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?
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?
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
Direct Selling Association
Netmums Working For Yourself and Self Employed chat boards
HM Revenue and Customs self employed pages
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.