Network Marketing Financial Management
Financial management is essential to running a successful network marketing business. Network marketers act as independent salespeople, consultants, or distributors and are wholly responsible for navigating sales, commissions, profits, revenues, and tax exposure.
Many experienced marketers know that network marketing is profitable when the business is run with the same level of detail and planning as any other–from setting budgets to tracking inventory, monitoring expenses, and having clarity over revenues and profit margins. This guide explores varied tools such as network marketing inventory management platforms, bookkeeping software, and tax planning options to ensure you have a better idea of the resources and tools that can provide the best platform from which to launch your business.
What Are the Core Elements of Financial Management for Network Marketers?
One of the common pitfalls for those new to network marketing experience is the assumption that because a consultant might work on a smaller scale initially and be able to track one order of stock and how much they have sold, that quickly becomes a far more complex task. For example, if you start selling Mary Kay and become a Beauty Consultant, you’ll need to plan for various requirements, such as:
- Monitoring the product lines that sell the fastest and forecasting when you’ll need to restock to avoid disappointing your customers
- Keeping tabs on all the products you have in your inventory, ensuring you can fulfill orders promptly or recommend products you know are readily available
- Knowing how much you’ve earned each month, the sales or revenues you need to hit to reach your targets, and all the expenses incurred
Putting in these frameworks first means you won’t later find your sales haven’t been sufficient to generate the earnings you expect or finding that you have promised products to new customers, which you cannot satisfy in the timeline offered.
These become even more crucial for network marketers selling directly. If you were, for instance, to offer a private tutorial or host an event only to discover you are out of stock of the most popular products, the time and effort invested will not generate the amount of sales and income expected.
Financial Management Tips for Network Marketers
Our best advice is to select a software suite with tools designed by and for network marketers, with an in-depth understanding of the tasks and admin functions that will make the biggest difference. Below, we’ve summarized some of the core tasks you should expect to complete periodically, all of which Direct Sidekick can assist with as an end-to-end resource engineered to meet the requirements of busy network marketers.
Planning for Expenses and Investments
If you need to invest upfront in product kits, these should include the resources you’ll need to establish yourself as a network marketer and authentic representative of the brand; business cards, digital assets like logos and order forms, paper or digital, are often provided. Once you have these in place, you’ll need to think about how to record the amounts you’ve spent initially and keep track of ongoing outgoings, such as weekly expenses.
This matters not only so you can see how profitable your business is but also because, as a self-employed professional, you’ll need to account for tax-deductible expenses to avoid paying a higher tax bill than necessary.
Managing Inventory and Ordering
Alongside recording the amounts invested in products and kits, you should monitor your inventory and deduct any products you’ve used in demonstrations or consultations. These products should be removed from your profit counts available for sale and accounted for as expenses because they’ve been used in running the business.
Inventory management is fundamental to completing customer orders, but it can also add up the cost of your inventory at the end of each period. If it is still in stock, it constitutes a business asset rather than a cost of selling.
FYI: Direct Sidekick is accounting software built for direct sellers, network marketers, crafters, vendors, VRBO owners, and many other home-based business owners. Create an account and start tracking your income, expenses, and inventory.
About the Author: Steve Nauta
