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Burps to Baskets: Selling through product parties
By Jennifer Merrill

It didn’t take long for Andrea Barnhart to find out that being a military spouse meant getting used to frequent moves. Unfortunately, as fun as the increased mobility can be, it also can mean a decreased ability to establish a stable career. When employers have a tendency to look at your resume and shudder, a home business you can pack up and take with you begins to have a strong appeal.

Direct-sales businesses have become a popular way for many people to work at home. No longer limited to Tupperware, entrepreneurs are selling products as varied as lingerie, books, home decor and kitchen necessities through parties held in customers’ homes.

As a Longaberger representative, Andrea found that the flexibility of home parties worked well with her lifestyle. A committed stay-at-home mother of two, Andrea considers her family her first priority. She is careful to schedule her business's shows around family activities, instead of the other way around.

"I don't remember ever paying a babysitter to come and keep the kids. I just did it when I had free dates," Andrea said. "If I had my schedule planned, when somebody said, 'I'd like to do a show,' I'd open up my planner . . . and we'd work something out."

It was also a better financial decision, she said. "By the time you pay a babysitter, there goes all your profit."

Joint planning with her husband was crucial to making it all work, particularly with the demands of her Army husband's work schedule. The fact that her Christmas season started in September didn't help to make the final months of the year any easier.

"During the holidays and those busy times, we really had to coordinate. We'd sit down and have planning meetings and then I would know what nights I had available to actually plan a show."

It's the ideal job for her, Andrea concluded. "People will ask me, 'How are you doing with it?' Basically, as well as I want to. If I want to do better, I'll put more time into it. I'm putting in as much time as I'm willing to give."

Ten Tips to a Successful Direct-Sales Business

Tip #1: Can you make enough to cover your expenses?
It's important to consider your initial cost and operating expenses when looking at a direct-sales company. Sign-up fees for some companies can come to over $1,000. Also, you'll bear the costs of hostess gifts, samples and display items. If the product you're selling is expensive, that can add up quickly.

Can you go to Wal-Mart or a specialty store in the mall and get the very same thing for less or the same price? Remember, it's not just the cost of your product, there's shipping and handling charges as well. Sometimes a product will cost more, but sell itself on the basis of the higher quality. Can you persuade your target market to agree with that reasoning?

"If you want to do it as more than a fun 'get me out of the house because I'm going crazy with the kids' thing, then you need to research how much you can really make," Andrea said. "That depends on your economic area or level. There are just some places where people don't have as much money and will not buy more expensive things that are considered frivolous."

Andrea found that in the area where she first tried selling Longaberger baskets, she didn't do very well. She admits, "I didn't [look at my market] very closely the first time."

Tip #2: Find out what the minimum order is.
The typical direct-sales business will have a minimum amount that must be met before a show's order can be sent in. How many items will you have to sell to meet that minimum?

If the minimum order is $100, and the average price of the items you're selling is $20, you'll have to sell just five items to meet the minimum ($20 x 5 = $100).

If the average price is $10, however, you'll need to sell twice as much, and you will need to make sure your parties have enough people attending to reach that minimum ($10 x 10 = $100).

Tip #3: Is there room for growth?
Look over the information from the parent corporation. Do they limit the directions your business can take? What variety of products do they sell and how easy will it be to branch out to those in your community?

Also, is the product you'll be selling something with a large customer base and a great variety of potential customers, or is it limited to one or two groups? Remember that the wider the range of people who might buy your product, the better you'll do.

Tip #4: Get used to cancellations.

"People flake out. All the time," Andrea said. "You'll have something scheduled for weeks and then the day of, or the day before, they'll call. 'Oh, nobody can come, I just can't do it.'"

She continued, "You have to get over that. That really got me down for a while because I had two or three [cancellations] in a row. You've planned your entire schedule around it and figured things out with your family, and then somebody cancels out. It's kind of a letdown."

Also, be prepared for guests who will accept an invitation, but never show up. No-shows are a frequent problem, according to Andrea, who has had more than one show where she and the hostess were the only people there.

Tip #5: Don't sign up in the first flush of enthusiasm.
It's easy to get excited about a great product, but don't let your appreciation blind you to the realities of the business world. It takes more than a good product to make a successful business. You need to do your research and get as much information as possible before signing anything.

Make sure you understand all the essentials of the business. Who's responsible for an unhappy customer? Are shipping costs proportional and reasonable? What do you have to do to be considered an active business?

The parent company should have information packets you can read to get all the details. Don't be afraid to ask for them. The more support your corporation is willing to give you, the better off you are.

Tip #6: Beware of get-rich-quick promises!

There’s a large number of phony work-at-home offers out there, and the direct-sales industry isn't free of them. Remember that con artists make their living by being plausible. Their intention is to blind and overwhelm you with golden promises and faked studies. If they can keep you from demanding hard facts and real figures, they can take your money and be gone before you've called the Better Business Bureau.

Tip #7: Who you know can mean more than what you know.
"First you exhaust all your friends and family," advises Andrea, "and when you've exhausted them, then hopefully you've met people at all their parties and it becomes a chain. At my business launch, say, I would have over all my friends and relatives and then one of them would say, 'OK, I want to do a show,' which brings in a whole new circle of people. And, then, if somebody books a show from that show, then that's a whole new circle of people again. And sometimes you run out, so you've got to get a little more creative, and start talking to people at school or work or whatever."

Tip #8: Sometimes, it's just a bad night.

Occasionally, you'll give a party where everyone is having fun, but no one is ordering.
"It's kind of frustrating," Andrea admitted. "What I try to do is just be really casual and tell the hostess, 'Go ahead and let's keep your show open. I'll give you some more catalogs and you can take them around [to your friends] and we'll collect enough orders to send it in.'"

Tip #9: Don't forget the IRS.

The parent corporation should be able to tell you what forms you'll need to fill out your taxes, although you'll have to do them on your own. If you go to an accountant, make sure it's someone who's worked with your particular direct-sales company before. Different companies have different rules and different ways of paying you, and it's important for your accountant to be familiar with that.

If you're making enough money, you may need to make quarterly estimated tax payments as well. The Internal Revenue Service has an online Small Business Corner that can help you get started on understanding self-employment taxes. Don't be afraid! It's easier than it looks and there's lots of help out there.

Tip #10: Enthusiasm sells.
Andrea has found that her excitement about what she's selling spills over to her customers.
"It has to be something you're sold on yourself," she explained. "I have a friend who sells Tupperware, but she talks you out of half the stuff. I'll go through the catalog and say, 'Well, what about this?' and she'll say, ‘Oh, no, I don't really like that, it's not that great.'"

She continued, "I've known lots of people who do that with the thing they sell, and I think, 'Well, why do you sell something that you don't just absolutely love everything?' How can you sell something that you don't love everything and you're not convinced that it's the most wonderful thing since sliced bread?"

Jennifer Merrill is the News Editor at Busy Parents Online Magazine

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