As you’re working your debt-free plan, you may be encouraged to get a second job. It’s a task that seems impossible for busy moms. Carve out 2 or 3 nights a week!?!?!
Direct sales can seem like the perfect solution. Set your own hours. Be your own boss. You’ve heard the spill.
Dream come true, right?
Well, maybe.
Direct sales can be a fun, rewarding, and even in some cases lucrative business.
But it can also be a “get poor fast” scheme.
I have a couple friends that do it; a few that even do it successfully. At one point in my life, I even tried it. So if you’re looking into it, or doing it, here are some financial tips to keep in mind.
· Don’t spend more than you make. Genius, right? Give me the Nobel peace prize. J But seriously, take a minute to add up the cost of all your prizes, giveaways, incentives… I often heard Senior Executives say, if “I’m going to make $100 from a party, and it only costs me $20, I still come out $80 ahead.”
That’s true. But do realize that is still 20% of your income. If you have to spend 20% in addition to hostess rewards, you’re with the wrong company. It’s okay to give “From Me” freebies, but make them contingent on something else that earns you more money.
· Don’t get fixated on a title. After I got out of my direct sales company, I found out a dirty little secret. My “Senior Executive” spent hundreds, if not thousands, to keep her title up. She needed so many units active; and when they didn’t perform, she had to funnel shows their way to keep their performance up. She was barely making it each month.
She was losing thousands of dollars in sales and income for a title. Yes, that brought some additional revenue. But do the math. Are you losing several hundred dollars a month for a 2% bonus? Make sure that bonus is more than you’re losing.
· Don’t buy into performance goals. Performance incentives are to make you work harder and can be a great thing. I once knew a consultant who spent $4000 to meet a production goal for a “free cruise.” $4000 buys an awful nice cruise. Earn them honestly. Your credit card will thank me for it.
· Keep track of what you use. Even though tomorrow is technically tax day, I have to throw in a tax tip. Keep records of your personal consumption. Makeup, purses, candles, etc. If you use it, it is not deductible. You cannot buy “kit additions”, carry it around town for two months and then deduct the cost of it. That’s personal. If you don’t account for your personal use, the government will and you probably won’t like that number.
· And one more tax tip, remember that the IRS considers anything that loses money for 3 years a hobby and is not deductible. If you’re business is running in the red year after year, someone, other than the IRS needs to give you a wake up call. Get out or sell more. Period.
· Set a budget for your business. Your business won’t last forever on your starter kit. You’re going to have to replace those catalogs, order forms, samples, etc. Put money aside each month for business expenses and include postage!!!
Direct sales is a business that is completely reflective of your work. You won't get any more out of it than you are putting in.
Work it like a full time job, and it can make full-time income. Work it like a hobby, and you'll probably stay in the red.
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