I received an email one day from a Mary Kay consultant telling me that they made $80,000 selling Mary Kay last year.The educated skeptic in me doubts it highly, but if true, good for her.

However, let’s look at some numbers. In order to make $80,000 in Mary Kay, you would have to sell at least $160,000 retail at full price. And have NO expenses.

Since having no expenses except for inventory is impossible, that means your total retail sold would have to be much higher in order to have a profit of $80,000.

That would be some incredible sales and put this person in some very rare percentage of consultants.

But I have to wonder…

Is she selling that much or making that much?

You see, it’s not uncommon for people in business to have lots of sales and therefore conclude that they are making money. Actually, the opposite is very often the case.

I saw it a lot in eBay sellers when I was a reseller there. Just because they had money rolling in, they thought they were doing great.

But they weren’t sitting down and looking at the whole picture: the time spent, fixed expenses, packaging, fees.

I suspect a lot of times it is the same with consultants and directors.

At weekly Mary Kay “success meetings,” there is usually a point where they recognize the Consultant who sold the most in the past week. In our meetings, which were the combined units of six directors, the majority of consultants sold nothing. Many sold $100 or $200 retail. But a prize went to each consultant who sold $500 for the week. There was usually one or two people who managed to achieve this.

But that’s retail sales. So $500 retail means the most they netted would be $250. In reality, when you figure time and other expenses, it is much less.

My director used to spout off her recent commission check, which was always impressive. But she never said a word about her expenses.

She had two part-time, salaried assistants. She, along with the other Directors, paid monthly rent on a huge, multi-room meeting space to hold weekly “success meetings”. Then there were all the special events like recruiting brunches, retreats, career conference, and Seminar.  And what about the cost of the director suit each year?  These expenses are just the tip of the iceberg.

Most importantly, what you never hear mentioned as an expense for Mary Kay consultants and directors is one of the most ignored by many people in business: TIME.

It’s easy to fall into the trap of thinking that you are running a profitable business just because you have lots of sales. But the truth comes when you take the time to account for all your expenses involved in acquiring those sales.

Activity and sales doesn’t equal profit. The only way to know if you are actually turning a profit is to sit down and list all of your gross sales and your expenses. Once you’ve subtracted your expenses from those sales, you must then look at how long it took to make that net profit. What did those sales equate to when broken down to an hourly wage?

Only then will you know if you are making a profit or simply selling…and whether it’s worth it.