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Do Your Research
Researching a direct sales company before
signing the contract can save you lots of headaches.
by Anna Matetic
All materials copyrighted
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Have you ever run into this problem with direct sales? You attend a party and really enjoy the products. The enthusiastic consultant does
her job and before you know it you’ve signed up without really thinking about the opportunity. It’s after you sign up that “you find all
the catches,” says Mary Lou Stewart, a ten year veteran with Avon.
Before signing up with a direct-sales company, it’s important to spend some time getting to know the company by asking the following
questions:
What Are The Start Up Costs?
Find out what’s included in the start-up kit. Does your start-up kit include everything you need to start your business or will you need
to buy products and supplies in addition to your start-up kit?
Can you afford the start-up kit without going into debt? Even if you are interested in the business, eliminate it from your list if the
start-up kit and start-up costs are outside your budget.
What Is The Product Price Range?
Your customer base will begin with people in your social groups: family members, friends, book clubs, and church groups. Are the products
reasonably priced for the group of people you know or are they too expensive?
If the products are too expensive for you to buy without a consultant discount, or you wouldn't be willing to pay full price, then your
prospective customers will probably feel the same way.
What Product Will You Sell?
Don't base your product selections solely on what you like and don’t like. Take into consideration the tastes of those in your social
groups. Are the products something they’d like and be willing to purchase?
How Is The Compensation Structured?
Paying close attention to all aspects of the company’s compensation plan is vital to the success of your direct sales business.
Does the company require a party to be a certain level in order to receive compensation? If so, what is that level? Is it a dollar
amount, certain number of guests, or certain amount of products sold?
What is the lowest compensation you can receive? Based on that dollar amount, will you be able to meet the financial goals you set?
How can you increase your compensation? Is it only done through product sales or is it also done through recruiting downline?
Finding customers, especially repeat customers can take a lot of time. But once you’ve built a solid customer base, good customer service
will keep your existing customers coming back. Stewart has 250 customers, helping her to reach an average of $40,000 in gross sales, not
income, each year.
Recruiting, on the other hand, takes up more time than finding customers. You’ll be mentoring new recruits by helping them build their
businesses. “If you're going to be a leader, then you really need to take care of your downline,” says Stewart. Taking care of your
downline includes hosting training sessions and spending time answering beginner questions.
If you are not comfortable with recruiting, or simply don’t have the time to devote to new recruits, keep that in mind as you review
compensation packages. Can you still meet your financial goals without recruiting downline?
Look For Hidden Costs
Hidden costs: “Those are the things you don't look at when you sign up with direct sales businesses,” says Stewart. Costs such as
brochures, catalogs, invitations, order forms, and samples; items which “you don't get discounts on,” she continues.
All businesses require supplies and direct sales is no exception. But these hidden costs can be a shock if you don't know about them
ahead of time so find out what items you need to purchase, from the company, in order to hold a successful party.
What Are The Monthly Minimums Or Required Quotas?
Some companies require consultants to sell a certain amount of product per month, or quarter, in order to stay an active member of the
company. What does your company requires?
Stampin' Up requires their consultants to sell a minimum of $300 every quarter. For consultants who regularly book parties, or other
events, meeting this quota is no problem. But “if you don't have time to do the parties or other events,” says Tina Williams, a former Stampin' Up Consultant, “you could fall into the trap of not having enough for the quota.”
Knowing the quota is not only important to stay with the company, but it’s important to know in case you have a few slow months or want
to take time off from your business for personal business or family emergencies.
In addition to finding out what the quota is, you should also find out what happens if you miss a quota. Will you lose your downline?
Will you have to start your over? How can you reactivate your business?
How Many Reps Are In Your Area?
This is one of the biggest questions to answer. If there are too many representatives in your area, you will have a hard time building a
substantial customer base—unless you plan on traveling outside your local area to do it. Remember, without customers you have no
business.
What If You Change Your Mind?
Gung-ho with a new business idea, the possibility of failure never occurs. Yet it’s important to know what the company's policy is before
signing the contract.
Is there a certain time period where the company will take the products back? If so, what is the timeframe to return the kit and is
there a restocking fee involved?
If you research your opportunity well, your chances for success, as well as your satisfaction in the business you choose, will grow.
About The Author:
Anna Matetic is a Tealightful Treasures Consultant and a freelance writer based in Rochester, MN.
Contact her at anna.matetic@charter.net
*This article is NOT available for your publication.
For reprint rights or comments/questions about this article, please contact the author.
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