Saturday, July 16, 2011

Is Everyone In Direct Sales A Millionaire?

If we were to rely on the advertisements we see, we just might believe that everyone in direct sales is a million dollar income earner. Not only does everyone claim they are earning millions, but they also claim they do it while the kids are napping.

This just is not reality. If you understand numbers, take a look at the statistics offered by the Direct Sales Association. Their home page is Click on the “about direct selling” link. You’ll see their statistical information listed there.

Looking at the amount of distributors and the amount in dollars of sales you can create averages. Keeping in mind that average commissions on sales is about 30%, you quickly realize that not everyone is a millionaire in direct sales.

If you continue looking at the statistics, you do realize that 80% of all those in direct sales put in under 30 hours per week and only 15% of that is spent on developing a team. This means that the vast majority of time is spent creating sales.

I would encourage someone who might believe that everyone in direct sales is a millionaire to visit a classified ad forum and read the ads from one year ago. Start clicking links and see how many advertisers are still in business 12 months later. I think you’ll be amazed at the amount of folks not in business. Now, if everyone were a millionaire, why would they leave the business?

So what are realistic expectations of what can be earned in direct sales? I have to speak of averages. Average commission in direct sales is 30%. I am very aware that a few companies pay more than 30% and a few companies pay less. I’m working with an average here. If you sell $500 worth of products in a month, you will earn $150. Seeing these numbers in writing can be eye opening. While millions in earnings are spoken about in advertisements, no one ever seems to give details on how to achieve this. I’m showing in black and white what the earning potential is with direct selling.

You can also earn money in direct sales through sponsoring others. The average commission on this is 10%. Again, this is only an average. Let’s say you find 10 people to join you and be part of your team. Now let’s say each of these 10 people sell $500 each month. This is a total of $5000 in sales per month. If you earn 10%, you will earn $500. Now $500 per month is nothing to sneeze at, however it’s $6000 per year, hardly the millions we read about in the advertisement.

Let’s add our two examples together. With sales of $500 per month, you will be earning about $150 per month. With team sales of $5000, you’ll be earning about $500 per month. At $650 per month, you’ll have a yearly income of $7800. This is wonderful, but again, not the millions you read about in the ad.

While these ads look nice in writing, once you start looking at real numbers, you quickly realize that very few earn millions in direct sales.