Saving & investing

Home parties and direct sales: Formulating a plan for success

May 30, 2012
Are you in the market for some new cookware? Makeup? Scrapbook supplies? Or how about candles, jewelry, books or purses? We’ve all been invited to home parties. It’s a fun way to hang out with friends, drink wine and shop in a relaxed environment. Are you thinking about signing up to sell something, too? What will you sell? And with which company? How do you know a business is legitimate so that you, and your party guests, won’t get ripped off?

Direct selling has been around for decades. There are many different companies offering direct sales opportunities. With a little research and enthusiasm, you can hop on the direct selling bandwagon and start hosting home parties of your own.

What is direct selling?

The Direct Sales Association defines direct selling as the sale of a consumer product or service, person-to-person, away from a fixed retail location, marketed through independent sales representatives who are sometimes also referred to as consultants, distributors or other titles. There’s no doubt that direct selling represents big business: 74% of U.S. adults say they have purchased products from a direct seller.

Joining the Ranks

At the end of every direct sales party, the hosting consultants will likely ask party-goers if they’d like to host a party or become a consultant themselves. If you’re ready to take the plunge, make sure you do your homework to make sure you’re making a smart financial decision. Here are some top tips to get started:
  1. Decisions, decisions. Your first step is to find a company with a product or service that appeals to you. The choices are endless. You may choose the same product your hostess has chosen, or something else. Make sure it’s something you love and are excited about.

  2. Do your research. Start with your chosen company’s website, but don’t base your decision on their marketing pitch alone. Contact consumer watchdogs such as the Better Business Bureau or other state consumer protection agencies to see if there have been any complaints filed. 

  3. Dig deeper. Talk to other people who sell the products and ask about their experiences. Snoop around online. In this age of social media, you’ll find plenty of people with comments. Do keep the reputation of your sources in mind.

  4. The devil is in the details. Before you sign on the dotted line, obtain and review any documents you’ll be expected to sign. Understand what you’re committing to. 

  5. Crunch the numbers. Know and understand your financial obligations. What are the start-up costs? Legitimate direct sales companies typically have modest start-up fees to help you get going. Be wary if there is a large initial investment. Are you required to purchase inventory? What happens to the inventory if you leave the business? The Direct Selling Association (DSA), the professional association for direct sales companies, has a strict code of ethics that addresses this issue, and many others, to protect you. Know your rights.

  6. Understand the compensation plan. How will you make money through this venture? Is it based on what you sell? That’s an important distinction according to the DSA. Good products, marketing and sales skills should get you where you want to go. If your success relies on recruiting others into the business, you should be wary.

  7. Create a business plan. If you’re going to invest your time and money, make the most of the opportunity and take it seriously. Create a business plan that sets goals and objectives. Maybe your goal is to earn enough money to pay for your child’s college education. How will you accomplish that? By hosting two home parties a month? Attending local chamber of commerce events? Having a booth at a home show? Setting up a table at a street fair? The more specific, the better.
Party on

Most companies provide all sorts of marketing support to help you grow your business. From business cards, to ready-made websites, to social media tips, and annual meetings, legitimate companies provide you with the resources to help you succeed. If you’re ready to host your first party, invite your friends, whip up some appetizers, pop the cork on a great bottle of wine and get ready to show off your new business. Offer samples, let people get to know your product, have a giveaway, demonstrate what you know and love about what you’re selling. Have fun, but be informative. Ask others if they would like to host a party at their house to help you keep moving forward on your business plan and goals.

For more personal financial planning advice, contact a local CPA.

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