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Below is a list of words and phrases that you’ll hear used often by those in Mary Kay, followed by our definition and interpretation.

Awesome!
Used to describe everything MK-related.

Be a woman of your word
Phrase used to guilt you into something you never promised you would do.

Bee-lieve
Mutation of the word “believe.” The bumble bee is a symbol of the Company and often used as a motivational tool. Supposedly, the bumble bee is too heavy and aerodynamically-challenged to be able to fly, but is still able to. Therefore, don’t accept obstacles just because of your lack of belief (or bee-lief!)

Big Girl Panties
Used frequently by Directors to encourage Consultants to not be afraid of “working their business.”

“Put on your big girl panties and go to work!”

“Put your big girl panties on and handle it!”

“Fake it ’til you make it”
Pretending you are at a level of success you want to be before you actually are.

Great!
The often-uttered “positive” response to nearly every statement made by a Consultant.

“Hear my heart”
This phrase is used when your upline is trying to convince you that they are being sincere in what they are saying (gag).

“I’m SO excited!!”
Exclamation used by Consultants, usually in phone scripts to customers to entice them to book a class.

New Level, New Devil

A phrase favored by Directors when you’ve finally achieved a goal (by working MK to the exclusion of all else) and they’ve convinced you to immediately work toward the next step. What happens is, suddenly awful things begin to plague you. Your car breaks down, the babysitter quits, your husband draws a line in the sand about all the time you’re spending on this “simple” opportunity, someone in your family suffers a serious illness. You want to step back and focus on what is important, but the Director’s response is: “Now, now you defeated that first devil and now you have to face a new one. Satan doesn’t want you to succeed.

The reality is that a much larger force is trying to tell you that you’re taking the wrong road. These obstacles are thrown in your path to make you stop and reflect on what is truly important in life and to help you make the right choice. In the real world, it’s called Divine Intervention.

On Trend

An overused term in MK to describe Mary Kay products as being “current” with what women want to buy. Unfortunately, the products that are “on trend” are usually 5 years behind the real trend.

Pink Bubble

Term used to describe the Mary Kay environment. Those who are in Mary Kay are said to be in a pink bubble, separate from the “real world” due to the optimism and enthusiasm of the whole Mary Kay culture.

Sharp
Adjective used to describe a nicely-dressed professional-looking woman. Consultants are advised to use this when warm chattering women.

“You are so sharp! Has anyone ever offered you a Mary Kay facial?”

“I’m looking for five sharp women to give me their opinions of our products.”

“You’re a find-a-way, make-a-way kind of person”
This means you don’t let obstacles get in your way… or, you will charge Seminar on your credit card, even if you don’t have the money to cover it.

Short Term Sacrifice for Long Term Gains

A term used to imply that if you will just work really hard for a little while, making your MK business the top priority in your life, you will be financially rewarded in the near future.

Time and sacrifice, however, are relative. A person with no children or other family that requires her presence probably won’t mind spending every spare moment for the next 8 to 10 years building her business. Ah, but the mother of a 3 year old will have missed most of the best years of her child’s life.

Missed the school play? ‘Sorry honey…facials, facials, facials.’

Unable to attend the soccer play offs? ‘Sweetie, you know mommy has to go to Seminar.’

Hubby tells you that sonny rode his bike all by himself yesterday evening. ‘Don’t start on me, Success Meetings are incredibly important to our future.’

Seemingly, all of a sudden, it’s 10 years later. You’re an EESD or NSD, but your child doesn’t know you, you husband doesn’t care, you’ve lost 10 years of joy that you will never get back…..and oops, you discover that the hard work never actually ends.

Show Up to Go Up
If you want to be successful, come to every event and meeting even though you are really taking time away from what’s important…like your faith and you family!

“We’re on fire! “
Your unit is really doing great things.

We truly look at the world through rose colored glasses.
We are all insane and to keep from feeling like outsiders, from the rest of the world, we just like to say that we have a different view on things.

You can’t sell from an empty wagon.
Used to convince new consultants that they need to have inventory on their shelves to be successful.

sales aids
Section 2 items on the Consultant order form purchased by the Consultant from the Company that promote the sale of products; e.g. product samplers, skin care class supplies, literature, etc. Section 2 items are not available at a discount, are not intended for resale and are not subject to the repurchase obligation.

Sales Director car program
Career car programs available only to Sales Directors. Includes the Sales Director Premier Club and Cadillac programs. See “career car program”.

Sales Director-In-Qualification
See “Independent Sales Director-In-Qualification” and “career path program”.

Sales Director
See “Independent Sales Director”.

sales tax
When wholesale orders are placed with the company, the Consultant prepays sales tax based upon the suggested retail selling prices. The Company remits the sales taxes to the appropriate state and local jurisdictions.

Sales Ticket
Consultants use a sales ticket for each customer purchase to record information about each customer, the date, the items purchased and their prices, the sales tax, any applicable fees and the total amount purchased. It is your sales record. Here’s what a Consultant should do with each copy of the sales ticket: - The original (pink copy) is for the Consultant’s files. - Part 2 is the customer copy. Part 4 is the notice of cancellation and should be given to each customer with order of $25 or more. - Part 3 is the bank copy and is used for MasterCard, Visa and Discover sales.

satisfaction guarantee
100% satisfaction guarantee of all Mary Kay products by the Company to the consumer. Products will be replaced without charge, exchanged or the full purchase price refunded following its return to a customer’s authorized Consultant, or if the Consultant is no longer active, to the Company with proof of purchase.

Section 1
Regular line and limited-edition products. Section 1 is all products that make up the Mary Kay retail product line. Only Section 1 wholesale orders count toward active status, car qualification, company programs and contests. These items are eligible for repurchase by the company under the terms of the product repurchase program as outlined in the Consultant Agreement.

Section 2
Items that the Consultant can purchase to promote the sale of Mary Kay products. These include samples, skin care class supplies, recruiting supplies, and literature. These items are NOT discounted and are not intended for resale. Purchase of Section 2 items do not count toward a Consultant’s sales and are not eligible for repurchase by the company under the repurchase program outlined in the Consultant Agreement.

Section 2 Catalog
Brochure featuring all ongoing Section 2 sales-aid items available for ordering from the Consultant order form. Also available online.

Select Savings
Discount program for health-related services such as prescription drugs, dental, eye care, chiropractic care and more. This program is not health or medical insurance.

Seminar
The annual Company event to recognize the accomplishments of the sales force that also includes education and motivation.

Seminar area
Division of the sales force determined by Independent National Sales Director affiliation. Areas are names Diamond, Emerald, Pearl, Ruby, & Sapphire.

Seminar Contest
Yearlong sales and team-building contest leading to Seminar recognition. The contest period usually runs July 1 of one year to June 30 of the following year.

Seminar prize brochure
Brochure which features Seminar awards, recognition and requirements.

Seminar Queen
The top achiever in each category (court) during a Seminar contest year.

Senior Consultant
An active Consultant with one or two active personal team members. With two active team members, a Consultant is eligible to order her red jacket. Senior Consultants earn 4 percent personal team commission.

Senior Sales Director
See “Independent Senior Sales Director”.

60/40 rule
A suggested guideline a Consultant may use to determine the amount she pays herself once her inventory is adequate to support her business and she is earning money from her Mary Kay business. Sixty percent of the money from sales deposited for the week remains in the business account to cover product reorders and the remaining 40 percent, less other business expenses, represents earnings.

skin care class
Presentation of Mary Kay products and suggested skin care regimen to three to six customers.

Smart Start
An option for new Consultants to help launch their business:

• The Smart Start Business Package - Option includes 30 personalized business cards, Beauty Books mailed to up to 30 potential customers, plus 30 business-building tips e-mailed within 30 days. Cost is $10.
• The Smart Start Personal Web Site - Offers Consultant the opportunity to purchase a Mary Kay Personal Web Site at half off the annual rate for $25.

Star Consultant
A Consultant who places a minimum of $1,800 in wholesale Section 1 orders during a contest quarter: Stars for the Ladder of Success pin are awarded based on the size of the wholesale orders. Sapphire - $1,800; Ruby - $2,400; Diamond - $3,000; Emerald - $3,600; Pearl - $4,200.

Star Consultant program
The Star Consultant program is a recognition program for Beauty Consultants who order a minimum of $1800 in wholesale Section 1 products during a quarter. The first time a Consultant orders at least $1800 in Section 1 during a quarter, she receives a ladder of success pin and her first star to put on the pin. The color stone on the star corresponds to the amount of the order. $1800 Sapphire $2400 Ruby $3000 Diamond $3600 Emerald $4800 Pearl* * There are different levels of prizes for Pearl at 6000 and 7800, but they’re still Pearl.

Star of Excellence
Award for a Consultant who has completed eight quarters as a Star Consultant, double Star of Excellence for 16 quarters and triple Star of Excellence for 24 quarters.

Star Recruiter
An active Consultant who has three or four active personal team members. At the Star Recruiter level, a Consultant is eligible to wear the Mary Kay red jacket. Star Recruiters earn 4 percent personal team commission and can also earn a team-building bonus of $50 for each qualified personal team member, beginning with the fourth team member.

Star Recruiter pin
Awarded by a Sales Director to a Consultant when she is active and has three personal team members.

Starter Kit
The kit a new Consultant purchases when the Company accepts her Consultant Agreement. It includes the items a Consultant needs to start her Mary Kay business and conduct selling appointments, including supplies, demonstration products, educational materials and forms.

storing product
When a Consultant receives inventory, they will want to designate space such as a closet or shelf for the purpose of storing Mary Kay products. A Consultant should organize their inventory by product category and formula to make finding products easy. Use the “first in, first out” rule in selling: Sell the product that has been on your shelf the longest before you sell newer product. When stored properly, exposed neither to excessive cold nor heat, most Mary Kay products have a minimum three-year shelf life from the date of manufacture. Products that don’t have a minimum three-year shelf life have an expiration date stamped on the package. A Consultant should check the expiration date before making a product delivery.

Success Tools envelope
Envelope containing useful success tools for a Consultant to organize her Mary Kay business.

suggested retail price
A retail selling price suggested by the Company for each Mary Kay product; however, as independent contractors, Consultants determine their own retail prices. The Consultant’s wholesale price is based on a discount from suggested retail prices. The prices listed in the Beauty Book, Look Book, Personal Web Site and promotional brochures are also suggested retail.

tax essentials
A guide that provides the general tax information applicable to the Mary Kay business that is available on Mary Kay InTouch web site.

team building
Recruiting new Mary Kay team members.

team-building bonus
A bonus paid to active Star Recruiters, Team Leaders, Future Sales Directors and DIQs for each qualified personal team member beginning with the fourth active personal team member.

Team-building guidelines

• Follow the Golden Rule - If your prospect is a close relative or established customer of another Consultant, allow that Consultant the opportunity to ask her to join her team.
• No territories - Mary Kay follows an open territory policy for team building as well as for selling. This means that your team-building efforts are not limited to a specific geographic area within the United States, Puerto Rico, the U.S. Virgin Islands and Guam.
• A potential team member must be 18 years of age or older.
• Avoid conflict of interest - Your prospect cannot be a Mary Kay, Inc. employee or relative of an employee.
• Don’t prejudge - Your responsibility is to share the benefits a Mary Kay career has to offer so the prospect can make an informed decision.

Team Leader
An active Consultant with five to seven active, personal team members. Team Leaders earn 9 or 13 percent personal team commission and can also earn team-building bonuses. When a Consultant is active and has a minimum of five active team members, she receives a 9 percent commission on their combined wholesale Section 1 orders in any month. When a Consultant places a minimum $600 personal wholesale Section 1 order in the same month that at least five of her personal team members each place a minimum $200 wholesale Section 1, the Consultant’s commission increases to 13 percent.

team member
Person who is recruited by a Consultant or Sales Director to begin a Mary Kay business.

telephone coaching
The Consultant talks with the hostess to obtain names and phone numbers of each guest, reviews the hostess incentive, determines location for the class, refreshments, and encourages the hostess to confirm guests and invite more if necessary.

telephone directory listing
Sales Directors can elect to participate in the Company’s yellow pages advertising program.

tentative date booking approach
If a guest is hesitant about setting a date for her own class because she doesn’t know when she could hold it, a Consultant may want to suggest that the guest set a tentative date.

termination
The cancellation of a sales force member’s agreement with the Company.

top Sales Director trip
A trip awarded to Sales Directors who achieve the Circle of Excellence by achieving at least $650,000 in estimated unit retail production during a Seminar contest year.

Triple Star of Excellence
24 Star Consultant quarters.

unit
A Sales Director’s group of personal and non-personal team members.

unit meeting
A weekly meeting held by Sales Directors in order to educate, motivate and recognize their unit members.

unit member
A member of a Sales Director’s unit, but not necessarily her personal team member.

unit production
The combined total of the unit’s orders at wholesale or estimated suggested retail.

warm booking
When a consultant attempts to book an appointment with a stranger.

warm chatter
An informal way for a Consultant to develop rapport by engaging in a casual conversation with a stranger, hoping to turn them into a customer.

Weekly Accomplishment Sheet
This sheet provides a Consultant with an organized way to keep track of their weekly business. It summarizes income from appointments, Internet sales, reorders, the Preferred Customer Program and miscellaneous sales. One side of the Weekly Accomplishment Sheet shows the past week’s activities and income. The reverse side includes additional information about business activities and plans for the next week.

Weekly Plan Sheet
A sheet that looks like a grid where a Consultant can plan out every hour of every day for the next week. They are used to show where Mary Kay can be ‘fit in’ to a busy lifestyle.

wholesale
The cost of Section 1 products to a Consultant based on a discount from suggested retail prices. One should not draw the mistaken conclusion that the cost to a Consultant is the true wholesale cost of that product.

X’d-Out-Date Booking Approach
This approach helps determine when you’re going to hold appointments. Using a highlighter pen, a Consultant puts Xs in their datebook for when they would like to hold appointments. The Consultant then offers prospective hostesses a choice of available times.

Ladder of Success program - Incentive program to encourage Independent Beauty Consultants to achieve consistent sales goals. See “Star Consultant.”

Leadership Conference - A Company-sponsored conference held each January in which Independent Sales Directors and above may register to attend for inspiration, motivation and education.

LearnMK™ - LearnMK™ is the education Web site that provides information that may help you manage and grow your Mary Kay business. The Web site includes career resources, business development, legal issues and sales and marketing ideas. You can also access the Career Essentials Success Tools forms on this Web site. LearnMK™ can be accessed from the main page of Mary Kay InTouch®.

legal considerations - To find answers to your legal and tax questions and to access the Legal Ease brochure and Tax Essentials booklet, visit LearnMK™ on the Mary Kay InTouch® Web site. See also “tax information.”

• Travel to Foreign Countries - Mary Kay® products manufactured for sale in the United States cannot be sold in foreign countries. You should be aware that taking products designed for sale in the United States for resale in other countries could involve you in difficulties with: customs authorities for failure to pay import duties, packaging and labeling officials because products are not properly labeled for other markets and tax authorities for failing to pay tax on the sale to their governments through the Mary Kay Inc. subsidiary.
• Unemployment Compensation - You are not an employee of Mary Kay Inc. Since you are a self-employed person, the Company does not contribute any amount for you under various state unemployment insurance tax requirements. Thus, you may not claim unemployment by virtue of your having been associated with Mary Kay Inc. as an Independent Beauty Consultant.
• Use of Company Names for Personal Business Purposes
  • Personal Accounts - No Beauty Consultant or Sales Director may use the trademarks or trade name Mary Kay® or Mary Kay Inc. on personal checks (with the exception of checks offered through MKConnections®) or credit card accounts. These accounts may easily be kept separate for business purposes by the designation cosmetics account, business account or similar words.
  • Telephone Answering - You should not answer your personal telephone in a manner or have a message which leaves the caller with the impression that she has reached the corporate offices of Mary Kay Inc.
  • Telephone Directory Listing - As a Beauty Consultant, you are not allowed to list your Mary Kay business or residential service telephone number in any white or yellow pages directories (whether published by telephone companies or private publishing companies) in any way in connection with the Company-owned trade name, trademark or corporate names.This privilege is reserved for those Sales Directors who have elected to participate in the Company’s yellow pages advertising program and only after an agreement has been executed between the Sales Director and the Company concerning the licensed use of the Company’s trademarks or trade names.

look book
The Mary Kay catalog of products, which also showcases several coordinated makeup “Looks.” A new look book is published every three months and features limited-edition items, new products and the current line of products.

mail orders - See “ordering Mary Kay® products.”

marketing plan - The Mary Kay marketing plan developed by Mary Kay and her son Richard Rogers which ensures that every Independent Beauty Consultant’s opportunity is equal to her ambition and ability.

• dual-marketing concept - Another important aspect of Mary Kay Inc. is its dual-marketing system — its separation of corporate management from independent contractors selling the Company’s products.
  • corporate management and staff:
    • plan product and market development
    • provide quality products to Independent Beauty Consultants
    • provide the most liberal discount structure and highest commission opportunity possible
    • advertise Mary Kay® products to give marketing support for Consultants
    • offer incentives and awards for Consultants who excel in sales, team building or leadership
    • organize national and regional Seminars and Career Conferences which Consultants may voluntarily attend for education and inspiration
    • make suggestions (as exemplified by this guide) designed to enable Consultants to succeed in their own Mary Kay businesses
    • offer products and services to help Consultants grow their businesses and earn money.
  • As a Beauty Consultant and the wholesale purchaser of Mary Kay® products, you:
    • operate independently of corporate management
    • derive earnings from retail sales of Mary Kay® products to the ultimate consumers
• About the Marketing Plan - When Mary Kay founded the Company, she developed a special marketing plan which included the best features and avoided the mistakes that she had previously encountered in her 25 years with direct sales companies. The plan ensures that every Consultant’s opportunity is equal to her ambition and her ability.
• Income is based on retail sales - The entire marketing structure is based upon and intended to foster retail sales to ultimate consumers, with commissions earned based upon the products being sold at retail prices.
• All products are purchased directly from the Company - All Sales Directors and Consultants purchase products directly from the Company based on the same discount schedule. There is only one wholesale sale (from the Company to you) and one retail sale (from you to your customer). Our products do not pass through several levels of distributors. Every Consultant sells her own products at retail to consumers of her choice.
• You decide to advance yourself on the basis of proven ability - Mary Kay Inc. does not sell franchises or distributorships. You are able to advance in this career when you are ready.
• There are no territories to limit where you may sell or recruit - Many companies sell franchise rights within a limited geographic area, and many assign territories. Mary Kay Inc. believes this is unnecessary. You may build your team and sell merchandise in any of the 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam.
• Your Starter Kit puts you in business - Your Mary Kay business begins with a Starter Kit and does not require the purchase of any additional amount of product. Adequate inventory, however, will help ensure that you will be able to handle a quickly growing business. The benefits of purchasing inventory are discussed in Career Essentials on the Starting Points: Beginning Your Mary Kay Business audiotape.
• Only Mary Kay® products are presented or sold - Appointments with customers are the marketplace where our products are intended to be sold to the ultimate consumer. Any products or services mentioned during appointments are naturally identified with our Company and our trademarks. We ask Consultants not to introduce products or services not offered by Mary Kay Inc. during their appointments to avoid creating trademark confusion and customer misunderstandings.

Mary Kay Ash Charitable Foundation - Nonprofit, public foundation focusing on funding research of cancers affecting women and on efforts to prevent violence against women. Visit the Foundation Web site at http://www.mkacf.org.

Mary Kay InTouch® Community - See “Internet programs.”

Mary Kay’s mission - To enrich women’s lives. We will do this in tangible ways, by offering quality products to consumers, financial opportunities to our independent sales force and fulfilling careers to our employees. We will also reach out to the heart and spirit of women, enabling personal growth and fulfillment for the women whose lives we touch. We will carry out our mission in a spirit of caring, living the positive values on which our Company was built.

Mary Kay® Personal Web Site program - See “Internet programs.”

Mary Kay® philosophies - The principles and teachings of Mary Kay Ash which incorporate many founding beliefs of the Company, including the Golden Rule; priorities of God first, family second, career third; the go-give spirit and the adoptee program.

Mary Kay® Product Replacement Program - See “customer refunds and exchanges.”

http://Marykay.com - The Mary Kay corporate Web site featuring Company and product information.The Consultant Locator allows visitors to connect to the Personal Web site of a Consultant in their ZIP code. mileage, recording - See “tax information.”

Marykay.com
The Mary Kay corporate Web site featuring Company and product information. The Consultant Locator allows visitors to connect to the Personal Web Site of a Consultant in their zip code.

mileage, recording
See “tax information”.

Million-Dollar Circle of Excellence - Seminar achievements for Independent Sales Directors whose units achieve $1 million or more in estimated unit retail production during the Seminar contest year.

MKConnections® - The MKConnections® program supports Mary Kay Independent Beauty Consultants and Sales Directors by offering products and services to help advertise and organize their businesses, save money and invest in their long-term financial security. Business-building tools include business cards and checks featuring pictures of Mary Kay® products, stationery, a Visa® credit card program, apparel and business gear and product protection insurance. Detailed information and online ordering for all MKConnections® programs can be found at http://www.mkconnections.com.

• Business Cards, Checks and Stationery - offers products to help you grow your business with items such as Mary Kay® business cards, business card kits, stationery items and checks. For more information or to order business cards, checks and stationery, log on to http://www.mkconnections.com or call 1-800-627-9577.
• Apparel and Business Gear - offers apparel and accessories with the Mary Kay® logo to help you advertise your Mary Kay business and product carriers to keep your business organized and mobile. For more information or to order, log on to http://www.mkconnections.com or call 1-800-350-7382.
• Visa® Credit Offer from First USA - cardholders receive a gift of Mary Kay® product annually when the card is used to place a minimum $180 wholesale Section 1 order. This credit card program is designed to help you manage your inventory for the growth of your long-term business. Applying is easy. Just log on to http://www.mkconnections.com or call 1-800-804-8516.
• Product Protection Insurance - is an insurance policy designed especially for Mary Kay Independent Beauty Consultants who wish to protect their product inventory from theft or damage. For more information or to enroll, log on to http://www.mkconnections.com or call 1-800-697-4549.
• Select Savings - offers a package of discounts that provide savings on health-related services such as vision care, dental care, prescription medication and more.This program is not health or medical insurance. For more information or to enroll, log on to http://www.mkconnections.com or call 1-877-483-7478.

Note: More information about most MKConnections® programs mentioned above can be found in the Success Tools envelope.

MKeTouch™ - See “Internet programs.”

mkvelocity.com - Special area of the Mary Kay corporate and Personal Web sites devoted to the Velocity® product line. If the Velocity® generation is your target audience, you can use this Web site address on your Mary Kay® business cards and on your reorder labels allowing visitors to directly access the Velocity® content.

Momentum Month - The first month after qualification under the Consultant Grand Achiever program. During this month, the qualifier’s personal and team production is doubled, including any program credits. (For more information about program guidelines, ask your Sales Director or refer to the Advance brochure. You can obtain an Advance brochure from your Sales Director or access a copy through the Mary Kay InTouch® Web site.)

National Sales Director emeritus
Retired Independent National Sales Director.

National Sales Directors, NSDs
See “Independent National Sales Director”.

new Consultant rewards

• As a new Consultant, you can be eligible to qualify for a product bonus incentive based on your initial wholesale Section 1 order.
• If your initial order with the Company is $600 or more wholesale of Section 1 products and is received by the Company within the same or following calendar month as your Independent Beauty Consultant Agreement, you will receive a product bonus based upon the size of your initial order.
• You’ll be eligible to participate in the ongoing quarterly contest programs based on the accumulated wholesale orders postmarked during the contest quarter.
• You may want to refer to the Ready, Set, Sell! Inventory Options for New Consultants brochure for the product bonuses. For the online brochure, log on to the Mary Kay
  InTouch® Web site.

notice of cancellation
The last copy of the sales ticket is a notice of cancellation form. When a sale is $25 or more retail, current government regulations require that this copy of the notice of cancellation be given to the customer. To fail to do so could be considered an “unfair and deceptive act or practive” by various government agencies. See “sales ticket.”

offspring
A sales unit that originates from within another unit. When a Consultant finishes DIQ and becomes a Director with her own unit, that new unit is known as an “offspring” of the unit she was originally a member of.

online, ordering - See “ordering online” and “Internet programs.”

Online Agreements
Provides the recruiter and the new team member with the ability to submit a Consultant Agreement to the Company through the Internet. The team member completes the personal information, agrees to the terms and conditions and purchases the Starter Kit. Upon successful submission of the credit card payment, the new team member is assigned a Consultant Number and is able to join the online community and place her first order.

On Paper
Sales made through catalogs and brochures only. No facial or skin care class appointment held. One of five ways to market Mary Kay products.

on target

Term used to describe a Consultant who has achieved part of a specific goal and, with continued activity, could achieve it.

On The Face

Sales made at a facial or skin care class. One of five ways to market Mary Kay products.

On The Go
A quick appointment, typically 15 minutes or less. One of five ways to market Mary Kay products.

On With The Show
Appointments where a Consultant displays and demonstrates product sets. These appointments are typically held for larger groups (6 or more) and do not involve the typical “face washing” and makeup application of a skin care class or facial. One of five ways to market Mary Kay products.

Online
Selling Mary Kay products through use of the Internet using the Consultant web site. One of five ways to market Mary Kay products.

ordering Mary Kay products
Remember, when you place an order with the Company for products, you are purchasing the products at wholesale prices.The wholesale price of a product order is determined by a discount from the Company’s suggested retail price.The discount is dependent on the amount of Section 1 products ordered on the Consultant order form. All Beauty Consultants and Sales Directors buy directly from the Company based on the same discount schedule. The Consultant order form lists all the products available in the Mary Kay® product line under the heading “Section 1 – Products.” Refer to the Consultant order form for the current discount schedule and product promotion.You’ll want to take advantage of the maximum discount whenever possible.

ordering sales aids
Items listed in “Section 2 – Sales Aids” of the Consultant order form are other items you may purchase for use in your business. Section 2 items are not available at a discount, are not intended for resale and are not subject to the repurchase obligation set forth in your Independent Beauty Consultant Agreement. The Consultant order form includes the most frequently purchased sales aids as well as the latest promotional items. For the less frequently purchased items, you’ll want to refer to the Section 2 Catalog you received in your Starter Kit. The catalog pictures all ongoing Section 2 items.When you want to order something not listed on the current order form, simply write in the name, part number and price in the “Write-In” section of the order form. (The catalog will refer you to the order form if the item is listed on the order form.) The catalog will be updated twice a year. A copy of the catalog will be in Applause® magazine whenever it’s updated.

The Consultant order form includes the most frequently purchased sales aids as well as the latest promotional items.

ordering online
A consultant can order Mary Kay products anytime from any computer with access to the Internet using the Mary Kay InTouch program.

ordering by telephone - Following are guidelines for using the Mary Kay Inc. telephone ordering service:

• Payment by MasterCard, Visa or Discover Card is required for orders by phone.
• Complete your order on a current Consultant order form before calling. Compute your suggested retail, wholesale and tax amounts. Sales tax is based on where the order is being shipped.
• Call toll-free 1-800-828-9897. Telephone orders are accepted from 7:30 a.m. to midnight Central time, Monday through Friday, except holidays and the last two business days of the month.
• Your Mary Kay telephone order representative will need the following information:
  • Consultant Number
  • Shipping address
  • Suggested retail and intended wholesale amounts
  • Quantity and part number for each item you order
  • Credit card number and expiration date
• The normal discount schedule, freight charges and any special offers will apply to telephone orders.
• A $3.50 telephone charge will be added to each order.
• An Independent Beauty Consultant Agreement must be received in the branch with payment for the Starter Kit (or a Consultant Number must be on file) before a new Consultant’s order can be processed.

ordering by mail - Send your original completed Consultant order form to the branch designated for your area. Your Sales Director will advise you of the branch that will service your needs. You may find it useful to send your Sales Director a copy of your order and to keep a copy for your files.

Branch hours are 8:30 a.m. to 5 p.m. Monday through Friday (local time). Local sales counter hours are from 8:30 a.m. to 7 p.m. Monday through Friday (local time). Contact Customer Service at 1-800-272-9333, and they will connect you to your appropriate branch. See “branches” for branch addresses and phone numbers.

ordering with MasterCard, Visa or Discover Card - To pay with a MasterCard, Visa or Discover Card, you will want to follow these steps:

• Complete a Consultant order form and fill in your MasterCard, Visa or Discover Card account number, expiration date and signature.
• Do not call MasterCard,Visa or Discover to authorize your order before sending it to the branch (so that your account is not charged twice). The branch will call and authorize all orders when you purchase items from the Company.
• To allow for the maximum amount of time to pay off your entire bill, place your order the day after your credit card closing date (on your statement). For purposes of meeting production requirements, if authorization is declined, the order may not count toward that month’s production or be eligible for a contest or product offer based on the postmark cutoff or end-of-month deadline. In the event a charge is unexpectedly not authorized, the branch will attempt to notify the Consultant.

ordering tips -

• Remember to allow 10 days to two weeks for orders placed by mail. These orders must be accompanied by a valid MasterCard, Visa or Discover Card number, cashier’s check or money order (no personal checks) for the exact amount of purchase. Never mail cash.
• To place your order in person at your local branch, please submit a completed Consultant order form and full payment at least 48 hours in advance of when you wish to pick up the merchandise. During the heavier volume periods at the end of the month, fulfillment of pickup merchandise will require 72 hours.
• For customer service regarding your order, call 1-800-272-9333 from 8:30 a.m. to 5 p.m. local time, Monday through Friday. Automated information on the status of your order is available 24 hours a day, seven days a week, from a touch-tone phone by calling 1-800-440-5370.
• Using the automated information line, you can check your:
  • order description
  • process date
  • postmark date
  • ship date or projected ship date
  • wholesale Section 1 total
  • total order amount
  • annual subscription fee for your Mary Kay® Personal Web Site
  • Information is accessible for your five most recent orders within the last six months.
    • To access the automated information line, you’ll need to enter your nine-digit Personal Identification Number (PIN). For easy reference, this number is your Social Security Number. If you do not know your Social Security Number or wish to have your PIN changed, call a branch customer service representative.
• Self-Service Order Resolution for problem orders is available via the “Order Status” page on Mary Kay InTouch®.

  To resolve issues with your order, go to the Mary Kay InTouch® Web site, access the “Order Status” page and click on the link next to the order in question. You can then follow the instructions to correct the problem and submit the order back to the Company. It’s that simple. Just be sure to note that the problem must be resolved by the deadline indicated on the “Order Status” page and in the e-mail. After the deadline, the order will no longer be available for you to resolve yourself and you will need to contact Customer Service if resolution is still needed.

  Once the order has been submitted back to the Company, you will receive a follow-up e-mail confirming that the problem has been resolved. Customer Service will contact Consultants who do not have an e-mail address on file with the Company.

  This service will be available for the majority of mail orders received on the last day of the month. However, you will have less time to resolve any problems with these orders than orders received earlier in the month. Self-Service Order Resolution will not be available for any mail orders keyed on the final day of month-end processing.

Packing slip/Invoice
The computer printout which is shipped with the orders is provided to all Consultants and Directors to furnish a detailed description of the items shipped, items back ordered and the cost of the order.

part number, item number
Six-digit identifying number printed on product, carton and on the Consultant order form. Also used to order by part number when ordering online.

personal team commission - Percentage paid to all active Senior Consultants and above on the wholesale orders placed by their active personal team members. See “career path program” for details.

Perfect Start
The Perfect Start is one of two suggested goals for a new Consultant to help get her business off to a good start. To achieve a Perfect Start, a Consultant must facial 15 customers within a two-week period.

performance account
The account helps Grand Achiever participants make up any personal/team shortage during their participation in the Grand Achiever program. The account is established with a $4,500 balance in the month following qualification, which is the momentum month (see Momentum Month). Each month while participating in the program, excess production over the maintenance requirements will add to the account balance while production shortfalls will reduce the account balance by the production shortfall amount. The maximum balance carried forward each month is $13,500.

personal accounts
No Consultant or Director may use the trademarks or trade name Mary Kay or Mary Kay, Inc. on personal checks (with the exception of MKChecks offered through MKConnections) or credit card accounts. These accounts may easily be kept separate for business purposes by the designation cosmetics account, business account or similar words.

personal team commission
Percentage paid to all active Senior Consultants and above on the wholesale orders placed by their active person team members.

Personal Web Site program
See “Internet programs”.

placing product orders
See “ordering Mary Kay products”.

Pontiac Vibe
A career car that a Consultant can earn the use of by meeting the Grand Achiever program guidelines. Refer to the Advance brochure for guidelines.

Power Start
The Power Start is one of two suggested goals for a new Consultant to help get her business off to a good start. To achieve a Power Start, a Consultant must facial 30 customers in a month.

Preferred Customer Program
Also known as the PCP. A program for consultants to create a database of customers, potential customers, and potential recruits. Each quarter consultants are encouraged to enroll their “Preferred Customers” in the program for three mailings and/or emails. This is presented as a service to the consultant. Consultants pay a certain price per customer to participate. On behalf of the consultant, the company mails each customer enrolled a copy of the current edition “The Look” at a reduced rate, in addition to other mailers and emails not otherwise available through the Section 2 catalog. The Preferred Customer Program also offers customers a “Free Gift with Purchase” program, which the consultant may or may not participate in. This depends on if the consultant chooses to purchase the gifts from the Section 2 catalog to then give for free to customers who make qualified purchases. When a consultant terminates from the company, either by not ordering in 12 months or by returning inventory for buyback, the consultant’s Preferred Customer list is forwarded to her director.

Premier Club
Career car program that awards Independent Sales Directors the use of a Grand Prix or cash compensation by meeting the career car program guidelines for Premier Club. See “career car program.” For more information, log on to the Mary Kay InTouch® Web site.

pre-profiling
Contacting a skin care class guest, usually by telephone, to get her skin care information by asking her the questions on the skin care profile. When pre-profiling, a Consultant will want to ask guests questions 4 and 5 on the profile to help you know which products to use as well as the foundation shade range to select. The guests can fill in the rest of the profile information during the class or show. After they have completed the questions, the recommended products will be indicated on the hard copy of the profile.

private makeover session
An optional incentive to book the hostess for another class. The focus of this appointment is on a customized color cosmetic look for the customer or hostess.

Product Protection Insurance
Created exclusively for Consultants. Product Protection Insurance covers Mary Kay product inventory and is available to active Consultants.

ProPay
Automated customer credit card sales system, accessible through the Mary Kay InTouch Web site.

product reorder labels
Small labels with a Consultant’s name and contact information to be placed on each product sold to make it easier for customers to reorder.

Product Replacement Program
See “customer refunds and exchanges: The Mary Kay Product Replacement Program”.

product replacement request form
Form for Consultants to use to receive replacement products for customer refunds and exchanges.

Product Returns
For returns made by the Consultant, see “Consultant product return policy”. For product returns for customers, see “customer refunds and exchanges: The Mary Kay Product Replacement Program”.

production: personal, team or unit - The term used for the total wholesale or estimated retail amounts purchased from the Company by an Independent Beauty Consultant, team or unit.

qualification
The process of meeting the requirements of a particular level of achievement.

qualified team member
A person is qualified once they sign a Consultant Agreement and place a Section 1 order of $600 or more during a specific time period, usually within the month they sign the Agreement and the next month.

quarterly contests
Company-sponsored contests to help motivate a Consultant to earn a specific prize and encourage goal-setting.

quarters: contest, calendar
Contest quarters are the division of Mary Kay year into four segments, called “quarters”, with each lasting approximately 13 weeks. Contest quarters normally run mid-month to mid-month (e.g., Sept. 16 - Dec. 15).Calendar quarters (e.g. Oct. 1 - Dec. 31) are used for career car program production purposes. The Mary Kay Seminar contest year is July 1 of one year through June 30 of the following year.

queen’s court
An elite group of Consultants or Sales Directors who have qualified for special recognition at Seminar for sales or team-building achievements.

recording mileage
See “tax information” for details.

Recruit
The person that a Consultant or Director has personally brought into Mary Kay by convincing them to join and sign a Consultant’s Agreement.

recruiter
Person who recruits another person to start her own Mary Kay business.

red jacket

Red blazer signifying an Independent Beauty Consultant who has built her team with three or more active team members. As soon as a Beauty Consultant has two active team members, she can purchase a red jacket using the Company red jacket order form. She is eligible to wear the jacket when she becomes a Star Recruiter with three active team members.

regular line
The ongoing collection of Mary Kay products.

reinstatement
A former consultant may be reinstated and regain her active status simply by placing a minimum $200 wholesale Section 1 order with the company within one year of her last order month (or anniversary month if no order was ever placed). She will be reinstated to the unit and the recruiter indicated on record at the time removed, but she will not regain any personal team members.

reprogramming
Occasionally changing some of the customer’s product formulations according to her skin’s needs, often due to changes in climate conditions.

re-recruitment of former Consultants
See “Consultant activity” for details.

retail production
The total amount of sales based on suggested retail prices by a Consultant, Sales Director, team or unit during any given period.

active - Term that refers to the status of a Mary Kay Independent Beauty Consultant. An Independent Beauty Consultant is considered active in the month a minimum $180 wholesale Section 1 order is received by the Company and in the following two calendar months. See “qualified team member” for further Consultant status information.

adoptee program - Because of the Company’s no-territory policy, if your Independent Sales Director lives in another city, a Sales Director in your city can adopt you into her unit and, in the go-give sharing spirit, she can provide you with education, inspiration and motivation.

Advance brochure

Explains the sales force career path from Independent Beauty Consultant through Independent Executive National Sales Director, as well as the career car programs.You can access a copy of the brochure through the Mary Kay InTouch ®Web site, or you can obtain a copy from your Sales Director.

advertising and sales promotional materials - Company-supplied literature, supplies and brochures which utilize Company names and trademarks may be used by you in your Mary Kay business. The MKConnections® program offers a number of Company-approved advertising materials to help grow your business. You can obtain business cards and MKChecks™ through the Business Cards, Checks and Stationery program. Mary Kay® logowear is available through the MKConnections® Apparel and Business Gear program. Our experience has shown that personal business contact is the most effective and productive means of generating sales. To avoid inadvertent, false or misleading advertising, no Beauty Consultant or Sales Director should prepare or produce for individual or local use, sales literature, advertisements or promotional materials of any kind in which the Company’s trade name or trademarks are utilized without obtaining the prior written permission of the Company. Approved advertisements you can use for local reproduction at your own personal expense are available on the Mary Kay InTouch ® Community, or upon request from the Company by contacting Global Legal Resources at 972-687-5777; e-mail legalsupport@mkcorp.com; fax 972-687-1604 or write P. O. Box 799045, Dallas,TX 75379-9045.

advertising guidelines - As a Mary Kay Independent Beauty Consultant, you agree to make truthful, accurate representations to your customers and potential team members concerning Mary Kay Inc., the Career Path and Mary Kay® products. The Company, of course, carries full product liability insurance as protection against lawsuits claiming damage arising from any possible defects in the products themselves. However, exaggerated claims regarding earnings or potential product effectiveness, etc., are another matter, and, if untruthful and unsupportable, can involve you in a legal controversy with your customer or government regulatory agencies.

• The customer expects and deserves truth and reliability from you as a seller. Consequently, it is suggested that you carefully examine your sales presentation by asking yourself these questions:
  • Is the information I am giving to my customers contained in Career Essentials or in other Company-furnished literature?
  • If not, what is the source of the information and is it reliable?
  • Is it the truth?
  • Do I have facts to support it?
• Use of Company names for personal business purposes. See “legal considerations.”
  • telephone directory listing - As a Beauty Consultant, you are not allowed to list your Mary Kay business or residential service telephone number in any white or yellow pages directories (whether published by telephone companies or private publishing companies) in any way in connection with the Company-owned trade name, trademark or corporate names. This privilege is reserved for those Sales Directors who have elected to participate in the Company’s yellow page advertising program, and only after an agreement has been executed between the Sales Director and the Company concerning the licensed use of the Company’s trademarks or trade names. Should you need additional information, contact Directory Advertising at 1-800-264-7062.
  • local advertising and promotion - As identified in the Independent Beauty Consultant Agreement, the Independent Beauty Consultant agrees: “To protect the Mary Kay trademarks and trade name by obtaining the Company’s written permission prior to my use in any advertising (including but not limited to the Internet) or literature other than Company-published material. I understand that display or sale of Mary Kay® products in public, retail or service establishments of any kind is inconsistent with the terms of this Agreement.”
  • selling and displaying of products in retail outlets - Selling or displaying products in retail outlets of any kind constitutes a violation of your Independent Beauty Consultant Agreement. Aside from the legal considerations, there are also a number of very important practical reasons why you’ll want to avoid selling through retail-type establishments, such as beauty shops, flea markets, dress shops, spas, etc. Your success with your customer depends upon a very personal relationship: the customer’s ability to try before buying; to receive proper individual instruction in product usage, both before and after the sale; and her ability to rely on the satisfaction or money-back guarantee which only you, as an authorized Mary Kay Independent Beauty Consultant, are able to offer.

Agreement - See “Independent Beauty Consultant Agreement.”

annual Go-Give Award - Award given nationally to Independent Sales Directors to recognize those who exemplify the go-give spirit and Golden Rule philosophy. Five annual Go-Give Award winners, one from each Seminar division, are given special recognition for the Seminar year. The nomination form is available online on the Mary Kay InTouch ®Web site.

Ash, Mary Kay - Company founder.

automated information line - Information on the status of up to 10 of your most recent orders within the last 6 months can be accessed by calling the 24-hour automated Information Line at 1-800-440-5370 and entering your 9-digit Personal Identification Number (PIN; touch-tone phones only). For easy reference, your 9-digit PIN will be your Social Security number. If you do not know your Social Security number or wish to have your 9-digit PIN changed, call Branch Customer Service at 1-800-272-9333. Customer Service Representatives are available Monday through Friday, 8:30 a.m. to 5 p.m., local branch time.

automated retail credit card reimbursement - See “Credit Cards: MasterCard,Visa and Discover Card customer sales” for details.

avenues of income - There are three avenues in which a sales force member can earn income: product marketing, team building and leadership. Team building (recruiting new team members; sharing the Mary Kay opportunity, thus earning personal team-building commissions and bonuses) and leadership (becoming an Independent Sales Director and earning commissions and bonuses) grow naturally out of product marketing. Product marketing is the way a Beauty Consultant builds her business by selling Mary Kay® products:

• On The Face - skin care classes and facials
• On The Go - quick and easy 15-minute appointments
• Online - sales through the Internet
• On Paper - sales through catalogs and brochures
• On With The Show - parties that preview product sets (Collection Previews)
• Awards Night - The spectacular night during each Seminar when Beauty Consultants and Sales Directors are awarded prizes and recognized for their Seminar contest year achievements. Seminar queens are crowned for their selling and recruiting accomplishments.

bar pin - Gold and pavé diamond bar pin displaying estimated unit retail production, awarded at Seminar on Awards Night to Sales Directors who exceed all previous years’ estimated unit retail production (beginning at $300,000 and in $50,000 increments thereafter). beauty book - Brochure that pictures product lines and includes a suggested retail price list. Available as a Section 2 item on the Consultant order form.

Beauty Consultant, Consultant - See “Independent Beauty Consultant.”

Beauty Consultant Agreement - See “Independent Beauty Consultant Agreement.”

booking - Scheduling appointments to share Mary Kay® products.

branches - The five regional Mary Kay distribution centers in the United States that are responsible for shipping products to Beauty Consultants, processing orders and Agreements, and customer service activities. You’ll want to send your order to the branch designated for your state:

• Northeast Branch: P. O. Box 6702, Somerset, NJ 08875-6702, phone: 732-563-9100
• Southern Branch: P. O. Box 100028, Duluth, GA 30096-9428, phone: 770-497-1963
• Western Branch: 6300 Katella Avenue, Cypress, CA 90630-5229, phone: 714-897-6300
• North Central Branch: 221 Covington Drive, Bloomingdale, IL 60108-3114, phone: 630-924-8880
• Southwest Branch: P. O. Box 569190, Dallas,TX 75356-9190, phone: 972-620-1221

Business Tracking Register - A tool to help you keep track of your business expenses. You can learn how the Business Tracking Register works on the Career Essentials Audio Success Series, “Money Management” audiotape. You’ll find the original form in the Success Tools envelope and may make additional copies. Look at the example below which is described on the audiotape (keep in mind that this example is based on 6 percent sales tax; your sales tax rate may vary).

Example 1Business Tracking Register

Month / Year April ’02 Monthly Budgeted Expenses $120

Date	Reason	Deposit Sales (without tax)	Sales Tax	Inventory 50%	Sales Aids 5%	Pref. Cust. 5%	Bus.Income 40%
	Balance Forward	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
4/20	Class sales	$ 400.00	$ 24.00	$ 200.00	$ 20.00	$ 20.00	$ 160.00
	Total	$ 400.00	$ 24.00	$ 200.00	$ 20.00	$ 20.00	$ 160.00

Let’s build on that example. The next week, April 27, class sales were $250 with sales tax of $15. To complete the entry, you would put:

1. The date and reason for entering money in the Deposit column (you’ll want to include the reason you are moving money in or out of your business checking account).
2. The sales tax ($15) in the Sales Tax column.
3. $125, or 50%, in the Inventory column.
4. $12.50, or 5%, in the Sales Aids column.
5. $12.50, or 5%, in the Preferred Customer column.
6. $100, or 40%, in the Business Income column.

Then you’ll total each column. Based on this example, here is what your register will look like:

Business Tracking Register

Month / Year April ’02 Monthly Budgeted Expenses $120

Date	Reason	Deposit Sales (without tax)	Sales Tax	Inventory 50%	Sales Aids 5%	Pref. Cust. 5%	Bus.Income 40%
	Balance Forward	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
4/20	Class sales	$ 400.00	$ 24.00	$ 200.00	$ 20.00	$ 20.00	$ 160.00
	Total	$ 400.00	$ 24.00	$ 200.00	$ 20.00	$ 20.00	$ 160.00
4/27	Class sales	$ 250.00	$ 15.00	$ 125.00	$ 12.50	$ 12.50	$ 100.00
	Total	$ 650.00	$ 39.00	$ 325.00	$ 32.50	$ 32.50	$ 260.00

Buying Inventory: Let’s look at what happens when you take money out of your business bank account to buy inventory. In Example 2, your total in the Inventory column (after entering the 4/27 class sales) is $325. If there were $400 in the Inventory column, you could get the 50 percent discount on product (since you would be purchasing $800 in suggested retail). If building up your inventory is one of your priorities, you could use some of the money from the Business Income column toward your inventory. That would look like this:

Business Tracking Register

Month / Year April ’02 Monthly Budgeted Expenses $120

Date	Reason	Deposit Sales (without tax)	Sales Tax	Inventory 50%	Sales Aids 5%	Pref. Cust. 5%	Bus.Income 40%
	Balance Forward	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
4/20	Class sales	$ 400.00	$ 24.00	$ 200.00	$ 20.00	$ 20.00	$ 160.00
	Total	$ 400.00	$ 24.00	$ 200.00	$ 20.00	$ 20.00	$ 160.00
4/27	Class sales	$ 250.00	$ 15.00	$ 125.00	$ 12.50	$ 12.50	$ 100.00
	Total	$ 650.00	$ 39.00	$ 325.00	$ 32.50	$ 32.50	$ 260.00
4/28	Purchase $400 Whsl. Inv.	$ 0.00	–$ 39.00	–$ 325.00	$ 0	–$ 9.00	–$ 75.00
	Total	$ 650.00	$ 0	$ 0	$ 32.50	$ 23.50	$ 185.00

With this example, you would subtract $75 from the Business Income column and $325 from the Inventory column to place a $400 wholesale Section 1 order. In doing so, you can buy your inventory at a 50 percent discount (see the Consultant order form for the current discount schedule).You will still have $185 in your Business Income column for monthly expenses.

Don’t forget, when you take money out to buy inventory, you must also take the appropriate amount out to pay sales tax. You pay sales tax on the suggested retail price of the inventory and the cost of sales aids. In this example, you must pay $48 ($800 suggested retail price x the sales tax rate of 6% = $48) in sales tax. Since there is only $39 in the Sales Tax column, subtract the additional amount needed which is $9 ($48 - $39 = $9) from the Preferred Customer column. The Preferred Customer column is overbudgeted (since you put 5 percent of all sales into this column but you only need to use it one time each quarter to sign your customers up for the Preferred Customer Program). You can use monies from this column for additional sales tax, the $3.50 call-in charge (if you place your order by telephone) and the $7.50* freight charge. Don’t forget to record these transactions in your Business Tracking Register.

* See the Consultant order form for tax and freight information for Alaska, Hawaii, Guam, Puerto Rico and the U.S. Virgin Islands.

As you probably noticed, by totaling the Business Tracking Register after every transaction, you keep a running total of what is in each column, and you will always know how much you have budgeted in each column for your business. You will also have a running total of your sales in the Sales column.

Each time you put money into or take money out of your business bank account you’ll want to record it on your Business Tracking Register. As you’re using the Business Tracking Register, you will want to determine what your goals are in your business. Which has more priority? Building inventory? Paying yourself? Once you make that decision, you’ll know how to spend and use the money you generate from your business. This tool can really help you improve your business savvy, and it is simple to use!

Helpful Hints For Using The Business Tracking Register:

• When you pay yourself, use the money from the Business Income column.
• Remember, everything that you use and record in your Business Income column to run your business (e.g., expenses, inventory, etc.) ultimately takes away from what you pay yourself. This is your money; manage and utilize it the way you want to so you can get the most from your business.
• Be diligent in recording the money that goes into and out of your business. If you forget to enter some information on your Business Tracking Register, just go back to your business bank account register and record the deposits and withdrawals on your Business Tracking Register.
• Put all earnings from team building directly into the Business Income column since this income represents your earnings.

Beauty book

A brochure that pictures product lines and include their suggested price. Beauty books are less detailed than Look Books and are frequently incorporated into the Consultant’s presentation at a skin care class, show or facial.

Beauty Consultant

See “Independent Beauty Consultant.”

Beauty Consultant Agreement

See “Independent Beauty Consultant Agreement.”

booking

Scheduling appointments to sell Mary Kay products.

branches

The five regional Mary Kay distribution centers in the U.S. that are responsible for shipping products to Beauty Consultants, processing orders and agreements, and customer service activities.

Business Debut

A way for a Consultant to officially announce their Mary Kay business. The Consultant invites a large number of guests and does a “show and tell” of Mary Kay products. She then can book the guests for facials and skin care classes.

Business Tracking Register

A tool to help a consultant keep track of her business expenses.

Cadillac

Career car that a Sales Director can earn the use of by meeting the Cadillac career car program guidelines. See “career car program”.

Car Program Credit

Receive $600 car program credit toward car production, maintenance and requalification for each new personal team member whose initial order with the Company is $600 or more in wholesale Section 1 products, and is received and accepted by the Company in the same or following calendar month that her Consultant Agreement is received and accepted by the Company.

career car - The general description for the cars awarded under the Company career car program, which an Independent Beauty Consultant or Independent Sales Director can earn the use of by meeting career car program guidelines. See “career car program” and “grand achiever car program” for the Consultant career car program. For more information, log on to the Mary Kay InTouch ® Web site.

career car program - The Company award program through which an Independent Beauty Consultant or Independent Sales Director can earn the use of a career car or obtain cash compensation by meeting program guidelines. There are four programs: the Consultant Grand Achiever, Sales Director Grand Achiever, Premier Club and Cadillac. The Sales Director Grand Achiever, Premier Club and Cadillac programs are Independent Sales Director programs only. For more information about program guidelines, ask your Sales Director or refer to the Advance brochure.You can obtain an Advance brochure from your Sales Director or access a copy through the Mary Kay InTouch ® Web site. See also “cash compensation.”

Career Conference - A Company-sponsored conference held each spring in which Beauty Consultants may register to attend for inspiration, motivation and education. Speakers include Independent National Sales Directors and top Independent Sales Directors.

Career Essentials - Educational materials designed to educate new Independent Beauty Consultants about how to start a Mary Kay business. It is included in the Starter Kit. The components include the Starting Points: Beginning Your Mary Kay Business booklet and audiotape, the Reference booklet, Products booklet, Audio Success Series and the Success Tools envelope. The Conversations booklet, which contains useful dialogues and is another part of Career Essentials, is available online. To access the Conversations booklet, as well as the other Career Essentials materials, log on to the Mary Kay InTouch ®Web site.

career guidelines - See “Consultant activity.”

career path program - See Mary Kay Career Essentials Career Path Program

cash compensation - The general description for the cash award under the Company career car program which an Independent Beauty Consultant or Independent Sales Director can earn by meeting career car program guidelines. See “career car program.”

Circle of Achievement, Circle of Excellence - Annual recognition based on a unit’s estimated retail production. Circle of Achievement recognition begins at the $300,000 level of estimated unit retail production and continues in $50,000 increments thereafter (up to $600,000 retail). Independent Sales Directors who achieve $650,000 and above in estimated unit retail production are members of the Circle of Excellence and earn the annual top Sales Director trip. At the $800,000 level and above, Sales Directors earn an exclusive excursion. See “Half-Million-Dollar Circle of Achievement” and “Million-Dollar Circle of Excellence.” See your current Seminar prize brochure for contest rules.

Circle of Honor - Recognition for an Independent Beauty Consultant or Independent Sales Director who achieves 56 quarters of Star Consultant status. She becomes a member of the Circle of Honor and is referred to as a Guiding Star. She is awarded a custom-designed Circle of Honor pin with a diamond pavé ladder. She will continue to receive stars to attach to the ladder, and when 64 quarters have been achieved, she will receive a new centerpiece for the pin denoting 16 years of Star Consultant performance.

Circle of Stars - Recognition for an Independent Beauty Consultant or Independent Sales Director who has achieved a minimum of 32 quarters of Star Consultant status. She is awarded a custom-designed pin and a new ladder pin, both to which the Company will add additional “stars” and gemstones to acknowledge her sales achievements.

coaching - Establishing rapport with your hostess, explaining her role in the success of the skin care class, show or collection preview, discussing her goals for earning products from her appointment, and asking for bookings or prospective new team members. See “telephone coaching.”

collection preview - See “avenues of income.”

commission - Percentage paid to an Independent Beauty Consultant or Independent Sales Director by the Company on the wholesale orders of personal team members or the wholesale sales volume of her unit (if a Sales Director) based upon the products being sold at retail prices. Beauty Consultants and Sales Directors must be active to receive commissions on their personal team members’ wholesale orders.

commissionable, non-commissionable - Terms used to identify whether items purchased from the Company are eligible for personal team and Sales Director commissions. Team-builders and Sales Directors earn commissions based on the wholesale purchases of their team members and/or unit. All items listed in Section 1 of the Consultant order form are commissionable. Items listed in Section 2 of the Consultant order form are non-commissionable.

computer printout - The computer printout which is shipped with the orders you place is provided to all Consultants and Sales Directors to furnish a detailed description of the items shipped, items back ordered and the cost of the order. We suggest that you inventory your product against the computer printout when you receive the order. Any discrepancies should be brought to the attention of the branch from which you received the order. You’ll want to keep the computer printout for your tax records.

Consultant activity - See Mary Kay Career Essentials Consultant Activity

Consultant and Medical Relations Department - Company department for Beauty Consultants to call regarding a customer’s skin problem or about Mary Kay® products. This department also provides information on Mary Kay® products to physicians upon request.

Consultant Power Hour® - An educational audiotape available for Beauty Consultants to purchase on a quarterly basis from the Summary Section of the Consultant order form. Calendar quarter in March, June, September and December.

Consultant product return policy - See “customer refunds and exchanges” for product replacement information. Should a Consultant relinquish her Mary Kay business, she will probably still want to have some merchandise on hand for personal use or for gifts for relatives and friends for future occasions. However, if for any reason, upon cancellation of her Agreement, a Consultant feels she must return her inventory, she may ask for a Request for Repurchase form from her Sales Director. Consultants may contact the Company at 972-919-7767 to determine the amount of product eligible for return. She may then return the completed form, along with her repurchasable Company products, freight prepaid, to Repurchase Department, Mary Kay Inc., 1278 Titan Drive, Dallas, TX 75247. If she is unable to obtain the form from her Sales Director, the Consultant may contact the Company at the number indicated above for a form. The following will apply:

• The Company will accept a Consultant’s cancellation of the Independent Beauty Consultant Agreement within thirty (30) days after acceptance of the Agreement by the Company, and upon the return of the Consultant’s original and unused Starter Kit to the Company, the Company will refund to Consultant the Consultant’s cost of the Starter Kit; or if Agreement is terminated and Consultant’s original and unused Starter Kit is returned to Company after the cancellation period and within one (1) year of purchase, to repurchase such Starter Kit at ninety percent (90%) of Consultant’s original net cost.
• The Company agrees to repurchase, upon the termination of the Agreement, at ninety percent (90%) of Consultant’s original net cost, original and unused Section 1 products, provided such items were purchased by Consultant from Company within one (1) year prior to return.
• Starter Kit and Section 1 products must be shipped freight prepaid, accompanied by a Request for Repurchase form to the Mary Kay Repurchase Department in Dallas.
• Company’s cost of any prizes or product bonuses awarded to the Consultant because of the original purchase and any indebtedness the Consultant owes the Company will be deducted from the repurchase amount.
• Section 2 items are not intended to be purchased from the Company for resale and are not subject to the repurchase obligations set forth in the Independent Beauty Consultant Agreement.
• Any commission previously paid on product returned will be charged back based on the actual percentage paid at the time of the purchase.
• A Consultant who returns merchandise to the Company for repurchase is not eligible to rejoin Mary Kay as a Mary Kay Independent Beauty Consultant.
• Shipment of the products is the responsibility of the Consultant. This includes, but is not limited to, bearing all costs related to the shipment and complying with all federal, state and local regulations.

Consumer Guide to Cosmetic Ingredients - Booklet that provides a listing of all ingredients found in each regular-line Mary Kay® product, arranged in the order required by the Food and Drug Administration. The booklet is available on the Mary Kay InTouch ® Web site.

contest credit - Credit applied in a quarterly contest based on wholesale orders and the number of qualified team members added during a contest quarter.

co-op - The general description for the portion of the lease payment owed by participants in the career car program when production falls short of program guidelines.

courts - Recognition categories for Seminar Awards Night. Achievers are recognized for recruiting and sales. See the current Seminar prize brochure.

credit card sales - See Mary Kay Career Essentials Credit Card Sales

customer profile - Provides a record of a customer’s individual skin care purchases and preferences.

customer refunds and exchanges: The Mary Kay® Product Replacement Program - The Mary Kay dedication to total customer satisfaction enables you to give customer refunds and product exchanges. It is suggested that if a customer is unhappy with a product for whatever reason, you offer to exchange it for another product before offering a full refund. This is to your advantage because you will not be refunding cash, only exchanging product. Many times the customer may be happy with an exchange. Of course, should the customer ask for her money back, cheerfully refund the purchase price for the returned products as soon as you get them. In either case, we suggest you make sure to have the customer sign a receipt, itemizing the merchandise exchanged or refund given.

Our satisfaction guarantee is designed to guarantee the quality of our product and to assure that every customer receives product best suited to his or her skin type. The Product Replacement Program is available to you only after you have honored the Mary Kay satisfaction guarantee by either exchanging product or refunding money. In order to facilitate customer refunds and product exchanges, the Company offers you an easy-to-use Product Replacement Request form (included in the Success Tools envelope and is available on the Consultant order form). You must completely fill out the Product Replacement Request form to receive your replacement product. Complete instructions are on the form. Your Product Replacement Request form may be returned to you if not properly completed.

• Mail the completed Product Replacement Request form to the following address within thirty (30) days of receipt of returned items from customer. Attention: PRP Department, Mary Kay Inc., P. O. Box 569350, Dallas,TX 75356-9350
• Handling of returned items: Product returned to you by a customer should not be forwarded to the Company. For Quality Assurance measures, you should retain the product for a minimum of thirty (30) days from the date you mail the Product Replacement Request form to the Company. After the expiration of the thirty-day holding period, properly dispose of the returned items in accordance with applicable laws and regulations, unless you are contacted by the Company to do otherwise. In the event you are requested to return products to the Company, it is strongly recommended you ship the products through UPS and adequately insure the parcel. This will allow for traceability for compensation should your parcel be misrouted. Shipment is solely your responsibility. This includes, but is not limited to, bearing all costs and complying with all federal, state and local regulations.
• situations that may require refunds or exchanges -
  • A customer buys product, but needs a different formula or does not want it. It is suggested that if a customer is unhappy with a product for whatever reason, you offer to exchange it for another product before offering a full refund. This is advantageous to you because you will not be refunding cash – only exchanging product. Of course, should the customer ask for her money back, cheerfully refund the full purchase price for the returned product as soon as you receive it. To receive your replacement product, carefully follow the Product Replacement Request instructions, including the instructions regarding proper handling of returned items.
  • Customer claims there has been an allergic reaction to a Mary Kay® product. In the rare case when a customer notifies you that she is experiencing an allergic reaction, advise her to discontinue use of all products immediately. Mary Kay Inc. will not accept legal liability for the reaction, since any number of factors affect the skin including diet, illness and physical condition. The customer, by herself or through her Independent Beauty Consultant, must furnish the following documentation to the Company to be considered for reimbursement:
    • Name and address of the attending physician
    • Statement from the attending physician giving an opinion for the cause of the customer’s medical condition
    • Itemized receipts for prescription expenses and doctor bills
    • Once this information is provided, the Company evaluates the information to consider making a payment determination. Information concerning any such claims should be sent to Claims Coordinator, Mary Kay Inc., P. O. Box 799045, Dallas, TX 75379-9045.
    • The medical reimbursement policy does not pay for doctor’s visits “up front.” The customer may be reimbursed after she has been released by the treating physician so we can reimburse for the total cost of medical expenses rather than on a piecemeal basis. The Mary Kay Inc. medical reimbursement policy does not provide for payment directly to a health care provider. Medical reimbursement is paid directly to the consumer.
    • The medical reimbursement policy does not extend to:
      • Patch testing
      • Dermabrasion
      • Cosmetic surgery or any other cosmetic procedure that the customer requests and alleges is needed as a result of using a Mary Kay® product
      • Wage loss
      • Child care/baby-sitters
      • Mileage expenses
      • Housekeeping
      • Other similar expenses
  • Purchases from other Consultants - In the event a customer contacts you and requests an exchange or refund for a product she purchased from another Consultant, you should advise the customer to contact the Customer Satisfaction Department at 1-800-MARY KAY. A representative of the Customer Satisfaction Department will advise the customer how to obtain an exchange or refund.

DIQ - Refers to an Independent Sales Director-in-Qualification. See “career path program” for details.

debut - The completion of Company qualifications for the position of Independent Sales Director or Independent National Sales Director. New Sales Directors and new National Sales Directors are recognized at Company special events and within their own units with special debut ceremonies to celebrate the advancement in their careers.

Direct Selling Association (DSA) - Professional organization of direct selling companies which seeks to promote high ethical standards in the direct selling industry. Mary Kay Inc. is a member of this association.

discount schedule - The Company’s wholesale price to Beauty Consultants on product orders. Determined by a discount from suggested retail prices. See the current Consultant order form for the discount schedule and freight charges.

Double Star of Excellence - Award for an Independent Beauty Consultant who has completed 16 quarters as a Star Consultant.

dovetailing - When a Beauty Consultant is unable to hold or overbooks a skin care class and asks another Beauty Consultant to fulfill her commitment to the hostess, it is called a dovetail.The original Beauty Consultant who booked the class can receive a percentage of the class sales (a suggested guideline would be 15 percent of class sales). All other sales and bookings from the class go to the Beauty Consultant who actually held the class. The hostess remains the customer of the original Beauty Consultant.

dual-marketing concept - An important aspect of Mary Kay Inc. is its dual-marketing system — its separation of corporate management from independent contractors selling the Company’s products. See “marketing plan” for more information.

e-cards - See “Internet programs” for MKeTouch™.

electronic advertising - Consultants may only utilize the Company trademark standardization name and trademarks electronically (i.e., the Internet) through Company-approved programs, such as the Mary Kay® Personal Web Site program. For more information on electronic advertising and the Internet, read the Internet Guidelines found in the Legal Ease brochure. This information is also available online.

e-mail - See “Internet programs” for free Marykay.com e-mail service.

emeritus - An honorary title given to someone retired from an office or position.

Executive Senior Sales Director - See “Independent Executive Senior Sales Director.”

Expense Tracking Form - Form to track your business expenses. Tracking your expenses provides a means to help you control expenses and monitor where your money is going. Consider evaluating where your money is going and spending your money wisely on items that will grow your business. You’ll want to keep every business receipt and put it in an expandable file that is labeled with the categories on the Expense Tracking Form. You’ll find this form in the Success Tools envelope. On a monthly basis you can calculate each category of receipts based on the section headings on this form. Use this information to help you make smart business decisions. To learn how to use the Expense Tracking Form and manage your money, you’ll want to listen to “Money Management” on the Career Essentials Audio Success Series.

Fabulous 50s Club - Independent Sales Directors who achieve at least $30,000 in unit wholesale production within six months of their debut date and have a unit size of 50 unit members or more at the end of the sixth month following their debut date became members of the Fabulous 50s Club.

Face Case - A personalized skin care class trial case. It includes a regular and magnified mirror and can be packed with a foam tray for product samplers and demonstrators. The case is designed to be portable in the GO Kit and/or the GO Book.

facial - Demonstration of Mary Kay® products held with one or two people. The purpose of the facial is to introduce the customer to the Independent Beauty Consultant and Mary Kay® products, as well as teach the customer the correct application order.

family security program - Program that provides participating Independent National Sales Directors with normal, early and late retirement benefits, and disability and survivor benefits.

former Consultant status - See “Consultant activity” for details.

four-point recruiting plan - Mary Kay personally developed the four-point recruiting plan when she began holding skin care classes. By following these four easy steps, you can leave each class with personal prospective team members and referrals. In addition to the hostess and guests at your classes, you’ll want to consider friends, relatives, co-workers and referrals as good sources for potential team members.

1. Ask who might be interested. Before every skin care class and collection preview, ask the hostess, “Who is coming today who might be interested in doing what I do?”
2. Tell your I-story. Present your heartfelt, enthusiastic I-story at every skin care class and collection preview. Share why you began your Mary Kay business and what it means to you.
3. Select at least one person at every skin care class and collection preview and offer them the Mary Kay opportunity. You may want to plant seeds by sending guests home with a Something More audiotape, then meeting with them to tell them more about the Mary Kay opportunity.
4. Offer the hostess a special gift for any person she suggests who becomes a Beauty Consultant.

free Marykay.com e-mail - See “Internet programs” for details.

Future Independent Sales Director - See “career path program” for details.

general liability - This type of policy is designed to protect you from bodily injury, property damage, personal injury or advertising injury liability claims arising out of your activities as a Mary Kay Independent Beauty Consultant. Additionally, if you participate in bridal fairs, etc., you will be able to provide a certificate of general liability insurance to the owner/operator of the premises. Refer to an independent insurance agent in your local area.

Note: To protect yourself against any accidents which a business guest might have while on your property or which you might have on personal property other than your own, you may want to check with your local insurance agent about adding a special amendment to your homeowner’s policy.

GO Book - A streamlined, professional business organizer. The GO Book is designed to carry business cards, pens, customer profiles, datebook, recruiting and product literature along with copies of The Look and product samplers. You can even include a Face Case for an individual facial. The GO Book coordinates with the GO Kit.

Go Give Area - Area composed of Independent Sales Directors who do not have an Independent National Sales Director affiliation. When a National Sales Director becomes an emeritus and doesn’t have an active Senior NSD, the Independent Beauty Consultants and Sales Directors in her area become members of the Go Give Area.

Go-Give Award - Monthly award given to one Independent Sales Director in each of the five Seminar areas to recognize those who exemplify the go-give spirit and Golden Rule philosophies. Name and photo are published in Applause® magazine. Five annual Go-Give Award winners, one from each Seminar division, are given special recognition for the Seminar year. A Beauty Consultant may also receive a unit Go-Give Award.

go-give spirit - Spirit of unselfishness, sharing and helpfulness.

GO Kit - A tote bag professionally designed to carry your product demonstrators and supplies to skin care classes and/or Collection Previews. It contains multiple Quick Zip Bags that Velcro® to the bag, along with ample pockets and storage compartments.

gold medal program, gold medal - Special recognition for sales force members who personally build their teams with five or more new team members in a single calendar month.

Golden Rule - Philosophy of “Do unto others as you would have them do unto you.” The principle upon which Mary Kay Ash founded the Company.

grand achiever car program - Career car program that awards Independent Beauty Consultants and Independent Sales Directors the use of a Grand Am or cash compensation by meeting the career car program guidelines for Consultant Grand Achiever or Sales Director Grand Achiever. Refer to the Advance brochure, available through the Mary Kay InTouch® Web site, for program guidelines.

Grand Am - Career car that an Independent Beauty Consultant or Independent Sales Director can earn the use of by meeting the Consultant Grand Achiever or Sales Director Grand Achiever program guidelines. Refer to the Advance brochure, available through the Mary Kay InTouch® Web site, for program guidelines.

Grand Prix - Career car that an Independent Sales Director can earn the use of by meeting the Premier Club career car program guidelines. Refer to the Advance brochure, available through the Mary Kay InTouch® Web site, for program guidelines.

Half-Million-Dollar Circle of Achievement - Seminar recognition for Independent Sales Directors whose units achieve $500,000 or more in estimated unit retail production during the Seminar year. They receive a choice of one of several prizes. See the current Seminar prize brochure.

Honors Society - Independent Sales Directors who achieve at least $60,000 in unit wholesale production within one year of their debut date and have a unit size of 50 unit members or more one year from their debut date became members of the Mary Kay Honors Society.

hostess - A person who hosts a group selling situation, such as a skin care class or Collection Preview. For more information, see “coaching.” hostess incentive/hostess credit - Allows the hostess to earn Mary Kay® products when she shares her appointment with others. hostess packet - Information that can be given to a hostess when she schedules a class or collection preview.A list of items you may want to include in your hostess packet are:

• beauty books and The Look
• Something More audiotape
• Become Something More marketing brochure
• Your business card
• Suggested dialogue your hostess can use when she’s calling to invite guests to her class such as:
  • I am so excited to call you! I would like to invite you to have a complimentary facial at a skin care class that will be conducted by a Mary Kay Independent Beauty Consultant. The class is by reservation only, and I can invite five friends. If you can come, let me know now so I can reserve a place for you.” or
  • I am so excited to call you! I would like to invite you to a collection preview.A Mary Kay Independent Beauty Constultant will preview the latest products from the Company.You need to only show up and have fun. There will be great refreshments and conversation. Can I count on you to be there?”

You may want to offer the hostess a product credit of 10% of sales from the appointment, 15% for an appointment with one booking, 20% for an appointment with two bookings. Many states prohibit various referral sales plans and some do not permit plans when the earning of the rebate or discount is contingent upon a subsequent event. To comply with these various types of laws which might possibly be interpreted to cover the skin care class and hostess incentive, it’s important to give hostess incentives based on the number of bookings scheduled from the appointments, not based on whether the appointments hold.

I-story - A brief, heartfelt, enthusiastic talk on why an Independent Beauty Consultant began a Mary Kay career and what it means to her.

inactive, inactivity - An Independent Beauty Consultant with no order on record to meet the $180 wholesale Section 1 requirement is considered inactive. See “active.”

Independent Beauty Consultant - Official title for a Mary Kay salesperson, an independent contractor.

Independent Beauty Consultant Agreement - Legal contract between the Company and the Beauty Consultant (independent contractor) which outlines the responsibilities of each.

independent contractor - An independent businessperson who engages in business under the terms of a contract (i.e., the Independent Beauty Consultant Agreement). Independent contractors are self-employed and are in business for themselves. They control the details of their own businesses. They are not employees. They have no power or authority to incur any debt, obligation or liability or to make any representation or contract on behalf of the Company. Mary Kay Independent Beauty Consultants, Sales Directors and National Sales Directors are independent contractors, not employees of the Company.

Independent Elite Executive Senior Sales Director, Elite Executive Senior Sales Director - Sales Director who has eight or more active, first-line offspring Sales Directors.

Independent Executive Senior Sales Director, Executive Senior Sales Director - Sales Director who has five to seven active, first-line offspring Sales Directors.The blouse and/or scarf of their Sales Director suits will be a different color to designate their Executive Senior Sales Director status.

Independent National Sales Director, National, NSD - The top position in the career path. To achieve this status, an Independent Executive Senior Sales Director must have at least 12 first-line offspring Sales Directors with at least six who are also Senior Sales Directors or 11 first-line offspring Sales Directors with seven who are Senior Sales Directors or 10 first-line Sales Directors with eight who are Senior Sales Directors. The units to count toward these totals must meet certain performance guidelines. She must debut as a National Sales Director by age 64 or younger. Appointment to this position is at the Company’s sole discretion.

Independent Sales Director-in-Qualification, DIQ - See “career path program” for details.

Independent Sales Director, Sales Director - Advanced position in the Mary Kay career path. Sales Directors have proven their abilities to successfully sell Mary Kay® products and have demonstrated their abilities to motivate other team members to become successful. They have also completed Sales Director-in-Qualification requirements. Sales Directors are eligible to wear the Sales Director pin and Sales Director suit.

Independent Senior Sales Director, Senior Sales Director - Sales Director who has one to four active, first-line offspring Sales Director(s). They are eligible to wear the Senior Sales Director pin. The blouse and/or scarf of their Sales Director suit will be a different color to designate their Senior Sales Director status. See “offspring, offspring unit.”

insurance plans - See “general liability” and “Product Protection Insurance.”

Internet guidelines - Your Mary Kay business activities and responsibilities regarding the Internet are explained in this document available on Mary Kay InTouch ®Web site. This information is also available by contacting the Mary Kay Legal Department.

Internet programs - See Mary Kay Career Essentials Internet Programs

inventory - Your stock of merchandise — the product you have on hand. You should count your inventory on or as near as possible to December 31 each year in order for you to determine your cost-of-goods-sold deduction (the wholesale cost of merchandise you have sold during the year).