When I was a little girl I couldn’t wait for the Avon lady to visit my mom. She’d always give me little lipstick samples to play with. She’d spend 30 minutes or so showing my mom the latest and greatest products and leave with a nice order. In fact, I still have a collection of Avon Christmas collector plates starting in the 1970s my mom purchased from the Avon lady.
The small business boom
What I didn’t realize then was that the Avon lady was a small business owner — an independent consultant for a direct sales company. Direct selling companies like Avon have been around for years, and while most of the economy is shrinking or struggling, this market segment is booming.
More than 15 million people make a full- or part-time living as independent consultants for a direct selling company. Approximately 74 percent of Americans have purchased a product or service from a direct sales representative. And it’s not just makeup anymore. You can purchase nearly anything through the direct sales distribution channel — from jewelry and home goods to stun guns and power tools.
Why is the industry doing so well? People need jobs, and it’s a way to get started in business for yourself without a huge start-up expense. However, just as with any business, it’s not an instant cash flow machine.
What to consider before jumping in
It takes a strong commitment, hard work and a plan to be successful as a small business owner. And it’s important to know, not all direct sales companies provide the same opportunities. So before you decide this business model may be right for you, here are five factors to consider.
1. Belief in the Product. No matter how exciting the business opportunity sounds, if you don’t believe in the product itself, you’ll have a tough time being successful. The best marketing strategy for any direct sales representative is an almost evangelistic zest. So don’t jump until you are comfortable that the opportunity is the right fit for you.
2. Instant Success. Companies that try to entice you with instant success stories and big money should make you nervous. If something sounds too good to be true, it is. As I noted earlier, it takes a significant effort to build your direct sales business. You’ll need patience and the dedication to put an action plan together and work the business regularly. To attract independent consultants some companies try to get you all jazzed up about the opportunity and then pressure you to commit on the spot. Do your homework before you sign on the dotted line.
3. Established Company. It’s hard to know just how many direct sales companies there are in the market. Many of them frizzle out quickly. So make sure you choose a company with a successful track record. You don’t want to invest your time and energy building your business only to have the company go out of business.
4. Upfront Fees and Inventory. One of the attractive things about a direct sales business opportunity is that it usually costs very little to get started. So be wary of a company that requires a significant upfront fee or the purchase of large amounts of inventory. Both are red flags. I recently met a woman who had joined a direct sales company that required an $800 up-front in addition to purchasing inventory in advance — money she really didn’t have. But she invested in the “dream.” Sadly, her investment turned out to be for naught. There are many similar stories, so be cautious and choose wisely.
5. Success Dependent on Recruitment. Success with some direct sales companies depends on recruiting other independent consultants. Your compensation is a reflection of their sales and success. It’s what is known in the industry as a down-line. However, with a solid company you should be able to enjoy success based on your own efforts without building a down-line organization.
There are people who have made significant amounts of money in the direct sales industry, but there are even more who haven’t been successful. So a word to the wise: Assess any business opportunity carefully. There’s no such thing as an overnight success.
If you found this article interesting, share it with your colleagues using the links below.
Susan Wilson Solovic is an award-winning entrepreneur and journalist, author of three best-selling books, multi-media personality and contributor to ABC News and other outlets, public speaker and attorney. AT&T has sponsored this blog post.