Many people want to own a direct selling company these days. Very few businesses have a fast revenue income to it, except for a technology company. Direct selling is one such business. This is an obvious motivation to start in this business for most. You can see various examples of network marketing companies making billions from scratch in a few years if you go online and search. However, there is a grim fact associated with this. Yes, it is true that with the right product or service at the right time and of course, with the right people one can catapult a business from the shadows of the business world to its top. At the same time, you can miserably fall to your knees within a few months of starting up shop and it happens quite often in this business.
According to Bob Hipple, a veteran vendor in this line of work for over a dozen years and an ex-president of two well known and reputed direct selling companies says that even he was unaware of the full potential of this business when he helped set up a network marketing company a few years back. He was also a member of the board of directors of the Direct Selling Association for an annual spell. He says that at the time he was helping them to set up shop, he thought he knew all about the business. However, as it turns out, he did not and what’s more is that during those three years of transitioning the start-up into a full-grown business, he got to see and learns a lot about this field, even after his 12+ years in the field.
Bob says that there are a lot of things like event processes, comp plans, duplication models & replicable systems, distribution styles, etc that you may think you know but when you step out onto the field you might find yourself overwhelmingly perplexed. The most important being the field psychology. As you move on more and more such things crop up. Most people stumble upon the path they do not know. What you need to know that this business of direct selling is dynamically a complex one that has many moving parts associated with it. This can become overwhelming sometimes, particularly at a corporate level.
This is why Bob tells us that one should know why he/she chooses to be in this field. Direct selling is by no means a stroll in the park. You go into the wrong part of the park and you may drown in the pool. He further adds an example comparing it to raising children. Not the same thing works with any two children, what might work for one may fail miserably with another. The situations in this field are also the same. That is why the question arises “why would you want to own a direct selling business?” let us look at the following examples to understand the point of view that might lead one to invest in such a field.
Here are some examples of real-life owners who have been in this field for some time now. For obvious reasons, the names have not been furnished here.
A Successful Entrepreneur
As a widely successful entrepreneur, he owns a number of well to do businesses currently. However, with the current economic status, those businesses have been struggling for some time. This made it necessary for him to get cash inflow and with some of his friends who had once established themselves in the network marketing business, together they each invested to start-up a network marketing business himself that sells the most basic commodities needed in daily life. However, with next to none knowledge about the business, they decided to do it all by themselves; running the business operations, coming up with the comp plans, and developing a sales force. Their investment stood out to be a triple of what they expected; however, the company has not done very badly since.
Cost-Saving Was His Motive
His reason to come into this line of business was purely cost savings as he had heard that setting up a market networking business does not cost much. What he did was to buy an almost inactive network marketing company, one that had been around for a decade. The company had some products that were proven to make a good sale in the market, their numbers were predictable too and the company had a dawdling yet a sound sales force in place. All he did was to twist around the business plan of the company and lowered the payouts a bit and now he enjoys a handsome return on his investments.
A Prominent Distributor
After establishing himself as a prominent distributor after having worked with a few network-marketing companies, he thought that he knew as much as they knew about the business. After having seen their extravagant lifestyle, he decided that he wanted a piece of that action. What’s more, he thought that he would be able to that within just a couple of hundred thousand dollars. After having spent $350,000 for eighteen long months and poor planning, he, unfortunately, had to shut his doors.
He started out as a distributor and was doing fairly well for himself. Unfortunately, corporate greed caught up with him and decided to alter their reimbursement plans more than once. To an outsider, it seemed that they were not only serving themselves but in reality, they did not have a single idea as to what they were doing. This led to the field leaders to quit their posts one after the other, out of nervousness and faithlessness on the company policies. His check, however, seemed like one of those bell-curves we drew in our statistics class. It started to flatten and after reaching a peak, it took a sharp turn towards the low and stepped down badly. He was not at all happy and decided to start his own network marketing company along with a few friends of his. They did invest some $500,000 but it only lasted for a few months.
A Mid-Level Manager Who Wanted to “Do It Right”
As a mid-level manager in a network marketing company, he golfed with his fellow mid-level managers from other such companies. They often went on to talk about what their senior managers in their respective companies have been doing wrong. So finally after much frustration at their bosses, they decided that it was time they started their own company to “do it right”. They did become one of the fastest developing companies in the field of network marketing.
To Stay in the Exotica
Touring out in a secluded part of the world in the realm of the exotica, he wanted to stay there and start a network marketing company of his own. He started out in the real estate business and with the small fortune he had amassed there, he founded his own network marketing company. He hired a bunch of executives who were very competent in their line of work. However, the one fatal mistake he did was not to authorize them in the matters of decision making and did it all by himself and as such missed out on the valuable intake they could give in those matters. After having done business with 13,000 distributors over a span of two and a half years, he decided to close his doors and move onto retailing.
At the Flea Market
Once out for a stroll in the flea market, he came across a couple of ladies with a cool product. He talked to them, negotiated a takeover by paying a royalty to these two women on any future sales. Thus, he started his business. He kept it lenient and gathered as much knowledge he could about this line of business from the industry veterans and experts. He used a party plan model to grow his business and within a mere five years, he managed to earn several hundred millions of dollars from just a singular rendezvous at the flea market.
You should always keep this in mind that the skills that are required to set up a field organization are nowhere near those required for building a company itself. Many in this line like to think of themselves as an expert of their trade and why? Well, it’s just because they have been a distributor in a number of deals. That is your fatal mistake if you too think like that. Know this that the owners who are now successful have become so only by spending a considerable amount of time in running a direct selling company and not the distributor leaders who at some time might have held a monopoly in their trade. Also, in order to be successful in this field, one needs to rely to some extent on people who have spent some time running a direct selling company themselves.
However, the worst of the lot is the one who without a single knowledge in this domain likes to think of himself as the jack-of-all-trades, while in reality, he is a master of none. Just because you have been successful in other businesses does not at all say that you will be successful in this one too. Never judge this business with respect to the ones you did before and by the money, you made in the past.
Arrogance is never good in this business. Overestimating your own capabilities is a fatal mistake to make in the network marketing business. Once again, just because you had been successful in building a real estate business or a software company, does not mean that you will do outrageously well in this one too. However, the people with power are the unfortunate ones as they try to gain more and in doing so, they often take the wrong steps as they overestimate themselves. The result stands that after having invested a considerable amount of money as well as time, they ultimately close down their own doors. This is what you get when you think of yourself as the jack-of-all-trades. If you are indeed one of these people then please do save your money in a savings account with your bank instead of wasting it on a foolish endeavor such as this.
You are not just doing damage to yourself but to a bunch of others who have become involved alongside you in this business. Your investors, your employees, suppliers, and vendors and most importantly your distributors who have done business with you rusting in your vision, they all get affected by your decisions.
Having an accurate understanding of direct selling is very important in this line of work and more often than not, this becomes a difficult challenge to overcome to those who do not have adequate knowledge about the field. The relation between your company and your distributors is a very fragile one and you cannot let a single crack to appear there. Without proper management, this can severely damage your company and thus your business. This is why it is very important to ask yourself why you want to start working in this line. You have to understand whether your expectations from owning such a business are in line with the reality of this industry. If it is just about money, then there are many easier ways to earn. However, if you have a keen understanding of the domain and a clear vision, then, by all means, start your own direct selling company.
[wbcr_text_snippet id=”636″ title=”Common signature for all EN posts”]