Is Direct Selling Right for You?

Your next-door neighbor claims she makes a ton of money through direct selling, and you are giving this idea some serious thought. The independence and freedom to spend more time with your kids is a huge motivation. But first, you need to consider the following to determine whether direct selling is right for you.

What Is the Product You Will Be Selling?

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The most important question to ask before getting involved in a direct-selling program is the product. What type of product does the company offer? Do you know anything about the product? Does it ignite the passion for selling or adding value to others?

If you lack the motivation to sell a product, you probably won’t do well as an independent business owner selling that item. However, you can choose from thousands of products in the direct-selling industry.

Research the product to identify its advantages and disadvantages, peak sales periods, customer complaints, and other vital points. Having this information before starting will reduce the chances of selling inferior products, help you avoid scams, and boost your chances of success.

What Is the Initial Investment Required?

Once you chosen a product, the next step is to determine the initial investment to start with direct sales. Many direct-selling businesses have low entry costs: You can start with less than $100 for the sales kit. However, you also need to spend money on items such as business cards, a website, office equipment, product samples, and a business phone.

If a direct-selling opportunity involves high training fees or ambiguous payments, be cautious. Generally, direct-selling businesses have lower startup costs compared to other forms of home businesses so that you won’t be spending thousands of dollars for your initial investment.

Is the Opportunity Legitimate?

Many pyramid schemes that exist present themselves as legitimate direct-selling opportunities. While you may have heard of the Amway scam, fraudsters hide under the name of reputable nutritional supplement, health, and beauty supply companies like Amway to legitimize their shady deals. If a direct-selling business promotes recruitment more heavily than sales, the company is most likely a scam.

You should also be wary of direct-selling companies that ask you to pay training fees or unexplained charges. A legitimate direct-selling company will provide products and services, buyback guarantees, volume bonuses, and recruitment bonuses. If these elements are missing, you may be dealing with a scam.

What About Operating Costs?

As with every business, a direct-selling business requires ongoing costs. While some companies provide some support, you have to bear the direct cost of running your business. Think of items such as an internet connection, phone bills, fuel, office supplies, gifts, inventory, and taxes. While you can possibly deduct some of the expenses from your taxes, it is also essential to know the percentage of your income that goes into operating expenses.

What Is the Earning Potential?

You need to know the profit margin of the products you wish to sell. How many items do you have to sell to break even or make a profit? If you make a profit, does it fully compensate for the time and effort spent on the business? In addition to knowing the return on investment, you should also pay attention to the amount of energy you need to put into the direct-selling business to start gaining customers.

Are there customers around you? Are these individuals repeat customers? All these factors will affect how much you can earn as an independent business owner. While it may be difficult to determine potential profits at inception, you need to have a good understanding of your earning potential as the business grows.

What Does the Return Policy Specify?

If your direct-selling company is legitimate, it will buy back every unsold, marketable inventory at a minimum of 90 percent of the original purchase price. Be sure to understand your rights and responsibilities before signing any direct-selling business contract. A good place to start is the Direct Selling Code of Ethics.

If you are interested in a direct-selling business, the above points are essential to your success. Refer to them as you explore this challenging but highly lucrative industry.