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| Thoughts on Handling Money |
ESD JEANNETTE ALEXANDER Pretend for a few minutes that you have just opened a dress shop: 1. Would you open the door of your dress shop every day from 9 to 5? Or would you open the door just when you were in the mood? 2. Would you tell everyone you were in the dress business and invite them to your store? Or would you be shy about asking them to drop by for fear they would thinkyou were being pushy? 3. Would you keep up with the stock in your store and make sure you had plenty of dresses on the racks? Or would you spend the money as fast as you made it and let your stock get low? 4. Would you keep your books up-to-date so you could tell how your business was progressing? Or would you let it go and just guess at how you were doing? 5. Would you attend fashion shows, trade shows and all training available to make sure you were up on the latest fashions and trends that would make your businessmore profitable? Or would you decide you knew everything there was to know and that it wouldn't be worth it to further your business knowledge? If your answer was YES to the first of each set of two questions, why not apply the same guidelines to your Mary Kay business? In Mary Kay, you are in business FOR yourself but not BY yourself. Notice the chart below that lists the advantages you have DRESS SHOP MARY KAY BUSINESS 1. Need to purchase or lease a space for your dress 1. Operate out of your own home (tax deductible) 3. Must have a tax permit 3. Company handles remittance of sales tax in each state 4. No prizes or bonuses 4. Bonuses & prizes each quarter 5. You are responsible for keeping up with 5. Company keeps you updated on 6. You must sink or swim on your own 6. Company, Director and recruiter provide continuous Now, after reviewing the chart above, can you see the advantages we have over any other business? Think of what you Okay, now suppose you are opening that dress shop and you have decided to only invest in an inventory of 5 dresses. Each dress costs $50, and you will retail it for $100, which is 100% profit (the same in MK...we buy at 50% discount and sell at 100% profit). A customer comes in and buys two of your dresses your first day. You now have your first business decision to 1. Either you can take the $200 from the sale of the 2 dresses and buy 4 more dresses (each dress costs $50), giving you an inventory now of 7 dresses. But you didn't pay yourself a salary. 2. Or you can pocket the $100 profit you've just made as your salary, and take the other $100 and replace the 2 dresses you've just sold. This would bring your inventory back up to your original 5 dresses. 3. Finally, you could pocket the entire $200 you've just received and elect to buy no more dresses. Your inventory is now down to 3 dresses and you'll almost certainly "go out of business" this way. Most business people will immediately go for Option #1 because an inventory of 5 dresses doesn't really "put you in business" as you cannot meet the needs of your customers with such a small inventory. You should take the $200, reinvest the $100 cost of merchandise sold and also reinvest the $100 profit, opting to wait until later to pay yourself a salary when your business is in the black and on a profit basis and can afford to pay your salary. There is one goal that every consultant must achieve if she is to "make money" in Mary Kay. That goal is to get on a profit basis so she can pay herself a salary from her sales. Here is how it must work. 1. A profit basis inventory is one which provides you with enough inventory to meet customer needs for approximately one month. This should include some of every-thing you plan to sell in the MK product line. This minimum amount should be 2. A profit basis of inventory saves you time which is money. No longer will you miss a sale because you are out of an item. No longer will you have to run around and make extra deliveries and orders. No longer will you be tempted to not mention some products a customer may need just because you don't have it. Not having enough products is like a grocery store not having enough milk or bread! 3. A profit basis of inventory allows you to pay yourself a salary from your very first sale...something most retail business owners would love to do but few can do. We can in MK because we have so few overhead expenses but the same profit margin. If you set up 2 bank accounts...a 60% inventory replacement SAVINGS account and a 40% profit CHECKING ccount...you will be able to receive your salary of 40% from your first week's sales! **Your bank loan payment is paid out of your 40% profit checking account, so when planning your "salary amount" be sure to include the payment to the bank from that account. You will need to sell more at first until the loan is paid off. 60% Inventory Savings 40% Profit Checking EXAMPLE 1 Sell $100 a week (3 hours work) deposit $60 (60%) deposit $40 (40%) Sell $400 a month (12 hours work) $240 in acct toward $160 in acct to pay loan EXAMPLE 2 Sell $200 a week (6 hours work) Deposit $120 Deposit $80 Sell $800 a month (24 hours work) $480 towards order $320 to pay loan & self EXAMPLE 3 Sell $300 a week (9 hours work) Deposit $180 Deposit $120 Sell $1200 a month (36 hours work) $720 towards order $480 to pay loan & self ($600 order a month = Sapphire Star Consultant)
Until you have enough inventory, you cannot receive a salary because all monies should be put back into building inventory. A consultant with a full-time job can still find 9 hours a week to work and earn the salary described above in Example 3. And someone not employed outside her home can certainly work 36 hours a month to earn the salary described in Example 3 |
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