Anyone who has thought about starting a Home Based Business is very aware of the statistics showing that most business start-ups fail.
That is an absolute fact and it scares away many would be business entrepreneurs.
A major reason for these failures is that most owners do not give sufficient thought to how hard it is to make the first sale and what to do to get additional sales from each customer that they bring in.
Whether your business involves mail order, direct selling or online marketing, the hardest thing there is to do in this business is to attract people to your presentation and then make your first sale.
The sad fact is that many business owners do the math after their initial sale and realize that they actually lost money in the process.
They have not done enough research to realize that losing money to make your initial sale to a customer is the norm.
What sets profitable business owners apart from the ones who lose money and go out of business, is that the winners have created another stream of income.
This income can come in a number of forms.
The most common one is called the back end sale.
The back end sale creates another income stream for the successful business owner and can represent almost pure profit in certain cases.
For example, let us assume that you have started a mail order business and that you have a book to sell on how to start an indoor herb garden.
You decide to sell it for twenty five dollars.
It costs you five dollars to have each book printed on demand.
You are a little tight on money and do not want to carry an inventory of books in the beginning.
You develop a letter, have it printed and then buy a targeted list of buyers and mail out one thousand letters.
Let us also assume that it cost you one thousand dollars to put that many letters into the mail and that your letter is going to generate an absolutely amazing five percent response rate.
Most people are very happy with even a one percent response rate but we will be generous for the sake of our example and calculate a five percent response rate.
That would mean that you made 50 sales with your 1,000 piece mailing.
Your total profit would be one thousand dollars meaning that you broke even.
For the sake of our example, your customer paid the postage so you cleared twenty dollars for each book.
Most beginners would immediately think of raising the price of the book.
If you did that you would need to lower that response rate and, chances are, you would still be breaking even.
The seasoned entrepreneur would actually be thrilled with the calculations we just laid out.
The people who are the winners in business know that the real money is in the back end or additional sale that can be made.
When they mail out the book to their customers they will also include offers for other books or perhaps a training course or video.
Often, the back end sales offering is quite a bit higher than the initial sale.
This is where the real profit is made in almost any business.
One of the best back end sales of all is a continuity type program where the buyer is encouraged to purchase something every month.
Now you know why those record and book clubs made those incredible offers to get you as a customer.
They knew that every new customer represented a new income stream for them.
Creating multiple income streams within your business can be the difference between success and failure.
Before launching your business with that single product offering, take the time to look for ways to turn that initial sale into a steady income stream month after month.
It can lead to a fortune!