BUSINESS 101

Advantages and Disadvantages of Direct Sale Home-Based Business

People get into direct sales as a way to own their own business without having to establish a brand name. 2011 figures released from the Direct Selling Association estimate 15.6 million people in the U.S. work in direct sales. The opportunity for growth in direct sales is strong. The Direct Selling Association also estimates that direct sales in the U.S. increased from $28.56 billion in 2010 to $29.87 billion in 2011, which is a 4.6 percent increase. Although these figures are promising, a home business in direct sales offers both advantages and disadvantages to the business owner.

 

 

 

Startup Costs

Multilevel marketing businesses typically offer a startup kit for a small fee. Instead of spending thousands to get a business started, most home-based direct sales businesses are started for less than $100. This is an advantage to those who want to work from home but don't have a lot of money to invest. However, problems can arise with direct sales companies that have high quotas to meet or that pressure new consultants to purchase extensive inventory that costs hundreds of dollars more. Read the fine print before signing up for a direct sales company.

Travel and Commuting Costs       

Home-based direct sales means less travel to and from a job site. This is an advantage, because it means lower fuel costs, less maintenance and less time away from home. However, some direct sales jobs require travel to and from homes. In fact, direct sales companies are known for their in-home parties, which are typically held in the home of a customer called a "host." The host then invites her friends to the party. These homes can be located all over, depending on the direct sales company's territory rules.

Face-to-Face Time With Others

Home-based business owners may consider it an advantage that a direct sales company allows one to work from home and not be a part of office politics. Clashing personalities are less of a problem when one isn’t working with the same people every day. On the other hand, this can also be a disadvantage, as working from home alone can be lonely. A direct sales consultant must find ways to connect with others to keep generating a fresh pool of prospective customers.

Job Security

The success of a direct sales business is usually dependent upon how much time and networking the consultant is able to invest. A hardworking consultant with a large number of contacts will be more successful than a consultant who doesn't have as many contacts or only works part time at direct sales. On the other hand, there is no guarantee of a regular paycheck, because income is based on sales figures. Consultants of some direct sales companies must wait for payment at irregular intervals.