You’ve been bitten by the entrepreneurial bug and now you’re itching to start your own business. Luckily for you, with over 5 million self-employed entrepreneurs in the United States, you’re in good company.
So now that you’ve decided you want to start your own business, you have dozens of options, but we’re going to focus on the solo-preneur and micro-business decision of Starting from Scratch or going into Direct Sales.
Just like your mother always advised you, we’re going to explore the pros-and-cons of each type of business:
Direct Sales – Pros
- The business and branding are already established.
- Customer recognition of quality and branding.
- Minimal inventory management.
- Inexpensive buy-in (for most, but there are consultant companies where the buy-in is hefty).
- Built-in customer service.
- Opportunities for growth through leadership and consultant acquisition.
- Clear target market.
- Large support network.
Direct Sales – Cons
- Saturated market with many consultants in one area.
- Competition between local consultants.
- Products and services are not unique.
- Unable to stylize your business in your own fashion; limited to regulations of the mother-company.
- Expense for mandatory marketing, brochures, website maintenance.
- Tiered earnings which can become discouraging.
- Minimum sales required to remain active.
Starting from Scratch – Pros
- Innovative products and services that highly engage customers.
- You determine your own profit margins.
- Your own website, marketing, logo, graphics, etc.
- Growth and expansion plan determined by you.
- No minimum purchases, minimum consultant sign-ups, or tiered earnings.
- Ability to offer free shipping, specials, discounts, rewards, etc.
- Detailed and customer-centric service on your own terms.
- Unique and independent presentation at vendor events and trade shows.
- Opportunity to own trademarks and patents.
Starting from Scratch – Cons
- Expensive start-up costs such as a website, logo design, inventory, etc.
- Inventory and shipping management on you.
- Necessary to maintain accounting and bookkeeping.
- Required to obtain proper certifications and licenses to remain compliant.
- Support networks may be limited.
- Seasonal inventory forecasting.
When it comes down to making a decision on how you want to start your business, it really requires introspection and self-reflection. Try asking yourself these questions:
- Do I need autonomy when I run my business?
- If so, you may consider starting your own business from scratch. While direct sales certainly allow you flexibility regarding your schedule, you have to follow parameters of the mother-company. Sometimes these rules help maintain structure, especially if you’re new to being an entrepreneur.
- Do I work better with pre-determined goals given to me or goals I create for myself?
- If you’re someone who likes a structured timeline of goals, direct sales are great – you know exactly what you need to achieve the next step. If you’re someone who prefers to achieve at your own pace, your own startup might be the answer.
- Am I comfortable with other people selling the same products that I do?
- There will always be competition, even if you invent something new, but the competition of the exact same products in direct sales can be tough.
- Am I technology-savvy and capable of maintaining a website and social media?
- Direct sales companies usually handle all the overhead of maintaining a website, so if you don’t have the time or know-how to manage your own site, direct sales may be a great way to go. On the other end, if you like the ability to customize and create a site and social media presence, an independent business may be a great choice.
- Do I have the space to hold/manufacture inventory or prefer products were drop-shipped directly to the customer?
- Starting up, you will probably need to maintain your own inventory and manufacturing; in time, you may outgrow your space and have to consider renting other space – while this can be tough to manage, you also have control over inventory. For direct sales, you don’t have to worry about space or shipping, the mother-company handles that, but selling-out or website downtime can be frustrating.
Any opportunity to be an entrepreneur is going to be hard work. Remember to be patient with yourself and always plan at least 3 months in advance. Envision your ultimate goals and that will help guide your choice.
Any other advice for people trying to decide? How did you make your choice?