In Part 1 of the crowdfunding series, I discussed the rise of the crowdfunding phenomenon and Title III’s recent enactment under the JOBS Act. While Title III may appear to be an attractive avenue of capital fundraising for entrepreneurs and startups, founders of a network marketing company may find it a boardwalk littered with more stops than gos. As for crowdfunding as a MLM product service or offering, in my opinion, its a chance to go directly to jail.
TITLE III CROWDFUNDING AS WAY FOR MLMs TO RAISE CAPITAL
If you remember, the benefits of a Company looking to use Title III appear numerous. Title III provides the ability to raise up to $1 million without having to deal with burdensome SEC requirements. For an MLM looking for startup funding, what’s not to like? Well . . . er, money for one. The logic goes something like this: you have to have money if you want to raise money.
The direct sales industry is on the rise. I’m approached every day by people looking to enter the direct sales market with a startup company. Here at InfoTrax, we launch an average of three startup companies every month and due to the growing main-stream acceptance of direct sales, I expect the trend to continue.
Starting a direct sales company, or any company for that matter, is never easy. There will always be unforeseen issues, unexpected costs, and unruly personnel. These types of issues are not unique to your company. The business gods are not picking on you for any particular reason; you will simply have to be prepared for anything to happen.
At InfoTrax, we have launched hundreds of direct selling companies on our software. Year after year, I see companies face struggles that could have been avoided. Watching the growth of these companies has taught me that every company should answer three questions before they launch: 1) What exactly is your product, and does fit in the direct sales space? 2) Do you have someone at the lead with Direct Sales executive experience? 3) Do you have capital to fund the project?
When a distributor is terminated by his or her MLM company, he or she may claim breach of contract and seek recovery of his or her past and future commissions. After all, the distributor may have worked for months or years to build up his or her downline only to have its income stream summarily stopped and taken by the company.
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Multilevel Marketing is big business. There are dozens of companies (including Infotrax) that sell products and services to MLMs new and old. My company has been supporting companies in the industry for decades. I have seen a lot of companies start: some fail some succeed beyond their wildest expectations, and many others fall somewhere in between.
Evolving distributor motivations
As a company grows, the needs and motivations of the distributors it attracts change. Just as companies are started by entrepreneurs, the first distributors who join a company are themselves entrepreneurs. However, as a company becomes more established, it attracts distributors who are more conservative, more risk adverse.
Getting the maximum benefits from a cooperation with a direct selling consultant is not an unrealistic expectation. And there are many companies that have achieved this and have been very happy with the results. However, this requires taking the right steps in looking for, contracting and working with a direct selling consultant.
This week we will cover this.
1. How do I understand if I need a direct selling consultant?
Can you guess the biggest motivational challenge people face during their first few years in Network Marketing?
You got it – cash flow versus effort ratio.
They work 10-20 hours a week for meager wages. “Where is all the big money I was promised?” they cry. And then they quit.
It has always been interesting to see how direct selling companies compare on various grounds. Where they spend their money and at the end of the day, how much money they generate for their investors absolutely rank among the most interesting ones.
In this article, we will be briefly reviewing 11 direct sellers with varying sizes of business and with different product portfolios. These are Avon, Herbalife, Mannatech, Natura, Nature’s Sunshine Products, NHT Global, Nu Skin, Oriflame, Tupperware, USANA and Youngevity. This review will be based on their 2016 first quarter figures.