One of the biggest issues that people have with direct sales is that there’s this pressure for consultants – mainly women – to spend all of their money on inventory that they end up stuck with. Many of these women joined direct sales to get out of a bad financial situation, so pressuring them to spend all of their money seems predatory. It’s no secret that leaders and sponsors generate a portion of their income off of what their downline sells or purchases.
In every direct sales company I’ve been associated with, I can admit that there’s been “encouragement” from the top for consultants to buy more and more inventory. I’ve seen friends go into debt trying to meet a certain sales quota or hit certain goals or even help out their friend-sponsor to reach their goals. Sometimes it can feel as though the higher-ups don’t really care if you’re actually making money as long as you’re making them money. In a lot of cases, there doesn’t seem to be much support or training on how to sell the inventory that you purchase.
I have my own thoughts about why that is, but in this post, I’m just going to discuss my one philosophy for not overburdening yourself when building your business: don’t go into debt buying inventory and don’t keep buying inventory if you aren’t making sales. Okay, that was technically two philosophies.
Now don’t get me wrong: I’m a firm believer in I can’t sell what I don’t have and I need the proper amount of inventory on hand to reach my goals… buuuuuttttttt I’m an even bigger believer in buying what you can and making realistic goals.
When you first start with a direct sales company, you’re going to hear stories about people who sell everything in their starter kit at their launch party. Understand that’s not normal. Most people don’t sell everything they buy in a month. So, if you want a $10,000 sales month, chances are you’re going to have to buy more than $10,000 worth (retail) of your product.
Start with small goals based on what you can actually afford to purchase with cash within your budget. When you make sales, set aside some for taxes and reinvest everything else back into buying more inventory. As you make more sales and reinvest more of your income back into inventory, you’ll be able to purchase more and more inventory without going into debt or putting a burden on your finances.
It’s probably safe to say that most of us join direct sales because we were seduced by the quick money that we see some of the more successful consultants make. Combine that with the pressure we sometimes get from some of our uplines to buy, buy, BUY and it’s easy to see how women end up in financial despair trying to keep up with the Joneses. But remember these things: a) when you see somebody making thousands of dollars a week on their live sales, chances are they have even more thousands of dollars of inventory that they didn’t sell, and b) only you know what your budget can handle.
Related: Why I Joined Paparazzi Accessories
Starting out with smaller sales months is just as awesome as having huge sales months if you’re building your inventory slowly without going into crushing debt. Here are a few things I’ve learned along the way that can help you keep your financial sanity:
1. Consider the minimum purchase requirement when joining a new direct sales company. If you’re required to purchase a certain amount each month to remain a consultant, determine if you can easily absorb that minimum payment into your budget even if you didn’t make any sales or team commissions that month. If you can’t, you may need to think about passing on the opportunity for now. I’ve seen this requirement range from monthly, to semiannually, to annually. With Paparazzi, we have to purchase or sell 100 pieces (or 20 Zi collection pieces) in a 12-month rolling period to remain a consultant. So, you could purchase 100 pieces in January and not need to purchase anything else until the next January and you could remain a consultant.
2. Consider the minimum purchase/sale requirement to be “active” for the month. This is usually the requirement in order for you to get your team commission (if you have a team) and/or to be listed in the consultant search results on the corporate page. If you have a team and your commission is enough to cover the minimum purchase/sale requirement, then go ahead and make that minimum purchase. If your commission isn’t enough or you don’t have a team, only make that purchase if your budget allows. Paparazzi consultants have to have 50 PV (typically 25 pieces purchased or sold through the website) in order to be “active” and qualify for our team commissions.
3. Don’t kill yourself trying to hit fast-starts/jump-starts. Again, build your inventory slowly if need be. If you can hit those milestones and stay within your budget, that’s great! If you can’t – don’t worry about it. Just buy what you can, sell it, and reinvest. Buying thousands of dollars worth of inventory in the first 30 days just so you can get a couple of hundred dollars worth of free product is not worth it if you can’t afford it.
4. Focus on internet sales. With Paparazzi, consultants get a free replicated site that’s active as soon as they sign up. This means that you can start earning income before you even get your starter kit. While most consultants prefer to carry inventory, with the right strategy it’s possible to have a predominately online business. Drop your links everywhere (without being spammy – remember, strategy) and funnel traffic to your replicated website. These are sales that you don’t have to spend money on upfront (unless you pay for some kind of advertising).