Facts, opinions, and the real story behind Mary Kay Cosmetics.

Financial Management Guru Dave Ramsey on Mary Kay Inventory

Written by The Scribbler

Dave Ramsey, the king of living lean and living without debt gave his opinion on Mary Kay inventory. And he says you shouldn’t even carry inventory! I checked out the audio clip regarding MK that Dave Ramsey has on his website and typed it up for you guys! 

Tara: My husband and I have a lot of debt on us. One of the debts is a loan on Mary Kay inventory.

DR: How much inventory have you sold since August in dollar amounts?

T: About 1800 dollars.

DR: And how much inventory do you have?

T: I bought a $3600 inventory but the loan was for $4700.

DR: Why?

T: I got some of the luggage stuff that you can carry it in and I put about a 1000 dollars into marketing materials and luggage and just nice,you know, extra things that I wanted.

DR: Before you made money?

T: Yes.

DR: Wow.

T: Wasnt very smart.

DR: So weve got $1800 worth of makeup and some really cool stuff to carry it in.

T: Pretty much. I really enjoy doing it, I am making my loan payments; I want to pay it off. I have worked out a game plan – in order to pay it off, but in order to do that, I want to keep selling it and therefore I want to keep putting at least 50% back in to keep ordering it – keep restocking. He wants me to deplete my inventory and go ahead and pay the loan off.

DR: I do too.

T: Okay.

DR: Because you know what? They can get that stuff to you in about three days. So, by the time you get to the end of the inventory, you ought to be able to pay it off. And a few hundred dollars worth of the fastest moving product is more than enough, and run the rest of it like everyone else in industry does. Have you heard of Just In Time Inventory?

T: I have not heard of that.

DR: JIT is a process that manufacturers use that are mega-manufacturers; the big companies. They do not carry inventory; they order it just in time. They let the people that they are buying from house their stuff and therefore pay for it. In this case, that would be Mary Kay. Mary Kay is a wonderful organization, by and large, and by and large it is an excellent opportunity, but there are two major downsides to it.

One is that some of the hierarchies teach their people to get into the mistaken process of going into debt to buy inventory, like you have done. That is a mistaken process. You are a sales rep, for goodness sakes. Sales reps should not have to carry inventory, and so order it as needed as a business model. And if Mary Kay is an as excellent opportunity as you say it is and as I think it is, then you ought to be able to sell the stuff and keep a few hundred dollars on and just keep the UPS man busy. And be making plenty. Let them carry the cost of the inventory.

But some of the hierarchies get all screwed up, they are just trying to get a pink car and get all their people to order a garage full of this stuff, rather than making sure their individuals are successful first.

If you came to work here, and I said Hey, first thing you gotta do is you gotta buy 5000 Financial Peace University kits. You know how hard it would be get someone to work here? It is a pretty cool model if you are Mary Kay, but not a cool model if you are Tara. So, the beautiful thing is that it is a good company and it is a good product, and you can move forward without falling into that trap.

T: I will do that.

While I know Dave Ramsey says that MK is a wonderful organization and opportunity by and large, remember that he is speaking from his view as a financial expert. I believe he is saying that MK is a wonderful opportunity for a woman to make some coin and run a business given that they avoid the “You need inventory!” hype.

Chances are quite good that he’s not aware of the whole recruiting tactic/script cesspool, the husband bashing, or the religious twisting going on; with him being a Christian, I doubt he would say the same thing if he were aware that the “hierarchy” were constantly using God as a guilt dispenser and recruiting tool.

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