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You are here: Home / Business Plans / 4 Reasons Not To Have A Direct Selling Company

4 Reasons Not To Have A Direct Selling Company

May 7, 2019 By admin Leave a Comment

There are many great reasons to start a direct selling company, but what are the reasons not to?

Recently, I was asked this question by a prospective client.  My answers helped him to confirm he should move forward into direct selling, so I am sharing them with you now because they may help you, too.

Reasons Not To Do Direct Selling

1. You Don’t Like People

Dave Longaberger, the founder of The Longaberger Company said, “I don’t care what business you’re in, your success will ultimately depend on the relationships you build with people.”

This is especially true when it comes to direct selling.

If you believe you are not a “people person” or if you don’t enjoy talking with people and helping people to live better lives, you should not start a direct selling company.

To have a successful direct selling company, you must build and maintain relationships with the people who will contribute most to your success and those people will be your independent representatives.

2. You Have No USP

Differentiation is the key to successful marketing.  A Unique Selling Proposition (USP) is one or more unique selling points.

Creating a USP is work, work best accomplished by completing an exercise.  Jot down the following information:

Sales Methods

How is this product sold?  One to one?  At home parties?  Is it demonstrated?  If so, what are the elements of the demonstration?

Delivery Method

Identify how you apply or use your product.

Benefits

How do you feel after you use it, wear it, taste it, etc.?

Experience

What is the experience of the customer while using the product?  What is the experience after using it?  How long will the experience last?

Make It Memorable

What does the customer remember about the product that makes her or him want to use it again or recommend it to others?

Tag Line

Sum up the benefits in as few words as possible.  Try stating the benefits like this, “It blanks my blank.”

3. You Cannot Buy Low, Sell High

The direct selling business model works when the products or services offered by a company are marked up high enough to fund the company’s compensation plan and overhead while leaving sufficient room for profit.

Multiplier

Your multiplier is the average number you get when you divide the retail price by your landed cost.  For example, if the retail price for an item is $50 and your landed cost is $10, your multiplier would be five ($50 / $10 = 5).

The higher your multiplier, the more you can afford to pay out in field compensation, and the more you will earn in pre-tax profit.

4. You Fail The Survival Test

Did you know that successful direct selling companies depend on the presence of purchasers who buy the company’s products or services (and continue to do so) while they are making little or no money through the company’s income opportunity?

You would like all of your independent representatives to make great money through your compensation plan.  However, the reality is that the majority of your representatives will make little or no money on the sales volume of others because most people will never recruit anyone.

Are these non-recruiters worthless to your company?

The answer is “no” if enough of them will (a) sell your products to non-participants in the income opportunity and (b) continue to buy your products even if they are not earning any money.

Answer This Question

  • “Will people buy your products or services even if they are not making any money through your income opportunity?”

If no one will buy your products unless they are making money through your compensation plan, your long-term business success and legal survival will be in danger.

Tell Me Something Good

Would you like to know the reasons to start a direct selling company?

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Filed Under: Business Plans, Startups, Strategies Tagged With: start direct selling company

About Jay Leisner

P15Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving party plan and network marketing companies across the globe.

Direct Selling Startup GuideJay Leisner and Victoria Dohr authored the top-rated book for new and young network marketing and party plan companies, "Start Here: The Guide to Building and Growing Your Direct Selling Company".

Available in English and Spanish. This startup guide contains 250 pages of wisdom that will guide you through the right steps to start and continue on your journey to build a successful direct selling company.

You will save thousands of dollars and hundreds of hours of your time using the information you will read in our book.

Direct Selling Edge ConferenceSylvina Consulting and ThompsonBurton sponsor the two-day pure education "Direct Selling Edge Conference" for new and young direct selling companies in different cities. The wisest direct selling executives never stop being students. They seek out opportunities to learn more. They understand that the long-term success of their companies depends on how much they know, so they make efforts to keep learning.

In 1986, Jay began his career in direct selling by working for a major direct selling software provider. First as a software developer and later as a project leader and a business analyst, Jay worked closely with new and established network marketing and party direct selling companies to provide them with software solutions to meet their unique requirements.

Jay contributed in many ways to the success of large implementation projects for many companies. Jay also worked with dozens of smaller companies to assist each of them in various capacities to provide them with the systems they needed to help their businesses to grow faster.

Along the way while working with them, he learned the secrets of successful direct selling companies and the challenges faced by them. In true entrepreneurial spirit, Jay’s decision in 1999 to start Sylvina Consulting as a direct selling consulting company was driven by what he saw was a need for answers, advice, and solutions.

In 2004, 2006, 2009, 2014, and 2018, Jay gave presentations on compensation plans, recognition, and field leadership development at conferences held by the US Direct Selling Association.

He traveled to South Africa in 2015, 2016, and 2017 to conduct workshops on compensation plan design and recognition programs for member companies of the South African Direct Selling Association.

In 2017, Jay spoke at the Canadian Direct Sellers Association Meeting on the importance of recognition.

More than just a compensation plan expert, Jay is exceptionally skilled at advising new and established companies on business strategies. Before offering advice or solutions, he asks important questions to understand each client’s specific concerns and goals.

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