May 7, 2010Ten Questions to Ask When Considering a Direct Sales Home Business
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:
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 Demas has published her web site:
the Online Magazine for Work-at-Home Moms, since 1995. Her book
"The Work-at-Home Moms Guide to Home Business" is available online
or at your favorite bookstore. Cheryl lives in California with her husband and two daughters.
Permission granted for use on DrLaura.com.
Posted by Staff at 1:42 AM