Direct Sales – Chapter 6

Money Management

One of the most important aspects pertaining to your new career in direct sales, is how you are going to handle the money side of your new business. Right from the very start you need to be very strict with yourself and understand that the money which your customers hand over to you does not belong to you. You only receive your portion once you have paid your account with your company. The difference between the amount of money which you collect from each customer as you deliver their orders to them and the total which you need to hand over to the company equals your commission.  This is your salary.

When people pay you in cash it is very advisable to immediately put this money into a separate box or wallet, away from your day to day cash flow until you have to pay your account. There are some direct selling companies who ask you to pay them as you place your order. In this situation you have to tell your customers that they need to give you the relevant amount of money as they place their order with you. Issue them with a receipt for the amount they give you so there is no conflict at a later stage.  Depending on the sophistication of your customer, you may find that some of them prefer to do a bank transfer into your account instead of dealing with cash. By the same token, you may be able to do a transfer into the account of the company for whom you are selling, thereby ruling out the need to carry large amounts of cash around. It all boils down to understanding and facilitating your own as well as your customers’ specific needs.

It is critical to always be very strict with your money handling as nothing could be worse than thinking you have more to spend than you actually do, and then finding out to your horror that you have been using cash which was given to you by a customer when they placed their order with you.

Try not to become despondent in the early days when you see that you have made a very small amount of profit after having to purchase catalogues, and maybe some sample products as well. Rome was not built in a day, and it takes patience, dedication and a certain amount of hard work to build up your new direct selling business. Eventually you will come to realise that there will be good months and then much leaner ones as well, and sometimes this may be linked to the time of year. However, my advice is to try to ignore the idea that January will be a tough month for sales, as often you may find it to be one of the very best months for you. People will tell you that in South Africa where April is full of public holidays, your sales will suffer. This is certainly not a fact to worry about as it all depends on how you approach your business. By keeping your customers updated and telling them about any special offers and promotions the time of year may prove to be unimportant.  For example, after spending a lot of hard- earned cash on gifts for other people at Christmastime customers often feel the need to spoil themselves at the start of a new year.

I cannot emphasise enough just how important it is to conduct your monetary affairs efficiently in order to prevent problems popping up which could be very detrimental to the success of your new career. If you become known as a late account payer you may find that any credit facilities which your company gave you in the beginning get taken away, and you now have to pay before taking delivery of your orders. This, of course, is the situation if you were previously allowed credit which enabled you to take delivery and then pay later.

I have heard over and over again the story of how someone joined a direct selling company only to land up with non-payments by customers. The only way to prevent this from happening is either to ask for payment up front before ordering the items or not to hand over the product until you have been paid. In the latter situation, should the customer give you a story as to why they no longer have the money to pay you, you at least have the option to either re-sell the item or to send it back to your company for a credit on your account, explaining why you are sending it back.

Another piece of advice which you may find useful is to set yourself a goal and even to put a picture of what it is that you are striving to achieve, up on the wall in your office, or on the front of your fridge. This will serve to reinforce your determination to make a success of your sales business. If the money you make from direct selling is going to be extra income then it is obviously going to be much easier for you to set a goal which may be viewed as a luxury e.g. a trip away, an item for the home or something for yourself which you have always wanted but couldn’t afford on your regular income. Obviously, if you are starting out in direct selling and are feeling pretty cash strapped, then maybe your goal should be more in the line of finding more customers in order to boost your sales. After all, the more you put into the job, the more you are likely to get out of it in the long run. Be that as it may, a goal is always a good idea as it gives you the motivation to carry on carrying on even when you are feeling a bit down and despondent due to perhaps having lost a customer or finding that this particular month is harder than the previous ones have been .

The only way to increase your income is by selling more products and having more customers. It is an ongoing situation whereby you constantly have to let everyone with whom you come in contact know what it is you do for a living. Carry catalogues and business cards (if you decide that you need to have some to assist with your sales) in your bag, in your car, and in your pocket. Nothing indicates more clearly to a prospective customer that you are disorganized and unprofessional than if you are unable to give them something which identifies you as their point of contact should they decide to do business with you. Although catalogues tend to be quite a costly sales tool, they are critical to the ongoing success of your business.

It is important to keep a strict record of your expenses, in order to monitor your profit margin once you are earning money from your sales. By keeping a tight grip on the financial side of your business, you will always be in control. A casual attitude to money is one of the greatest mistakes one can make as it is just too easy to spend indiscriminately, especially when the excitement of having some extra cash in one’s wallet tempts you to splash out recklessly. Oh well, we all need some fun in our lives, and without the finances to afford them, there is little prospect of too much fun. So, get out there and sell, and enjoy the fruits of your labours. Good luck!

“Never spend your money before you have earned it.”
– Thomas Jefferson (American President)