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Think Before You Spend

Cost Benefit Analysis.   Wow those three words sure sound b.o.r.i.n.g. don’t they? Especially if you have a direct sales business and you’re just so excited about sharing your fabulous products with others. Phooey, who wants to be bothered with something as dull sounding as cost benefit analysis? Whoa now – if you’re interested in turning a profit with your exciting direct selling business you may want to pause a couple minutes just to see what I’m talking about. (Really, what else are you in such a hurry to do that you can’t just skim the rest of this riveting article?)

First of all, what am I even talking about? A Cost Benefit Analysis (CBA) is a systematic process for calculating and comparing benefits and costs of a project or decision. CBA has two purposes: 1. To determine if it is a sound investment/decision, and 2. To provide a basis for comparing alternatives. It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits outweigh the costs, and by how much.

Huh?

All that means is before you spend money in your business, make sure there’s a high likelihood it will be worthwhile.

  • Before you invest hundreds of dollars to participate in a vendor event, determine how much product you’d need to sell just to break even; and factor in all your other expenses (travel, lodging, meals, marketing collateral, display items, etc.) when you’re doing the math.
  • Before you fork over your hard earned dollars to advertise on a website or in a program or goodie bag, determine how much it’ll cost you, then make sure that your ad will be seen by the right target market and that you’ll be exposed to a big enough audience to be worthwhile. Are you targeting a narrow niche, so chances are if you aim narrow, you’ll miss narrow? Or, are you just spraying a bunch of bullets all over the place hoping you’ll hit something?
  • If you’re considering holding opportunity meetings, factor in all expenses – such as travel, room rental, marketing collateral, beverages or snacks, advertising expenses. Are you just casting a wide net hoping to catch someone? Or could you hand out some samples or do some snail mail mailings to accomplish the same thing and spend far less?
  • Logowear – chances are your direct sales company has some really cute shirts, hats, totes and other logowear items. Ever feel like you have to have one of everything? Hang onto your debit card. Professional marketing collateral (biz cards, brochures, decals, etc.) are a must – but how many t-shirts do you really need? Do people flock to you when you wear that adorable hoodie so it justifies the costs? Or could you get away with one jacket and then instead open your mouth and share your catalog with others. Have you ever made a purchase or signed up for a company based on a seeing someone wear a logo polo shirt? I haven’t. I’m sure anomalies exist, but it’s generally not going to positively affect your bottom line, at least not to the degree that you need to spend a bundle in your logo store.
  • Lastly, and oft times least popular, are team incentives. This could clearly be an entirely separate post/discussion. I’ll just briefly say that while recognizing your team is nice to do, and sometimes temporarily alters consultant behavior, are you seeing a return on your investment from the items you’re purchasing to recognize team members? Are you recognizing them for achievements that are already recognized? For example, if you’re sending a trinket (or larger) to those on your team who sell $2,000 or more in one month, and your corporate office already issues a 5% bonus to these folks, why are you as the upline adding to your expenses to acknowledge what is already acknowledged?   Many times a simple “thank you” for an acknowledgement for a job well done goes farther than a tangible gift.

I’m not at all suggesting that you don’t need to invest financial resources into your business.   There is much to be said for the adage, “˜It takes money to make money’ – I’m merely saying think before you spend!   Do so and you may realize a fun, profitable direct sales business.

See you at the top!

About the Author: Laurie Ayers is a Michigan work from home mom who started her first direct sales business in 1988. She is currently a Superstar Director with Scentsy Fragrance and President of Income Wax, Inc. She enjoys helping men and women start and maintain a home based business throughout the US, Canada, Puerto Rico, Germany, Ireland and the UK. You can learn more about her at http://www.ThrivingCandleBusiness.com

 

 

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