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| Paying off your New Consultant $1800 Inventory in 5 months |
| It is important for a new consultant to first determine her level of commitment to the business and her definition of success by answering the questions on the Inventory Worksheet. If she plans on holding a Grand Opening, she will need to add three points to the worksheet total. Her first purchase of inventory will be made with a credit card, business loan, or cash. All future purchases will be made with a debit card, which will transfer funds electronically. (Therefore, it is very important to open up a debit card account immediately for business purposes with only her name on that account... It is a seperate checking account that functions thru the use of a debit card) This will act as a built in control system to keep you from running up credit card debt or ordering too much inventory. The important thing to remember is that inventory is an ASSET not a liability. A liability depreciates (like a car) while an asset increases in value (like a house), thus making it a wise investment. Here is an example of how an average consultant can pay off her inventory (which for this purpose lets say is on a credit card) in four months and then start paying herself a salary. Lets say she chooses to start with an $1,800 wholesale order and plans to do a New Consultant Debut. (With tax and section 2 supplies added on, plus getting her business cards and web page and color organizer her start up costs on her credit card would be around $2,400.) Month One: She pays the minimum on her credit card and puts all the rest of her money collected from her sales into product. (She deposits all money into her debit card account and orders on line or by phone and transfers money electronically) for example purposes, lets say she averages selling $500 a weekfor 4 weeks. (She pays $100 on credit card and puts the remaining $1,900 plus tax into product section 1 orders .. Thus giving her a full inventory of $3600 Wholesale; (if some of that is put into section 2.. for sales aids it may take a bit longer to get to a $3600 Wholesale Full Inventory) Month Tw At $500/wk she is selling $2,000/month. Now she can do 60/40 (of course assuming she is at full inventory.. if not .. please please keep building until you are there before you take your 60/40) Which means that 60% goes into her debit card account to replace what she is selling and herv40% profit goes to credit card reduction. That means that she would have $1,200 in that account for ordering, giving her about $1,000 wholesale and $200 for taxes and section 2. She would have $800 to pay on her credit card debt. Month Three is a repeat of month two. She has now reduced her credit card debt by $1,700. Month Four is a repeat of month three. She has now reduced her credit card debt by $2,500!! She has paid off her start up cost plus an additional $100 for interest. Month one was $100 Month two was $800 Month three was $800 Month four was $800 Total $2,500 Month Five: Her credit card is paid off and her 40% profit ($800) is now hers to spend on whatever she wants!! If she sells more than $500/wk she could pay off her debt sooner. But anyone selling more than that is under stocked and will need more inventory. So she should take another month to build her inventory stronger. If she sells less than $500 a week, it will take her longer to pay off the credit card. (Example: $400 a week will take five months to pay off the card; $300/wk will take six months.) |
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