Q: I have been doing MK since 12/27/10 and I have put everything I make back into my business, thus, leaving me to wonder at what point I will or should stop and pay myself. I came in with a full inventory and I’m still establishing my customer base. I see other consultants that move fast with their business and really wonder if I’m doing something wrong. I often wonder if other consultants have the same thoughts and concerns. I love what I’m doing so I guess that is what really matters. ~ Gail Capper
A: Dear Gail, yes, other consultants struggle with the same thing. Sometimes at the direction of their Director or from their own ideas of how to build the business, they invest in inventory and training but show very little profit in their business.
My take on it is that you should be paying yourself from the beginning. If you don’t have profit, you don’t have a business, you have an expensive hobby. I don’t know exactly how the breakdown works or should work in MK – so I’m going to share with you a hypothetical from my business.
If I sell $1000 in my business, this is an example of how I would divide it:
$250 taxes (rough estimate)
$250 business expenses (inventory, training materials, admin help, education, website, etc.)
$500 my personal income
Then my personal income gets broken down into different accounts as well. (Play, Give, Long-term Savings, Financial Freedom account, etc.)
If I needed $2000 to cover my monthly expenses, then I know I would need to generate $4000 sales in my business.
It sounds like you keep dipping into your “income” to cover your business expenses. I would challenge you to find ways to make the money you need for inventory (having a “summer blowout sale” on items you already have on hand) or to attend Seminar rather than dipping into your income.
Without this kind of discipline, you won’t see a profit in your business which ultimately is not sustainable.
Hi Nancy! Hi Gail!
I just wanted to share that as a new Consultant, I was trained/mentored to have 2 separate checking accounts for my MK business: 1 being for ‘profit or personal’ and the other labeled ‘business’. It was recommend I divide whatever monies I make…. in the way of parties, bonuses, etc….. into the 2 accounts (Ideally 40% into profit; 60% into business). This helps you run a ‘clean’ business!
With that said, I think it’s important to remember that when someone starts a traditional business they typically do not see a profit for at least 5 years!
We can beat THAT by a LONG shot. 😉
Much success,
Elizabeth
Elizabeth,
I like your idea of the two accounts. And I don’ t know if the percentages are like that no matter what stage of business you are in (start-up vs. established, etc.) but I do know that the habit of dividing the money is more important than the amount.
As far as a traditional business not seeing a profit for at least 5 years may explain why 95% of all businesses fail within the first 5 years! I mean really, who would keep at it if they weren’t seeing any money??
I would say that if you’re not seeing a profit after a year, there is something you don’t know. Seek out successful business owners and find out what they are doing. Don’t wait until you’re too broke and too exhausted to fix what is wrong.
Thanks for sharing with Gail. You know the business from the inside-out and that is invaluable! ~ Nancy