After last week's light bulb moment (see Mumpreneur mistakes number 1) I've been working through 'Finding your perfect work' by Paul and Sarah Edwards. It's a much bigger book than I expected! And it's full of worksheets, which will take me a little time to work through, but I'm hoping it'll be time well spent. I've realised that I'm not just starting a business from home which has to work around two small children, I'm also planning a complete career change. Which is a tall order for anyone, especially as I'm also coming up to eight months pregnant. But then again, I never do things the easy way! I'm still stunned by how much having a baby has totally turned my working life upside down. A year ago I fully intended to go back to my old job full-time while Little Lindop went to nursery five days a week – so much has changed since then. I feel a bit daft for being so naive and my head is still spinning from all the changes that have happened to me in the last couple of years, but I feel positive about the future and that there IS a business out there for me.
I’ve researched quite a few business ideas since my daughter was born just 14 months ago and while I wait for the right one for me, I thought I’d share what I’ve learned. First up are direct selling and party plans.
What is it?
Direct selling is selling a product for commission on a self-employed basis. This can done by holding a party, distributing catalogues door-to-door, selling direct to friends and family or holding a stall at a fete or craft fair. Products include toiletries, cosmetics, kitchen/cooking equipment, childrens toys, clothes and books, cleaning products and even utilities. Well known names include Avon, Kleeneze, Usborne Books, Body Shop at Home and many more.
Some companies encourage reps to build their own teams and you may already have been approached by someone hoping to recruit you onto their team. The team leaders are sometimes known as ‘uplines’. There’s a financial incentive to recruit reps, perhaps a higher rate of commission or a payment each time a team member places an order.
What are the benefits?
- It’s usually cheap and easy to get started – compared to starting your own business from scratch, anyway.
- Catalogues, leaflets and other marketing material are produced by the company, so you don’t have to do this yourself.
- Often companies don’t give you any targets or pressure to sell (E.g. if you just need to make some cash on the run up to Christmas and not the rest of the year). But check this to be sure.
- You don’t need any business experience.
- It can fit in around caring for children. You might host parties during the day or push a buggy around the neighbourhood distributing catalogues. Or you could host parties in the evening when the children are in bed.
Things to consider
- How much money will you actually make?
If you ask this question of your recruiter they will probably, quite rightly, tell you that it depends on how hard you work – although any previous experience of selling, your personality, your feelings about the product and the geographical area you work in will probably be factors too. So you’ll need to do a few simple calculations yourself.
Lets say that you host a party and your takings are £200. You get 25% commission*, so far you’ve made £50. But you may then have to pay for catalogues, order forms, postage to have the products sent to you, petrol to deliver the goods to your customers, tax and national insurance plus nibbles and drinks for the party. You might not have to pay all of this, it’ll vary from one company to another.
So lets say you actually earn £35 for the party – how many parties will you need to host to make the income you need (e.g. per week or month)? How many hours work will it take you to host the parties, get party bookings, place orders then sort and distribute the goods when they arrive?
If you’re distributing catalogues door-to-door, how many people will need to place an order and how much will the average order amount need to be for you to earn the income you want? How much time will it take you to cover this area?
- Is becoming a team leader the only realistic way of making the income you want?
Having done a few sums, will you be able to make the income you need from selling the product alone? Or will you need to recruit a team of your own? This is not a criticism of direct selling, it’s just that recruiting a team is a different prospect from selling the product – do you have skills? If not, could you learn them? Do you want to have your own team?
- Are there any targets?
Some people are motivated by targets, others loathe them. Which one are you? Does the company match you, your family commitments and the way you want to run this business?
- How experienced is your prospective team leader? And what level of support will they give you?
Once you have signed up with a team leader you may not be allowed to change to another, so it pays to ask what level of support you can expect beforehand. Many companies encourage new reps to get recruiting straight away, so you may find yourself with a team leader with only one week more experience than you! If you’re a complete beginner at selling and party plans, it could be really helpful to pick someone with lots of experience who is able and willing to share that experience with you.
I would even ask the team leader how much money they make a month. This will give you an idea of the potential of the business and the success of your team leader. If they give you a figure, make sure you know exactly what this is – is it the takings from their parties, their commission and if they’ve subtracted their expenses and tax/national insurance or not?
- Do you LOVE the product?
It’s an uphill struggle convincing people to buy something when you don’t 100% love and believe in it.
- Is the product a) good quality and b) favourably priced compared to similar (or the same) products in the shops or online?
Again, it’s an uphill struggle trying to sell a product that people can buy in Tesco next time they do the weekly shop. Especially if it’s cheaper in Tesco. The products sold by party plan are usually very good quality, but that often makes them more expensive – are customers prepared to pay extra for this quality?
- How many other reps for this company are there in your area?
You’ll stand a better chance of party bookings if people haven’t already been approached by three reps from the same company as you. But it can be tough to find out how many reps there are in your area, because it’s often a free-for-all. Some reps will be signed up with the company but might not be active, so even the company itself may not be able to give you very useful information. Instead, you could try looking in the places reps might be (e.g. school fairs), checking local websites or asking around your friends to see if they have been asked to host a party or have had catalogues through their doors.
- You will be self-employed so responsible for paying your own tax and national insurance.
You will also need to keep records as evidence of what you have earned and your business expenses.
If you’re not making much money then you may not reach the threshold for paying income tax and national insurance, but you will still need to inform HRMC that you are self employed within 3 months of starting work.
For more information
Not convinced that party plans and direct selling are for you? Take a look at other business ideas for mums.
* £200 per party and 25% commission are nice, round figures I made up to make the sums easy. They aren’t necessarily typical.
Remember in my last post I said I had a few more Mumpreneur ideas on my drawing board? Well, I was playing around with one of these (was there a market for it? How would I get clients? How long would it take before I got an income from it? And so on). I felt a few sparks of "yes, I could do that" but most of the time it didn't really grab me. I was missing something, then I found a book by Paul and Sarah Edwards, authors of the excellent "Getting Business to Come to You". This book is called "Finding Your Perfect Work" and unlike the usual careers guides that point you towards a job, it specialises in helping you find the right self-employed work for you. (You can get this from Amazon or download it as an ebook from http://middleclasslibrary.com/). Finding your Perfect Work gives three questions not to ask when deciding what work is right for you:
- Don't ask what COULD I do – you'll get lost in a forest of endless possibilities
- Don't ask what SHOULD I do – you'll get lost in a barren desert of unappealing ideas
- Don't ask what's BEST for me to do – you'll get lost in a quagmire of impossible choices
Instead ask "What do I really want to do?" Then I realised I've spent the last eight months going round in circles with the three 'don't' questions. I know exactly were this came from. On the day I decided I couldn't put my daughter in nursery and go back to my full-time job, I decided that my work options were now so limited, I would have to take whatever I could get. Maybe it wasn't a totally conscious decision, but it's been steering my thoughts and actions ever since. Now that I've done some research I'm realising that my options are very different than the ones I had pre-baby, and yes, they probably are more limited, but I have a lot more possibilities than I first thought. With two very small children to care for, I'll need a passion for any business I run. My energy is going to be pretty low at times so I need my natural motivation to be as high as it possibly can be. If my business idea doesn't grab me now, it's not right for me. But what is right for me? So far I've only read chapter 1 of the book, so I'll let you know when I've finished.
My background is in training, mostly IT training. So I thought there would be a a good opportunity to bring the online training I’ve delivered in big organisations to small businesses. A few weeks ago I asked solopreneurs and small business owners to take my survey to see if there really was a market for my training.
Here is my plan. I thought that small business owners are probably frustrated by at least one aspect of their computer software. Chances are that they’ve not had training on how to use it and they’ve picked it up as you’ve gone along. They don’t have time to do a whole day’s training or to plough through huge manuals to find the quickest way of getting a task done. But if they add it all up, struggling through software is costing time (=money), effort and frustration every time they use it.
They could take an online training course, but virtually all are pre-recorded and don’t feel much different to ploughing through a manual. What they need (so I thought) is the speed and accessibility of an online course, but with a real, live trainer like you would have in a classroom – live online training. And they need it broken into short chunks so they can pick and choose the topics they need, when they need them.
I was right to some extent, but I found that people tend to deal with their frustrations in two main ways. If they are confident with IT, they’ll read a book, go to an online forum or talk to the software supplier’s technical support. If they are less confident with IT, they’ll tend to outsource to someone who is. This left me with very little ground in the middle, where people’s training needs were few, far between and very fragmented. One person might need to know a small part of Photoshop and another would need a little bit of Sage. I was hoping for a number of people to say something like “great, my accounts software is driving me nuts, can you help?” but this wasn’t the case.
I saw a gap in the market, but there wasn’t a market in the gap.
I’m not despondent, in fact I’m feeling rather pleased with myself. This is the first time I’ve done any proper market research and I’m delighted that I’ve saved myself a lot of time and money pursuing a business that doesn’t have an easy and hungry market.
So it’s back to the drawing board, but luckily my drawing board has a few more ideas sitting on it, just waiting for me to get researching. Keep reading to see how I get on.