Direct Sales companies are the tried and true method of working from home. Some of the companies are brand new and others such as Avon, Tupperware and Mary Kay pioneered this industry over two decades ago. The premise of a direct sales company is to enlist Independent Sales Consultants to sell their products to friends and family and via home shows or home parties. The sales consultants earn commissions on the sales and sometimes other incentives like products, prizes and vacations. With hundreds, if not, thousands to choose from, how do you know which on is right for you?
Here are a few things to consider when making your choice:
- Find a product you love! You can not sell a product you would not use yourself. You can not successfully sell a product you can not stand behind and be enthusiastic about. Do not be afraid you will not find something you love, there are direct sales companies for cosmetics, skin care, bath and body, household items and decoration, food, jewelry, cleaning products, greeting cards, books, baby gear, clothing, and much more.
Check out the commission structure. Many companies offer a straightforward payment plan of something between 10% and 40% commission with the average being around 25%. Others have tiered programs that offer higher commission for higher sales volume. Some have multi-level programs that become vary complex.
- Downline Sales. Most direct sales companies encourage you to build a team of sales professionals offer you a commission on their sales. This commission is generally around 10-15%. You might even be able to earn lesser commissions on indirect sales consultants, i.e. the people your team members recruit, or even their team members. So when researching the perfect direct sales company for you, be sure to ask about the downline structure and if it has multiple tiers. One word of warning, companies that offer multiple tiers of downline commission often offer you a lower commission on your own sales so that is an important difference to weigh out and determine exactly how you will benefit most.
Incentives. Other than your commission, you might be able to earn bonuses, prizes, free products and even trips.
- Investment or Start Up Cost. If you have read anything about work from home programs, you have probably been well warned to stay away anyone who wants you pay an upfront fee. This is good advice if you understand what it means. Scams are when you are asked to pay a fee to apply for an hourly paid job, pay a fee for a package or start up kit that you never receive and many other sneaky and underhanded ideas. These scams are different from paying for a start up kit in a legitimate direct sales company. When you become an independent consultant for a direct sales company you are in essence starting your own business. And it is completely reasonable to be asked to make an investment in your new business. This investment can range from as little as $5 to as much as $1,000. On average the cost is between $100 and $200. The reason for this investment is two-fold. The benefit to the company is to help make sure that the people who sign up are serious about selling. The benefit to the new business owner is that you get products and business supplies that help you get up and running.
- Hidden Costs. Generally when you sign up with a direct sales company, you will do so under another consultant who becomes your team leader and mentor. They will be the one who helps you to understand the commission structure and other benefits and costs before you sign up. But always make sure you ask about hidden costs that you may incur other than the cost of the start up kit. For example, while some companies offer you a free website, most will charge extra if you want to make sales via a website. They may even charge an additional fee to allow your customers to pay via credit card. While your start up kit may include some business cards, catalogs and brochures, once those are gone you’ll need to purchase more. Find out what they charge. Other hidden costs come into play if you plan on selling via home parties. Do you need to carry stock or additional samples to display at the party? If your product consumable, such as food, you may need to pay for samples for each party. Another hidden cost involving parties is the hostess plan. The hostess plan is incentives offered to the hostess of the party to entice them to have the party in the first place. Sometimes the expenses of these incentives are paid for by the company, sometimes they are paid for by you, and sometimes they are split. All of these costs, while legitimate business expenses and tax deductible, will, none the less, affect your bottom line and earning potential.
- Quotas. Another way that some direct sales companies make sure you are serious is to impose quotas or purchase minimums. These may be monthly or quarterly. Make sure you are confident you’ll be able to meet these quotas and find out what happens if you do not.
- Payment. And of course, you’ll want to be clear on how you get paid and how often. Make sure to take into account how this payment method will affect your taxes too.
If you are interested in working from home, direct sales offers an affordable and potentially lucrative business choice for the determined, disciplined, self-starter.