According to Direct Selling Association, almost 16 million Americans are involved in direct sales, an industry generating almost 32 billion dollars in sales in the U.S. each year. 82% of sellers are happy with their experience and the company they joined.
The start-up costs for these business opportunities can range from free to several hundred dollars. While a business opportunity with no initial investment may sound appealing, you need to look at the full picture before investing your time and your customers’ money.
Ask yourself the following questions before signing up.
How long has the company been around?
Some companies have been around for several years successfully offering free Boutiques. Others have sadly come and gone within six months. There is a risk of company closure with any opportunity, but new companies can carry a bigger risk than those established. You don’t want to build your own business, giving it 110% of your efforts only to find out, through no fault of your own, you have to start over.
What’s their customer service rating?
While we previously had to rely on BBB reports and Yelp ratings that may or may not be honest, we can now instantly uncover customer service issues. How? Social media! Any time you are considering joining a business opportunity, hit up the company’s Facebook Page and Twitter @mentions. You are not looking for just any complaint. Those will happen with every company. What you are looking for are posts that are receiving no response from the company and issues brought up repeatedly by customers. If there is post after post from people saying they paid for product they never received or never got a refund they requested, those are red flags. Those issues will reflect poorly on you as well.
What support do they provide their consultants?
One of the biggest benefits of joining a replicated business is that you are not going it alone – usually. A great company will provide their consultants with training, sales resources and a platform for accessing help. They may have weekly calls or monthly webinars. Many now have Closed Facebook Groups for asking questions and getting feedback from the consultant community. If no support is offered or mentioned, it’s a big red flag. You shouldn’t be left in the cold to figure things out on your own.
Are there hidden costs you aren’t seeing?
I cannot stress enough how important it is to read the fine print in your Consultant Agreement. While it may be free to join, there are most certainly other costs involved. Most reputable direct selling companies have activity quotas, meaning if you do not place a minimum in sales within a specified period of time you will not receive commissions. Some companies have a minimum dollar amount on each order. If you have only one customer ordering a $23 item but the order minimum is $100 that means you are either chasing sales or forking over the remaining $77 yourself. You also need to consider website fees. While most companies now offer consultant URLs for online sales it usually comes at a cost of around $10 per month.
What’s the product?
There is so much confusion between “party plans” and “network marketing.” Tupperware is a great example of a party plan business. The majority of a consultant’s income and focus is selling a product to non-consultants. While recruiting the occasional team member and stocking her own cupboards with Tupperware at a discount are perks, personal consumption and recruiting are not at the center of the business model. Many health and wellness opportunities on the other hand are focused on monthly autoships and signups. The latter is also more commonly offering a low barrier of entry.
And, there can be huge differences in income between the two as well! From Sylvina Consulting, “Annually, network marketing representatives typically generate about $500 to $1000 per head in sales for the company. Party plan representatives, on the other hand, generate between $5,000 and $15,000 in sales per head each year.” Learn and understand the difference.
If you are interested in a company but unsure of their industry standing, you can always check the Direct Selling Association. The organization vets direct sales companies to ensure they meet ethical standards.
Looking for a direct sales opportunity? Stop by TheBestDirectSalesCompanies.com for in-depth overviews and sponsors ready to help you get started.
- Real-life story: Direct Sales Bailed Me Out of Over $35,000 in Debt