Category Archives: Getting Started

Starting your Direct Sales business and How to Finance It

Want to start your own business but do not have the money to do it?  Here are some methods to help finance your startup and get you going.

Direct sales can be a very exciting industry, and when you find the company that suits you, you are ready to jump in with both feet and get started.  Unfortunately, sometimes having the money to get started, even an amount as little as $20 can be difficult to find, but there are some things that you can do to help you with this.

Money cash

Money cash (Photo credit: @Doug88888)

Have a Party – One of the best ways to get started is to host your own party!  If you have found someone to sign up with that is local to you, see if they will come over and do a party for you and give you all the sales.  If your friends know this is going to be your debut party, they will likely come out and support you.  Not only does this get you your kit, but it also gets you started on any new consultant program that your company may offer.  Be prepared to sign on the dotted line the day of your party, or else the consultant that did your party will be within their rights to keep all sales and you won’t get the proceeds to signup.

Odd jobs – Can you do some odd jobs for friends, family or others?  Check your local classifieds for people needing help with various things like house cleaning, dog walking, lawn mowing or anything else you are capable of doing.  Before too long you could have the money raised!

Garage Sale – if the weather is nice, haul any unneeded items you have onto your driveway or lawn and try to sell it.  Once you get started sorting out your house, you will be amazed at much you can find to sell.  Remember that you will never get as much for your items as you think they are worth, for instance, books will sell anywhere from a nickel up to 50 cents (at least where I live).

Borrow – See if you have a relative or friend that might lend you the start up fee or help you in some other method.  Maybe you can ask a few different people to help you out.  In return, you will want to pay them back and you may want to offer them a discount on product or something else as a thank you.

Charge – Do you have a credit card with some room on it?  While it is always best to buy things with cash, you can put your kit on credit.  Make sure you take any money you make at the party to pay it back before you start paying interest on it.

Payment Plan – Does the company you are signing up with have a payment plan?  If so, use that.  Or you may have to choose a lower level kit than what you want, and work on building it up with profits.  There is nothing wrong with doing this.

While direct sales may be cheap to get into, sometimes cheap is still hard for some people, and they are joining a company to make money.   Don’t forget that there are additional costs in direct sales that you will have to have money to pay for, even if all you get are new catalogues.

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Do I have to do Home Parties?

No.

While direct sales are based upon home parties, you definitely have other options when it comes to sales. The home party may be the easiest method, but it is not the only method. Here are other ways you can get sales.
• Catalogue parties
• Internet sales
• Open houses

Here are the statistics about where sales are happening, which confirms that the home party is the best method, but you can still do well with other methods.

How/where these sales occur

77.1% involve face-to-face selling.
Of the face-to-face sales:
70.4% take place in the home
3.7% are in a temporary location
2.5% are in the workplace
0.5% are in other locations
22.9% involve remote selling.
Of the remote sales:
11.4% are through the internet
8.8% are by phone
2.7% involve other remote means

http://www.dsa.org/research/industry-statistics/

I don’t have a car right now; can I still enrol in direct sales?

You can, but it may be more difficult for you to get to and from parties.  That said, you may prefer to stick to catalogue parties or Internet sales until you have a vehicle.

If you have access to public transit, that can be a good way to get to and from, but as you know, it is not always the fastest or more efficient way to get around.  Invest in a good suitcase to help haul your stuff to and from.

Of course, you can always cab to and from, but this could get pricey and there is no guarantee you will be make your money back.  You can use these costs on your taxes though.

Home based business vs a Retail business?

Chances are you already know the benefits to having a home based business instead of having a retail business, but just in case, let us review them. Maybe we will stumble upon something you are not aware of.

Flexibility – When you work out of your home, you have the flexibility to do things when you want and how you want.  This is especially important with direct sales as you can book events when you want to do them.  Have a kid’s birthday party?  No problem, don’t schedule an event that day.

Time Commitment – You can make just as much money in a few hours in direct sales as you can working an eight hour shift somewhere else.  If you work your business well, you can pretty much be guaranteed whatever income you are looking for.

Cost – Ever wanted to start your own business but you only have a few hundred dollars?  No problem!  I have not run into any company that costs more than $500 to start up!  And depending on the company, you may even be able to earn that sign up fee back!   Have you ever heard of starting a retail business for that amount?  Chances are you going to pay more than that in rent per month.

Profits – Not only is it cheap to get into direct sales, but you make profits fast!  Even if you do not get your kit for free, within doing a few thousand dollars worth of sales (depending on kit cost and commission level) you have made back your investment and are into profits!  Try doing that in a retail setting.

Tax Write-offs – This is a favourite for everyone, the write-offs you get working from home.  You are able to write off portions of your car, your fuel, the products you buy for yourself and family (product testing is important, right?) and so many other things.  Always check with your tax accountant or buy a proper tax program to help you with this.  But make sure to keep a mileage book and all receipts until tax time.

I have heard some people say that if you own your home, it is stupid not to run some sort of home based business, at least for the tax write offs.  But imagine getting into direct sales and being able to make money relatively easy, and get the write offs to go with it.  Win win!

 

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Isn’t direct sales a pyramid?

Definition of Directs Sales from http://www.internetmarketingdefinitions.com/DirectSales
Direct Selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location. These products and services are marketed to customers by independent salespeople. Depending on the company, the salespeople may be called distributors, representatives, consultants or various other titles. Products are sold primarily through in-home product demonstrations, parties and one-on-one selling.

Source: Pyramid Scheme From Wikipedia, the free encyclopedia
A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public.

As you can tell just from those definitions, direct sales is about selling a product, so whenever money is exchanged, the person giving the money receives something in return. In a pyramid scheme, typically money is exchanged and there is not much product involved. You also only tend to make money when people sign up instead of when you make a sale.

Why should I start in direct sales? What is in it for me?

Well, there are a variety of things you will get.

Money – This is always a big thing for people, as most are looking to make extra.

Flexibility – The ability to work when you want to work.

Getting out of the Home – For some stay at homes, this is a big reason to get into direct sales.

Confidence – This can be a big factor for some people.

As with anything, what you get out of your direct sales business will be proportionate to what you put in.  If you only put in one event a month, you can’t expect thousands of dollars and all the perks.  But if you put time and effort in it, the rewards can be endless.

What are the benefits of a sponsor?

The short answer is that no, you do not need a sponsor, but most direct sales companies do not allow you to sign up with the company directly.

Let’s discuss the benefits of a direct sales sponsor before talking about where to find one.

Unless you have been in direct sales, or even sales before, you may need some help and guidance in regards to what to do.  Your sponsor can help with this.  If you get confused, are not sure how to handle a situation, want to see a party, or just need help, your sponsor is there to assist you.    You may want to choose someone who is local to you, or you may click with someone who is further away, the choice is yours.

Not every sponsor is created equal, so it is suggested that you interview your sponsor before you sign up with them to get an idea how they operate.  If you feel that you are going to be contacting them for help, this is likely a good idea.

If you just want the sponsor so you can sign up, and you have no intention of ever contacting them, then you might want to just pick someone.  If this is your preference, when your sponsor contacts you after signing, you can just let them know you prefer to work on your own and you will be in touch if need be.

Now, you have a couple different ways to select a sponsor.

1)      Chances are the website has a method that will allow you to search for demonstrators.  Search for demonstrators, select one, and sign up under them.

2)      Talk to potential sponsors – If you do not know someone in the business, you can search on the website and then contact the people that pop up and decide who you want to sign up with.

What is the best way to get started with my direct sales business?

The best way is to start with a method where you feel comfortable.  A few suggestions though:

1)      Host your Own Party – Have a party yourself and invite everyone you know.  If people already know the product, this is a bit easier to get people to turn out, especially if they like it.  Regardless, ask them to come, check out what you are selling, and tell you what they think about it.

2)      Ask Someone to Have a Party – Depending on what you are selling, you may be able to get someone to host a party for you.  Ask your parents, your friends, someone.  This helps you get a comfortable start, but also allows you to start expanding your circle of possible hostesses.

3)      Open House – Another great thing you can do is have an open house. It is a come and go event for a few hours and people just drop in, check out the product, and hopefully order.  Invite everyone you know and invite them to bring a friend.  You might even want to offer a small gift if they bring a friend.  Some people give the hostess benefits away (do a draw for different things – purchase, booking, friend, etc).

4)      Vendor Events – If you cannot get anyone to host, or do not know anyone, you can try a vendor event.  But be warned that these can be hard to use for bookings or sales, and every event is different.

5)      Classifieds – As a last resort, you can try the local classifieds.  Make sure you adhere to any rules your company may have about advertising.