The Mary Kay empire, just like Rome, wasn’t built in a day. It took grit, stamina, hard-work, and the perseverance of a female entrepreneur determined to fight against the norms of an otherwise male-dominated society.
And though Mary Kay was just “one woman, her son and $5000,” to begin with, today she’s a household name and serves as a role model for generations of women who choose self-employment.
So, here you are! You’ve signed up to build your own business, becoming a distributor for some fabulous product (that you absolutely love) and you’ve gotten your packages from the “mothership.” You’re feeling new-car fresh and empowered to chart your own destiny.
Freedom rings powerfully pink as you set your sights down that road to success. And, what’s great about companies like Mary Kay is that they provide you with many of the resources you need to hit the road running.
However, don’t be fooled by your Cadillac comrades. Entrepreneurship is no walk in the park. It’s a super highway with a hundred ways to crash & burn.
And, as inspiring as Mary Kay’s story can be, the sad truth is that entrepreneurship is a tough game, especially in the world of multi-level marketing (MLM).
According to this article, “the loss rate for all these MLMs ranged from 99.05% to 99.99%, with an average of 99.71% of participants losing money.”
That’s a staggering loss in a world where Cash is Queen; but frankly, it’s not surprising considering the skills of a savvy business person don’t come in the form of a subscription box and pretty pamphlets.
In order to succeed in the world of MLM entrepreneurship, you need to treat your small business like any other small business.
As much support and infrastructure as you’ve managed to acquire through the MLM’s systems, you also need to make sure you’re establishing the foundation of a solid, operating micro-business.
And, for all micro-businesses and startup enterprises, that solid foundation begins with a great system for tracking your numbers.
Why? Because in that same article it states, “on average, one in 545 [MLM’s are] likely to have profited after subtracting expenses and 997 out of 1,000 individuals involved with an MLM lose money (not including time invested).”
WOW! Those stakes are high, especially for someone changing careers and/or starting from scratch. Launching your MLM business is a huge investment and it’s one that requires tracking your ROI.
Ultimately, as the CEO of your small business, you need to stay laser focused on driving sales & building that stable book of business through strategic networking efforts. This takes hours of nurturing relationships, ‘making deposits’, and truly showing up for your customers to keep them engaged as brand evangelists.
On that point, I return to a quote from Mary Kay herself, which reminds us that this work is about more than just selling products. She says: “Pretend that every single person you meet has a sign around his or her neck that says, ‘Make Me Feel Important.’ Not only will you succeed in business, you will succeed in life.” from Entrepreneur.com
What I love about this quote is that it reminds us of a core tenet to our work at HireEffect: People First. And, in a business environment that can sometimes feel inhumane, Mary Kay reminds us that the work we do is about deep, authentic connections that empower others to feel their best.
We understand that self-employment is not an easy path, that it takes a village and failure is part of the journey. But we also understand that it’s worth it!
Why? Because when you get to take that week off to care for a loved one, spontaneously spend your Tuesday eating ice cream & watching movies or having the choice to say ‘heck no’ to that butt-head client, that’s the priceless power of being self-employed.
Yet, as RuPaul iconically states to her Drag Race superstars, “with great power comes great responsibility.” So, when it comes to your bookkeeping, “Don’t !#&% it up!
Our Advice: Don’t put yourself on the short end of those statistics! Instead, invest in a properly setup, automated, recordkeeping systems and work with a numbers person to track your ROI.
How? Well, we recommend starting with a system like QuickBooks Self Employed (QBSE), because this Intuit product makes it easier for you to separate personal & business expenses. And for those true road warriors out there, it includes an awesome app that tracks your mileage.
Of course, a great bookkeeping system is more than just the right software, setup correctly. So, here’s a roadmap to point you in the right direction:
- Check out the IRS Publication 583, “Starting a Business and Keeping Records”, to acquaint yourself with record-keeping requirements.
- Open a separate checking account for your new business, so that you can set up bank feeds to automate data entry & reconciliation, and deposit all of your business income into this account.
- Spend money directly from this same bank account, or a business credit card, and be careful not to mix & mingle personal and business expenses.
- Speaking of expenses, for those sole proprietors out there, we recommend familiarizing yourself with the Schedule C categories in Part II. This will help in setting up your Chart of Accounts (assuming you don’t hire a qualified bookkeeper or accountant to do this for you…)
- At the end of each month, complete a bank statement reconciliation (because even banks make mistakes…)
- Lastly, generate a monthly Income Statement (P&L) to see how your business is performing. If the data has been entered correctly into QBSE, running accurate financial reports will always be a few clicks away.
PRO TIP: Don’t just stop at running your P&L. Consider discussing your business’ financial performance with mentors and business advisors, including a bookkeeper or CPA, to optimize your growth potential. Remember: It takes a village of knowledgeable advisors!
Finally, as our pro tip reminds us, don’t go at it alone. Entrepreneurship can often feel like that trip down Route 66: though beautifully romantic and nostalgically adventurous, some parts are frighteningly lonely and desolate too. So, if you’re looking for a fearless numbers person to sit passenger side, give us a ring. We’re here to help! Otherwise: