Looking back in history, bartering was the first form of business. Exchanging goods was the custom until a standard form of currency was put in place. Neighbors would offer pieces of meat in exchange for the currency at the time. Traveling merchants would pass by a town or village and sell their wares in exchange for the currency of the land.
Indeed, when currency was created, so was direct selling or direct sales. If you think about it, direct selling was the first form of measured transaction.
More recently, we associate direct selling with our mother’s Tupperware parties, the town’s beloved Avon lady, or the friendly door-to-door vacuum salesman. Sellers would visit towns far from the city to bring their products straight to the household.
Times have changed but direct selling still remains—and it has even evolved into more impressive and formidable forms. Continue reading and find out why you should start a direct selling company.
The Advantages of Direct Selling
Starting a direct selling company the “traditional route” might not be the most affordable way to set up and run a business. However, it cuts out several levels of middlemen. Since there is less money to spend on a supply chain, rent, and employees, the savings are passed on to customers, and the profits are unlimited and exponential.
There are many successful direct sales companies out there that have stood the test of time. Companies like Avon, Mary Kay, and Tupperware remain strong because they follow a strong plan while incorporating newer methods.
For an entrepreneur testing the waters, what could be more helpful than having a tried-and-tested business plan as opposed to developing a new one from scratch?
Choosing Your Product or Service
It is easy to say that technology and the internet can bring us to anyone’s home without knocking on their door. However, you must still consider the product or service.
Is it something that can easily be sold from an online catalog, or does it need a demonstration to convince a buyer of the solution it provides?
With that, will a simple video suffice, or does the buyer need to experience it physically for themselves?
Does the product itself solve a known problem among your target market?
How many units of the product can you supply or how often can you provide the service?
These are very important questions, here’s why:
Some products or services do really well via simple E-commerce, while when implemented in direct selling they flop.
It is critical you answer those questions without being bias before you launch your company. Not all products or services qualify to be the foundation of a direct selling company.
Having an attractive product or service is crucial to your success because distributors they can market them more easily and effortlessly.
Getting the Right People to Grow with Your Company
You do not need hundreds of people right away; starting at the lower two digits is actually good. Some of our most successful clients have started with just a few distributors and grew to thousands. Unless you are bringing an existing team, it’s important to have moderate recruiting expectations and work with an aggressive recruiting plan.
How do you attract distributors?
Attract the right people to represent you with a fair compensation plan and an exciting incentive system.
Your distributors are 1099, meaning, they only get paid when they make sales. Their income depends on their sales and their team sales, for this reason, a fair compensation plan can help you keep them in a big way.
A lucrative compensation plan allows distributors to focus their time and energy on building their team, instead of looking for additional ways to generate income.
Not only that, a polished compensation plan can give your company financial stability for years to come.
How to keep your distributors?
A common theme in direct selling is the attrition challenge. The sooner you tackle this dilemma the sooner you’ll be moving forward.
Suppose you have a good product and a good compensation plan, now what’s next to retain distributors?
You have to focus on growing people with the tools and the necessary training to succeed.
First, your onboard process should be designed in a way that any distributor can replicate the money-making activities of the top distributors.
Second, provide the necessary tools to move forward with their business. Equip them with recruitment methods that work. You cannot start a direct selling company with the thought that your distributors or sales representatives will just invite their friends and family.
We’ve noticed that companies who focus on those two areas perform better than the one who tends to overlook them.
A Digital Business Structure
There is an abundance of software and digital tools to help your representatives.
They no longer need to come up with creative selling practices or draft spells since you can provide everyone with uniform presentation materials. These can include digital images and catalogs for online shops, videos for presentations and social media, physical presentation materials that are visually appealing, and even a mobile app to share experiences and insights with one another.
There are applications and software to accommodate all your representatives so that they can track their own sales and recruits. This makes it easier to calculate commission and pay. Representatives can even forecast their future earnings and incentives when they can see their milestones and points.
Also, don’t forget your representatives will need their own wallet so you can pay them fast and easy.
Setting Up the Corporate Team
Sales and recruiting is not the only department you should be focusing on. Of course, there are other aspects of the business that you should never neglect. If the sales force is the face of the company, you will need a body and backbone to go with it.
Maybe you are the type of person who can row a boat alone, but keep in mind that a direct selling company is made for continuous growth. This means you need to leave the boat behind and get on a bigger ship. And a bigger ship needs a crew to sail smoothly.
While individual representatives can run on their own after a while, they will still reach out from time to time for assistance on bigger sales, customer support, compensation inquiries, and large-scale recruitment. That means you will need people specializing in different areas to accommodate the needs of your sales force.
When you start a direct selling company, a skeleton crew of a CEO, an accountant, legal advisers, marketing team, a director of operations, director of sales and customer support will be a good starting point. Some tasks can be outsourced, such as product development, web design and administration, advertising and marketing material development.
Your Company as a Legal Business Entity
Although we are not lawyers, we’ve worked with the best in the industry, those who understand direct selling and they will tell you if you want to start a direct selling company, you need the proper advice. Direct selling companies operate differently from brick-and-mortar stores.
Make sure that your products and services abide by the restrictions or regulations before you put them on the market.
As much as possible, be transparent. Avoid making outrageous claims as these can expose you to lawsuits in the future.
You want to have your system written and approved by a legal adviser to avoid running into legal difficulties later on. This will protect you and your representatives. Make sure that you are consulting with a lawyer who is familiar with business laws and structures.
As soon as you start a direct selling company know that there will be challenges, however, with the many successful companies before you, you can take their best practices and structure those procedures in such a way that they will fit your brand, your products and the people who represent you.
Direct selling companies are popular for a reason. They require capital to start but, you have a bigger leverage opportunity because you are signing up distributors. With a good team, it’s easier to manage your growth and to set yourself for success.