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?
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.
Yesterday Jason Elrod, founder and CEO of Disrupt Worldwide, LLC. made the following announcement on his Facebook wall.
We have been informed that a former Disrupt affiliate had apparently been soliciting people to give him money in exchange for a purported “share equity” investment in Disrupt.
Our investigation proved that the allegations were accurate and the affiliate was immediately terminated.
Disrupt is not selling any ownership interest or stock and has not authorized the resale of any ownership interest by this former affiliate or any others. Disrupt did not receive one red cent of investment money from this individual.
Disrupt takes all regulations seriously, and if our legal and compliance staff feel this action is grounds for regulatory discipline we will file a complaint against the former affiliate with the appropriate authorities, in our home state, the affiliate’s home state as well as with federal regulators.
If you are solicited by anyone purporting to represent Disrupt for investment purposes, immediately report any person who claims to be selling an investment or ownership interest in Disrupt to the the following: firstname.lastname@example.org
It was not a surprise to me, as I had been following the saga all weekend long. Elrod had reached out and shared his side of the issues. I then reached out to Kingston to get his side of things.
I wrote and article over at BeachsideCEO.com asking this question and sharing some additional information on how brandjacking aka subterfuge marketing may land a personal in civil and criminal court by using these blackhat marketing tactics.
Over the last couple of years GenY aka Millennial Generation has become a focus point for the continued growth of the direct selling aka network marketing aka MLM industry. Now I see Wallstreet and main stream media asking if specific companies are manipulating this generation.
Over the last 18 months I have viewed, reviewed and even worked with several executive teams who have plans to launch or have launched a business based on the Freemium business model. Very quickly some have realized the challenges of this type of business model and have survived while others never got off the ground. Based on this experience I decided to write this small piece.
Freemium:The combination of free and premium levels of services.
I would say that over the last ten to fifteen years, and especially in the last five we have seen cloud based, SaaS, PaaS and mobile app development companies dominantly use the freemium business model to launch their platforms.
In most cases there is a small set of free services for basic users, while premium users get additional upgraded services. In several cases, the free users are inundated with ads, while the premium subscribers can opt-out of the ads.