This particular business had three potential income streams: sales through demonstrations, classes and recruiting. I was very interested in sales and classes, but reluctant to have anything to do with recruiting. Mistake number one was not realising how crucial recruiting was to the business model.
But first, a look at sales through demonstrations.
I had a business launch and invited all my friends and family. It was relatively successful and I was able to book at least two more demonstrations from the launch. High on hope and enthusiasm I prepared for that first stand alone demonstration. It went relatively well and I sold about $350 worth of product, giving me a $70 profit. Not too shabby. At least until I looked more closely at the figures. Look at them with me.
SALES: $350
EXPENSES:
$12 postage (for me to receive the goods ordered)
$4 petrol (getting to and from the demonstration)
$15 supplies (what I used for the demonstration and then had to replace afterwards)
$10 administrative supplies from the company to order more product
$6.25 purchase of extra catalogues for people who wanted them
INCOME AFTER EXPENSES: $22.75
As the demonstration took two hours to prepare for, two hours to conduct and approximately an hour to package up the ordered supplies and deliver them to the hostess, I earned a whopping $4.50 an hour. Hello?
I didn't worry too much at this point. It was just a first demonstration, everybody knows that it takes a while for a business to break even, and a while longer to make a profit and I had only just started.
The second stand alone demonstration was an unmitigated disaster. Oh, it was nobody's fault but my own and certainly nothing to do with the hostess. It was, as I would painfully discover, a forerunner of all demonstrations to come. There were 6 people at the demonstration, all of them mothers. They were not interested in my product. The items were overpriced, irrelevant to their needs and no matter how beguiling they looked, the people didn't want them. Everybody put in an order - out of politeness - of about $20 each and I ended up with sales of $120.
SALES: $120 PROFIT BEFORE EXPENSES: $24
$10 postage (for me to receive the goods ordered)
$2 petrol (getting to and from the demonstration)
$10 supplies (what I used for the demonstration and then had to replace afterwards)
$10 administrative supplies from the company to order more product
I made a loss of $8 and received no recompense for my time at all.
This pattern continued for a few months until I gave a demonstration for a lady with lots of friends. They spent up BIG! On that unreal night I sold $790 of product AND got the salesperson of the month award!! Finally, my business was making money.
Umm, actually no.
Let's look at the figures.
SALES: $790 PROFIT BEFORE EXPENSES: $158
$24 postage
$2 petrol
$10 supplies
$15 administrative supplies
$69 for an uncollected order with a fake address and phone number
$5 in phone calls to try and track down person who ordered but didn't pay.
PROFIT: $32 for 6 hours work which works out at $5.33 an hour. Do you know anyone who would willingly work for $5.33 an hour?
In reality that $5.33 is only a figure on paper. You see, with every order that I submitted from a demonstration, I would submit my own order for products from the catalogue. I was getting a 20% discount and I was making money so it was all right. Except that all the profits and then some were being spent on products, products and more products. The products were indeed selling by themselves; to me, not real customers.
This was about the time that I decided to launch into classes. Surely there must be money in classes!
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