You are a home-based business owner in the Direct Sales industry. The commission on your sales is 50%. So, when you sell $1000 worth of products, you should have $500 in profit. Right? Wrong! As a business owner you have other expenses.
First, I advise you to track every business (Mary Kay, Lia Sophia, Thirty-One Gifts, etc.) expense. Only through consistent and complete tracking can you figure out where all the money is going. When you are tracking expenses, be sure to includes postage and shipping, sales aides, presentation supplies (cotton balls, pens, candy, etc.), hostess gifts, meals at Conference, registration for professional development, discounts given, gas, mileage, internet fees, etc.
Then, use a discerning eye on all your expenses. What are the categories where you can cut back? Could you utilize email or phone calls instead of mail? Or, cut down on postage/shipping by keeping full inventory and placing larger orders once a month instead of small orders every few weeks or days. Another expense to examine is sales aides. How many do you really need? For example, many times it is more cost-effective to demo from full size products than from samples. Hostess gifts - use the free products you receive from the company instead of using something in your inventory. With some focused thought, you can come up with a few ways to cut back on your expenses.
Another way consultants lose money is by discounting products. Each time you run a sale, you reduce your profit and you perpetuate the idea that your product is not worth full price. You are selling a great product; your customers love the product - why discount?
Finally, the more you sell the more money you will make. I know this concept makes sense in theory, but often we aren't sure how to apply it to our everyday business practice. You will spend the same amount of money in samples and demo products for 1 person or for 30 people. The shipping cost for an order from the company is the same whether you order $100, $200, $600, or $1800. The more people you see, the more income you will earn. But, just as importantly, your expenses will not increase dramatically. That is where you start to see the real profit.
Tracking all your expenses and then problem solving ways to reduce those expenses will help you increase your overall profit. Which is why you are in business!
Lisa Crilley Mallis the owner of SystemSavvy Consulting and the creator of the College Success Initiative. She has assisted many students, solopreneurs, and busy moms, increase productivity and decrease clutter. Visit http://www.SystemSavvyConsulting.com for more helpful tips for direct sales professionals.