Ten Questions to Ask When Considering a Direct Sales Home Business
by Cheryl Demas
If you need extra income, a flexible work schedule, and you like
the idea of owning your own business, you might want to consider
joining a direct sales company. There are hundreds of companies
to choose from, offering a wide variety of products. But there
are also
things to watch out for, so use this list to ask the right questions.
Do you love the products?
Don't think only about the company's commission plan. Think about
the products. It is better to make a 25% commission on a product
you can sell than a 50% commission on a product you can't sell.
Ask yourself, "Would I buy these products even if I wasn't
involved with the company?" To be an enthusiastic salesperson,
you have to believe in your products.
Do you know exactly what you will receive in
your starter kit?
Most direct sales companies have a starter kit that new representatives
must buy. The costs can range from $20 to over $200. You should
be given an inventory of exactly what your kit will include before
you send your money. The contents should also be listed in specific
details. For example: "You will receive 50 full color, 25
page catalogs and 25 tri-fold opportunity brochures" not just "sales
materials".
Is the starter kit a good value?
If you are told that you will be getting a kit worth $300, add up
the contents and make sure you're getting your money's worth. Some
companies may include an instructional video that they claim is
worth $50, or forms that you could buy yourself for much less.
The company shouldn't be making money on their starter kits. Do
the math.
Is there a clear return policy?
Be sure that you can return your starter kit if you aren't satisfied,
and that you can also return unsold inventory. Some companies specify
that items you return must be in reusable condition. Be sure you
know what they mean by "reusable." It may mean that your
kit or products have to be returned unopened. So ask specific questions
about the company's return policy.
What is the "buzz" on the company?
Search the Internet for the company and ask questions on bulletin
boards. Look for forums of people who used to be involved with
this company. Find out what they're saying and listen to the reasons
they left the company. You can't beat the voice of experience.
People who are trying to get you to sign up have a financial interest
in getting you to join their company; you need to also talk to
people who can give you an unbiased opinion.
Is the company a member of the Direct Sales Association (DSA)?
Every member company of the DSA pledges to abide by the DSA's code
of ethics. It is a good place to start a search for reputable companies:
http://www.dsa.org
What is the minimum amount of sales you must achieve each month
to remain active?
Many companies require a certain dollar amount of personal sales
that must be met each month for you to receive your commission checks.
Find out if your company has such a policy and what their personal
sales goals are.
How much will you have to sell to make a decent profit?
Set income goals for yourself and calculate how much you will have
to sell to reach your goals. Also calculate how much of your time
will be required to complete a sale, and then calculate your hourly
rate. For example, if you present a 2-hour home party and make
a $100 profit, you may think that you've earned $50/hour. However
if you spent 5 hours recruiting a hostess, preparing your presentation,
mailing invitations, and making follow-up calls, then 2 hours on
the actual night of the party, and 3 more hours of follow-up and
product delivery, your hourly rate would actually be $10/hour.
Still not bad, but you need to consider all the tasks that will
require your time when you're looking at an opportunity.
How long will it take to establish a profitable business?
Every business has a startup phase. Calculate what your startup expenses
will be and how long you estimate it will take you to build up
your customer base and start making a profit. It's important to
have a realistic picture and a plan for your business so you won't
get frustrated as you begin your business. You will be able to
look at your plan and know that there is light at the end of the
tunnel.
Will there be pressure to recruit other sales representatives?
Direct sales organizations are often set up so that you make a commission
on the sales of people you have recruited to become representative
themselves, this is known as your downline. This is also called
Multilevel Marketing (MLM) or Network Marketing. Many legitimate
companies use this method of payment, but some may encourage you
to use high-pressure sales tactics to recruit your downline. Your
income should be based on sales of actual products, and perhaps
eventually the sales of those in your downline. But your focus
should not be on recruiting others. Find out if you can earn a
decent amount through your own personal sales, or if you will be
expected to recruit others.
Many moms have found great success running their direct sales home
businesses. They appreciate the freedom and flexibility it gives
them to earn income while staying home with their children. If this
sounds good to you, take your time, research the opportunities, and
ask questions. Curiosity may have killed the cat, but it will save
you a lot of headaches.
Cheryl is the founder and publisher of WAHM.com. She
lives and works at her home in California with her husband and two
daughters. She
is also the author of It's
a Jungle Out There and a Zoo In Here and The Work-at-Home
Mom's Guide to Home Business.
