It is Possible to Have a Profitable Home Business
Turnover among independent direct sales consultants is higher than in a traditional employee/employer relationship. One of the most common reasons why consultants say they have chosen to get out of direct sales is because they weren’t making any money.
Some consultants last only three months and others stick it out for a year or two before they come to the realization, or a spouse will point out, that they are spending more than they are putting more into their business than they are making. Earning a profit is important if you are in business. I think even the CRA considers it a hobby if you’re not earning a profit after a certain amount of time.
The best way to keep your home business profitable is to make good choices. That’s easier said than done, though. Otherwise we wouldn’t have so many failed businesses. True there are some factors beyond your control. Don’t worry about that which you have no control over. The areas that are entirely within your circle to control are where you need to make wise decisions.
What do I mean by that? While it is true you need to spend money to make money, far too many new business owners spend excessively all in the name of building their business without regard to how it will affect the profit margin. Do you really need that logo shirt, and tote bag, fleece vest and car decal? Or is that something you may be able to hold off from purchasing until you start earning a profit?
You may be able to get a two day expo, but is it really going to be worthwhile to pay the $800 booth rental fee? Have you calculated how much you will need to sell just to break even? Do you know how much you are spending on display items that you didn’t already have on hand?
To be clear, some of these investments may be worthwhile. Some may initially sound like something that could be very beneficial to your business. You won’t know if you don’t take the time to carefully consider and calculate a cost benefit analysis first. If you don’t have any business education or experience, then take a course or pick up a book on basic accounting. You’ll need some basic bookkeeping skills to properly manage your home business.
There is a saying that goes something like: the further you bury your head in the sand, the more a certain part of your anatomy is most prevalent. The same is true if you blindly make decisions about your business. Keep accurate records of how much you are spending and how much income you are generating from sales and downline bonuses. Don’t merely speculate about your business’ financial health. Know the current situation of income and expenses.
There will be times in your business when you will be in the red. Initially you will have the cost of your start up kit, and perhaps some other expenditures such as business cards, postage, and additional inventory. That is to be expected. And there is a short period of time you will have a negative balance before things turn around for you. The problem comes in when months and in some cases, years, go by and you’re still not earning a profit.
Some successful consultants have shared that they view their business’ financial condition as they would if they were trying to lose weight. They don’t step on the scale every day, but they do work at their goal every day and then once a week they track their progress.
This is exactly what you need to do in order to have a profitable home business. If you can’t measure it, you can’t manage it.