #1: Choose the right company. You may love a certain kitchenware brand, but if everyone you know hates it, starting as a consultant with that company will be a huge uphill battle. Before signing up with a direct sales company, take a dozen catalogues and hand them out to friends and family, and ask them if they’d book a home party with you (or trunk show, manicure party, cooking demonstration, etc.). While you’ll eventually move out of your friends and family circle, they are where you’re going to start your business, and you don’t want to sell a product everyone you know dislikes.
Rule #2: Offer the opportunity graciously, and accept a “no” just as graciously. If you’ve joined this business to make extra money, don’t be surprised when friends decline the opportunity to have a party or purchase your product – they’re likely on a tight budget too. Respect your relationships and don’t let this business interfere with them. You don’t want everyone avoiding you because you put the screws to them to place an order. Why might you find yourself pressuring friends to order? Because you need to meet your minimums, which leads me to rule #3.
Rule #3: Don’t buy your minimums. Some companies have minimums you’ll need to meet to stay on as a consultant, while others may have minimum sales requirements in order to keep earning commissions on your team. Don’t fall into the trap of ordering product you don’t need to meet these minimums. If you’re finding it difficult to meet your minimum, it’s time to have an honest look at whether this product is the right product for you, or if you’re really as committed to the business as you need to be to succeed. I know a leader in a makeup company with steep minimums who is always posting on Facebook about how her team is, “rocking out the end of the month!” I suspect these aren’t true sales, but are the result of her team buying their pay rank.
Rule #4: Evaluate your real costs. How much are you spending on your cell phone usage, gas, child care, shipping, meeting fees and supplies? Have you been pressured to buy more and more inventory to have on hand when customers “want their product right away!” but you just keep dragging this product from show to show? Keep track of what you’re spending and how much you’re earning (see my first blog post, Are You Making Any Money).
Rule #5: Be authentic. If your company says their reps will average a certain amount of money per home party and a potential recruit asks you if you’re making that, be 100% honest. Don’t inflate your income or understate the time you put into your business.
I love working in direct sales, much more than I enjoyed having a retail store and the associated staffing headaches. I can set my own hours and put as much or as little effort into it as I have time for month to month. But it’s not for everyone, and many consultants will end up spending more than they earn, and dropping out quickly. Keep these rules top of mind, and you’ll have a better chance at succeeding!
Sarah Deveau of Calgary, Alberta has written two financial guides, Sink or Swim: Get Your Degree Without Drowning in Debt (2003) and Money Smart Mom: Financially Fit Parenting (2010). She has owned a children’s consignment store with annual revenue topping $400k, and currently works from home around her three children. Sarah writes for a number of publications including the Calgary Herald and Today’s Parent magazine, and is a leader in direct sales company Stella & Dot, with more than 80 Stylists on her team.