Ok let’s be honest… there have been a lot of changes to the Mary Kay product line this year. Lots of questions are rolling in to our team about how to handle the changes financially. Here are some tips and tricks to help you move out the “old” stuff and bring in the NEW…without going broke!

Out with the “Old”?

Before we dive into Q&A, let’s clarify one very important thing: The discontinued product(s) you have in inventory aren’t necessarily “Old” they are just no longer featured in the current catalog. This can make it harder to move them off your shelf, but not impossible. The quicker you act, the greater your profit will be on discontinued products.

Business 101: Supply and Demand

When it comes to moving product off your shelf, you can boil it down to Supply & Demand… it’s that simple. NO ONE knows how popular a product is going to be… not you, not your Director, not even Mary Kay, Inc. can know for certain what will be a winner or a loser. The win or loss happens at the point of sale. Try not to get too wrapped up in the hype of the “new,” and remember… you know your customers better than anyone!

Here are some helpful hints on how to get that coveted NEW product on your shelf without losing your mind or blowing your budget!

Q: Dear Ascend, Mary Kay has two new formulas of Liquid foundation coming early 2011… The Full Coverage formula is being discontinued, and the Medium Coverage price will increase. What is the best way to move almost-discontinued products to make room for the fabulous NEW Foundations without charging up a credit card?

A: Change is a part of the cosmetics industry! Plan on it. When these changes occur you have to be intentional about how you will deal with it. Meaning you need a PLAN. It’s not wise to just go out and purchase copious quantities of the new items. Remember… in a retail business, supply and demand are supreme! Here’s how to PLAN to replace the old with the new:

1. Make a Black List: List out what’s being discontinued, how many you have in inventory, and what the cost of each item is.

2. Estimate a Demand List: Once you know what’s coming in, estimate how many of the new items you’ll need to service the demand from your current IPAs for just ONE MONTH. If you sell 15 Basics per month, then it’s safe to estimate you NEED 15 new foundations to service the current Demand with new clients. It’s easy. Only ONE month should be on your Demand list; you’ll order more next month after you’ve tested the water for awhile.

3. Add up the Demand List: How much do all of the new items on your Demand List cost? Don’t forget to budget for retail tax! Once you know your “budget” then it’s time to start acting like a retailer…

4. Liquidate the Black List ASAP! You’ll want to “liquidate” the items going out and set aside the funds to purchase the new items coming in. Sell it for 50-60% off in the first week; offer 65% off if they buy two or more; only accept cash/checks. This is called recycling the “cost basis” of the inventory.

• It gives you cash NOW to buy the inventory your clients will see in the Look Book. This is business savvy, plain and simple.
• You’re leveraging a business asset (inventory) in order to maximize your selling opportunities with new products, at a greater profit margin.
• You’re putting the new products on the shelf without using someone else’s money to do it; you’re using yours! In the long haul, this will make you more money because you’re not paying hefty interest charges on the product.
• You’re moving the discontinued products before no one wants them, at a price that they will feel lucky to have paid.
• Unsold products are not making you money; better to sell it and get the money working for you!

Suzie has $1000 retail on her Black List. She’s considering the financial advantages of Liquidating below cost, or holding out to sell it for 30% off. She thinks that by selling it at 30% off, she’ll end up financially better off than if she’d taken a loss on the product.

Original Cost was $500 wholesale + tax

Other Strategies we recommended to Suzie:

Suzie accepted cash only because she didn’t think it was smart to pay Processing fees on top of the discount.

• Once a week she deposited the cash/checks from her Black List sales along with the money from reorders and classes—but deposited them as a separate deposit. No 40/60 split with that money!
• Ascend helped her reinvest keep track of the Black List funds because she created a new Envelope called Demand List; it was visual and she actually saw how close she was to selling her whole Black List.
• As Suzie sold more of the items she is liquidating she had more CASH to purchase the new items when they are launched!

By planning ahead she was ready when new items come in! This method can be used for ANY inventory changes throughout your Mary Kay career.

Q: Dear Ascend, I love the idea of the liquidation sale and I know I can do it. What if I don’t sell all of my items and want to order the new items when they are available?

A: This is a great question! What you have to understand is that if you sell 4 but need to purchase 6 the extra comes out of your profit. You have to determine how much profit you are willing to reinvest (without going into more debt) to have the items on hand. Inventory is a depreciating asset. Product that is sitting on your shelf is NOT a tax write off and is not worth anything unless and until it is sold. This is why you need to be intentional about your inventory plan. You need to reevaluate to be sure the decisions you are making are helping you MAKE money… not lose it!

Stay Tuned for more Q & A on this subject to be posted HERE soon!

We all start a home based business for different reasons. Maybe you wanted a reason to get out of the house, or you needed something to supplement the family income, or maybe you have always wanted to be your own boss and a home based business seems to be a perfect fit! Being in business for yourself has many benefits. But not all of us have a degree in business finance. The moment you signed your independent consultant agreement you became a business owner! YAY! Along with that the IRS now views you as a business. Therefore you are required to follow the laws that go along with owning a business, especially when it comes to managing your business finances.

Recently I was discussing this topic with a few different individuals to see what the buzz is out there. One of the main things I heard was that most consultants and directors are depending on the reports within their Inventory and customer management programs for their tax reporting purposes. Although these reports have great information in them… and SOME of the reports are needed at tax time. These reports are merely a small part of what is required by the IRS.

I say… Use that inventory program to its fullest! The inventory programs out there make running your business and keeping track of inventory levels and customer history a breeze. But BE AWARE… you are required to be keeping proper book for your business in addition to these inventory reports. You need to keep a well kept record of every penny that comes into your business and every penny that goes out. You need to label where the money came from (income source like sales, commission, etc.) and exactly where the money went. All this information must be backed up with receipts in the case of an audit.

This is where Ascend Financials comes in. Here at Ascend we are dedicated to not only bring you the tools you need to keep proper business books… but we are also dedicated to educate you, to empower you to make better financials decisions. Call your inventory programs support department and they will tell you they do NOT have business books built into their system. Ascend Live DOES! With Ascend Live you can track every penny that goes into and out of your business in not just one of your business accounts but ALL of your accounts related to your business including checking, savings, cash accounts, credit card and loan accounts. Ascend will create a register for each of your accounts, show you  in real time your spending plan, and create comprehensive and customizable reports to help you sparkle at tax time! The government just granted 5.5 billion dollars to increase the effort of enforcing laws pertaining to home based businesses (especially those with losses). This means there is more funding to crack down on those who are not treating their business like a business. Ignorance is no excuse for not following the laws. You do NOT want your business reclassified as a Hobby with the new IRS initiatives!

USE your Ascend Live portfolio(s)! Take us up on our free education! Keep proper business books and you will be able to keep your peace of mind and your deductions in the event of an audit. Remember… this is a powerful tool, but it only works if you enter the information! Let us help you get on the path to financial freedom and peace of mind when it comes to your business books! I can’t wait to see you in one of our next webinars. I just KNOW you are craving more information! Click here to see the current webinar schedule.

I’m sure you are all starting to feel the seminar “buzz” already. Year end is just upon us and we are all working to finish up our Mary Kay Seminar goals! So I thought it would be appropriate to share some tips on how you can attend Seminar and still stay within your Business Budget.

1. If you need to fly…look for tickets NOW.  The longer you wait the more expensive it usually gets. Have a little flexibility in WHEN you can travel…this can help bring costs down as well.

2. You gotta stay someplace right? Find other consultants or directors to room with. The cost of the room can be a fraction when you share the cost with your Mary Kay sisters!

3. Use the Mary Kay provided transportation. Cabs can get expensive. Mary Kay Corp provides a shuttle service. Yes you may have to wait, but think of all the wonderful women you can meet and share success stories with while you do. Bring your walking shoes and your patience and you’ll see that cab fare isn’t really worth it.

4. Your registration includes some breakfasts and lunches. Take advantage of the meals the company provides. You can even be just like Mary Kay herself and pack some food you can eat in your room to save money. There is no need to go out for a $35 dinner if you don’t have the cash for it! You can make sandwiches, have energy bars, you name it…get creative!

5. Bring your cell phone or if you don’t have one get a pre-paid calling card. It will be MUCH less than using the hotel long distance services!

6. Avoid impulse buying…Yes those vendors are wonderful and oh so tempting. Be a collector or catalogs. IF you still like the item when you get home you can always order from their website. At least you’ve given yourself time to think it over. You’ll find that once you get home you may not have NEEDED that wig!

7. Make a spending plan BEFORE you go. Yes try to predict what you will need to spend money on and set limits for yourself. Carry an envelope to collect your receipts and write down what you have spent. Once a day you can find a computer and enter your information into Ascend Live. This might help keep you on track!

There are TONS of great benefits and reasons to attend Seminar…with a little pre-planning of HOW you intend to spend your hard earned money… the trip doesn’t have to break the bank!  Have a fabulous time in Dallas! I may even see you there!

Many times during my Mary Kay career I have heard Independent Executive National Sales Director Emeritus, Arlene Lenarz say we live in the land of opportunity and Mary Kay is the opportunity of the land!  So, are you taking full advantage of this wonderful opportunity before you?  Here is my “top ten” list of tips to help you climb your ladder of success!

1. It does not matter if you are a part time or a career consultant.  You NEED to manage any and all money that comes into your business.  Work in your Ascend Live portfolio on a weekly basis.  Make a non negotiable appointment with yourself once per week to do your business books!  Then you never have to feel behind or worry about tax prep!

2. Attend your weekly unit meeting with your unit or find a great adoptive director close to where you live or work.  School is never out for the pro.  Your unit meetings are where you will learn about what’s new and develop a group of girlfriends that will be your support in the highs and lows alike!

3. Attend Company sponsored events!   Mary Kay Inc sponsored events are like nothing you’ve ever been to before!  It’s not your average business meeting!  Create an envelope in your Ascend Live Portfolio so you can pre-plan to attend and set aside the funds to go!  The company sponsored events have great education and can help you to help your customers!

4. Participate in the Preferred Customer Program.  Let Mary Kay corporate do the mailing for you at a less expensive rate than you can mail it yourself!  When you are using your deposit from sales in your Ascend Live portfolio… 5% of your deposits from sales goes into your PCP envelope so again you can set aside funds the way Mary Kay Ash taught us!

5. 50% is 50% so get out there and sell, sell, sell!  Build a great customer base and have product on your shelf to service them.  Mary Kay Ash said, “You can’t sell from an empty wagon!”  Using the deposit from sales template in Ascend will help you keep your shelves stocked and not increase your debt!

6. Go to www.thepinkplan.com and create your free MK business plan!  It’s a great tool to give you an idea of where you are headed.  It also can be discussed with your director to make a solid mapped out plan of action to make your MK goals a reality!

7. Check the Advance brochure on InTouch and choose your next spot on the ladder of success.  There are MANY avenues of income in Mary Kay… why not use ALL of them!

8. Knowledge is POWER.   Attend meetings, events, special guest speakers, etc. to educate yourself in your field.  You have many things you need to know and many things you need to do as a business woman.  Soak up ALL you can.  We sure to check our Webinar page often and sign up for our free classes!

9. Step out of your comfort zone every day!  Growth does not happen when you are comfortable all the time.  Challenge yourself to talk to just one more person, learn just one more thing.  You’ll find “just one more” goes a long way!

10. Don’t be afraid to ask for help.  Your director has been where you are…  ask her for guidance.  EVERYTHING is easier with a friend!  We are here to help you too!  If you are frustrated and just don’t know where to start or go from here…  ask us!  We’ll help you sort out the financial side of your business so you can focus on painting the world PINK!!