It’s What You Don’t Know

I began my career in direct selling in 1986 when I went to work for a company that develops and sells network marketing software.  My previous background was software development, so I was hired as a programmer/analyst.

Within a few months, I was promoted to project leader.  In those days, project leaders did everything for their clients.  They responded to requests to support specific business initiatives, determined whether the software could support the specific business need, proposed solutions, wrote specification documents, programmed, and tested their clients’ compensation plans, mapped and converted their data, trained users, and answered all support questions.  To do a good job, it was essential that the project leader learned everything about their clients and their businesses.

I saw firsthand how companies like Nu Skin and Usana grew from small businesses into large multinational corporations.  I also saw many companies launch and struggle to grow, some of whom exited their businesses.

Later, as a business analyst, I reviewed and documented the business processes and operations of large direct selling companies to provide project leaders with information they needed for successful implementations.

During my 13 years of employment with the software company, I learned a tremendous amount from my experience visiting and working with over 100 network marketing and home party plan companies.

What Did I Learn?

I learned that direct selling companies are often launched by people who had not previously worked inside another direct selling company and that what often harms a company is a lack of knowledge of what to do when to do it, and what not to do.

In 1999, I launched Sylvina Consulting.  Since then, we have helped emerging direct selling companies worldwide to launch, and established direct selling companies to grow, their businesses successfully.  Our clients include startup businesses, young companies, new direct selling divisions of companies, and large multinational corporations.

While creating and operating a direct selling company is a complex endeavor, there are do’s and don’ts that everyone should know.  Here are 10 of them:

1. The products or services you sell are critical to your success.  Make sure that your products can be sold by your sales reps to non-participants in your income opportunity.
2. The income opportunity is your second product.  It needs to be branded and marketed like any other product.
3. Your compensation plan is an important ingredient in your success recipe.  It must encourage and reward 12 compensation plan behaviors.  If your plan is weak, your income opportunity will be less attractive and as a result, your business will grow more slowly.  It will also fail to attract and retain strong business builders, who are vital to your success and longevity.
4. Follow what I call the “golden rule” of direct selling.  Create an income opportunity that is as easy, fun, and lucrative as possible for your sales representatives.  This is just one of the 20 secrets of successful direct selling companies.
5. Direct selling companies need good margins.  Without them, this business model will not work.
6. Recognize that your company has a responsibility to recruit alongside your sales reps until the business has enough momentum where this is no longer necessary.  Sharing leads with others is important, but follow-up and review of results are equally essential.
7. Watch your cash carefully.  Use financial budgets and cash-flow management religiously.
8. Set targets for growth and monitor your progress with a good set of key operating indicators.  Whether you are ahead of plan or behind it, you will need to adjust your spending in response to where you are.
9. Take the time to nurture the business.  You can’t run a direct selling company successfully as an absentee landlord or part-time while you focus on other businesses.
10. If you don’t have all the answers (or know all the questions you should be asking), get help.