In This Chapter

Contemplating the benefits of direct selling

Exploring products, profits, and programs

Choosing a start-up company

Debunking the myth of saturation

Being a business owner is something many people dream about — four out of five people say they want to own their own business — yet only about 8 percent ever do. What keeps the other 72 percent from stepping out and becoming entrepreneurs? Most of the time, it’s not even the courage to start or the self-discipline required to succeed that holds people back. In reality, it’s usually the cash outlay for overhead and the length of time before revenue meets and exceeds it that prevents most people from owning their own business.

Depending on which field you’re talking about, starting a traditional small business can cost a lot of money. If you want the ease of a franchise, you may be looking at even more money. Of course, one benefit of a franchise is the system the company has in place to support the entrepreneur. This can include everything from purchasing to marketing and selling. These proven methods of operation help create lasting success for entrepreneurs, and make the return on investment (ROI) more likely and more profitable.

What many people don’t realize is that direct sales is a low-risk way to start their own business. And it offers many of the same benefits as a franchise. Like franchises, direct sales businesses have proven systems for marketing and selling that they share with their independent representatives. They also help take care of inventory, shipping, product development, and so on.

But they also offer something more — or rather, less. Direct sales allows you to get started for minimal costs. In fact, many starter kits for Party Plan businesses will run you less than $200.

The training for representatives is also often low-cost or free. Most direct sales companies provide a simple program that, when followed closely, help you earn commission (which will help you recoup the cost of your kit) and earn additional products to add to your kit within your first three months of business. Most such companies also typically offer free ongoing training in the form of conference calls, webinars, and meetings. And many offer marketing materials such as catalogs, business cards, social media graphics, posters, email campaigns, and so on.

Direct sales companies have a vested interest in you and your success, which is why they provide you with the training, marketing, and other techniques needed to be successful.

The direct sales model is definitely a powerhouse business model, though it differs in some ways from a traditional retail business model. Both models source products or services to sell to consumers. But a traditional retail business hires salespeople, gives them marketing materials, and tells each salesperson when and where to work. Even if the salesperson is on 100 percent commission, the company requires the salesperson to report to work at a specific time, sell a preset amount, and report to a supervisor. These salespeople receive pay increases and promotions based on their supervisors’ decisions.

Direct sales, on the other hand, is very different in terms of flexibility of time and work. When you start a direct sales business, you are in business for yourself. You determine how much you want to work and how much you want to get paid. You are recognized by your efforts when you achieve certain benchmarks in the company, such as achieving a certain level of sales and bringing on a certain number of new team members.

Even though you are in business for yourself, you are not in business by yourself. Your company is with you every step of the way, motivating and training you to achieve success.

What to Consider When Choosing a Company

Nowadays, an extra stream of income, the lack of job security at a regular job, and the desire for additional tax breaks make a home-based business very appealing. And there are many great companies out there. You may like several of the product lines and could be well suited for any of them. So how do you choose?

Most people select a direct sales company that they’ve already heard about or had some contact with, whether as a customer or host. Another way that people become interested in a certain company is that a friend or family member joins and invites them to learn more about the opportunity.

Belief in your product, programs, and profits is important when deciding whether a company is right for you. You also need to be passionate about what you offer your clients. Many people discover this passion after they’ve sampled a product, become a loyal customer of a company, or hosted a party themselves.

If you are interested in learning more about what companies are available to join, aside from the ones you already know, the Direct Selling Association is a great resource. It offers a list of many different companies, organized by category. Visit www.dsa.org for more information.

Many people ask me what the best company would be for them to join. I always answer by mentioning the three Ps: The best company is the one that pays special attention to products, programs, and profits.

It should deliver a quality product in a timely fashion. It should also support you as a representative with programs that train you, help you reach short-term goals, and build long-term habits for success. And of course, profit refers to compensation, and in direct selling, that’s more than just commission. Some of the profitable rewards are, for example, car incentives and trip incentives.

For profits, you should take incentives into account and choose based on what is important to you. Some companies pay a higher commission on personal sales, and if that's what you are looking for, then that will be appealing. Some focus on the rewards and have excellent trip incentives, which are easy to earn. Some may have a simple and easy car program, so if a car is desirable then this could be for you.

All companies use the exact same dollar; it’s how they choose to divide it that makes them different. Sometimes it comes down to the passion that you have for the company, their products and programs, and their profit focus. People always ask me, who has the best compensation program that works? I always respond: They all work if you work their program.

One of the key ingredients to success is enthusiasm. People are drawn to it — they want to be a part of it. When someone sees that you are enthusiastic or passionate, it piques their interest. So, it’s important that you are enthusiastic.

It can be very difficult to fake that excitement. I have heard people say over and over that you need to fake it till you make it. People can say that all day long, but it’s not an easy thing to do. Others see through it, and you may not feel as comfortable doing it. I like the statement honesty is the best policy, and I do believe that when people see that you are sincere and excited about your product, company, or opportunity, then they will naturally want to do business with you.

The best company really just depends on you, your likes, and your lifestyle; and finding what is going to fit with that.

The Three P’s of Every Company

There are several factors to consider when choosing which direct selling company you want to launch your business from. It’s absolutely important to look at the “three Ps” mentioned in the last section. In fact, they’re so important that I’m going to look at them much more closely in their own section here.

Special Considerations for Start-up Companies

One of the most exciting things you’ll hear in direct selling is: This is a ground floor opportunity! Joining a company that’s just starting up can be very rewarding — but it can be risky too.

The United States has seen some phenomenal growth among direct selling start-ups in the past decade. According to the industry trade journal Direct Selling News, a Hybrid company founded in 2011 reached sales of $100 million in 2012, then doubled that in 2013, and then more than doubled again in 2014. In fact, the journal’s Global 100 list, which ranks the retail sales of direct selling companies across the world, cited 11 companies that grew by $100 million or more in 2014 — several of which were less than ten years old.

But there are also some very real down sides, too. Examine everything closely before making your decision.

Debunking the Myth of Saturation

I’m frequently asked about saturation of a market. There are always people worried about this, and people often ask, “How many representatives are in my area?” For some reason, they seem to believe that their area reaches market saturation when there are five people selling in their town.

To those worried about saturation, I ask what the population of their area is. After they tell me, say, 50,000, I quickly do the math for them. Even if you had 17 representatives, then you’d have to do 200 parties per month per consultant — a number that is very unrealistic and, actually, unattainable.

But even with the number game aside, look at your own circles: friends, family, acquaintances, coworkers, kids’ friends’ parents, doctors, lawyers, real estate agents, instructors, coaches, and so on. Chances are, the majority of these people will not be selling for the same company that you are. You have a larger reach than you think you do, especially when you factor in their network and circles.

It takes a lot to reach saturation. I frequently tell people that one thing you will almost never have to worry about in direct sales is saturation. That’s because direct sales companies don’t limit you to specific territories. So, when you aren’t finding customers on your street, your block, or even your city, you can simply contact friends in another area by logging on to social media.

And let’s face it, not everyone that joins in this business stays. In fact, a third of the people on your team are usually leaving. This isn’t a negative reflection on you or on the industry — it’s simply that they don't feel it’s a good fit for them, or they just don't enjoy it, or maybe life circumstances are causing them to refocus their attention.

In fact, because there are always changing lives and circumstances among your team members and prospects, there are always going to be people you can sell to or recruit. Every year, a whole new group of people are graduating, buying a home, getting married, having a baby, and so on. People continue to go through new cycles of life, and these are opportunities for you. Five years ago, your best friend might not have been interested in purchasing from your home decor business, but with her new home and new circumstances, your products will become some of her favorites.

The most important thing to remember is, establishing relationships with your customers and clients is key. Build strong rapport with your networks and they will continue to purchase from you and recommend you to their circles of friends.