Category Archives:MLM Business Plan

Shave Years Off Your Learning Curve At The Direct Selling Symposium

Launching a new Direct Selling Company (home party or MLM) and getting it off the ground can be a very complex and difficult process. Especially if you’re doing it on your own. Unlike many things, the world of Direct Sales is not something that you can just YouTube and find easy-to-follow tutorials on how to effectively build and grow a Direct Selling Company. There are many areas that must be considered, such as building your compensation plan (and keeping it legal), training your field, compliance, legal, your sales pitch, how to motivate your sales force, recruiting, retention, logistics, what software are you going to use, how do you keep a balanced budget, communication with your field, customer service, social marketing, and the list goes on and on. The best practices for each of these disciplines is truly unique for the world of direct selling.  Much of what drives the peculiarities is the fact that your products will be demonstrated and sold by an army of independent field sales reps – who will make a decision each day whether or not to work their business and stay with your company.

Because of these complexities, only 20% of all direct selling startups are in business after one year.  The other 80% have failed in their attempt to launch.  However, what we have found is that if the entrepreneurs will take the time early to learn and follow proven best practices and processes for starting and running a direct selling company – that success rate is as high as 80% still in business and growing after one year.

We want more successes and less failures!  We’re sure you do to!  Failures are bad for the industry and leave thousands of independent sales reps’ dreams laying in the wake.  Successes breed confidence and good will in the direct selling industry and help independent sales reps reach their dreams and aspirations.  To increase success rates – YOUR success, we have brought together in one place, at one event, the industry’s leading experts in these different fields to educate you on Best Practices of Starting, Building, and Growing your Direct Selling Business.

The Direct Selling Symposium is a place of education, learning, and mentoring – and includes front-of-the-room instruction as well as individual coaching sessions.  It is NOT a time when services are sold – in fact it is prohibited.  Whether you’re an entrepreneur starting from scratch or leveraging your existing business by diversifying into the direct selling space – attending the Direct Selling Symposium will shave years off your learning curve, and dramatically increase the likelihood of success.  We look forward to seeing you there!100_6124.JPG

Dave Taylor

 

Starting a Direct Selling Company: Direct Selling Symposium

Successful businessman sit at his desk while talking on mobile iSo . . . you’ve decided to start a direct selling company.  Or at least you’re seriously considering it.  You’re contemplating entering into that great world of MLM or party plan marketing – or some cross between the two.  I still remember when I entered direct selling.  It was over a decade ago.  I was acting as an advisor to executive teams and I was leveraging specific areas of expertise that I had developed outside of network marketing.  I had started, operated, and sold a half-dozen businesses of my own.  As I began my career as a consultant to direct selling companies, a colleague who was experienced in the industry gave me some sage advice.  He said:  “Dave, about 70% of what you know about traditional business will apply with just a bit of adaptation.  But the other 30% is REALLY different.”  I remember thinking at the time – how different can it really be?  Well, it’s very different.

Here’s what you’re getting into.  Your products or services will be sold through a network of independent representatives – let’s just call them distributors.  Each of those distributors will decide to “join” your company because someone they know and trust (another one of your distributors) recommends it to them, and because they like the products or services you’ll be offering.  Most of them have probably already had some kind of personal experience with network marketing – and most of the time it probably wasn’t all that positive.  If they haven’t been directly involved in MLM before, they most likely have some negative stereotypical ideas about it.  But they’re taking a leap of faith.  They hope your products and services actually provide the benefits that have been touted.  And they hope they can make some extra money, like their friend has told them.  They hope you’re a great company with a great leadership team, as has been promised.  But they don’t yet believe.  And they don’t even know you, your company, or your executive team yet – let alone trust you!

This is the very person, times thousands, who will make or break your business.  And every day they will decide whether or not they are going to continue using your products or services and whether or not they are going to recruit others.  They will do that based a great deal on how they “feel” and how much trust and belief they have in you and your company.  And how you handle every single interaction with them, from the time they sign up, to when they open their first shipment, to every call they have with your customer service team, to the training you provide them, to the compensation system you offer, and on and on – will determine whether they move forward and do anything, or do nothing.  A few even slightly negative experiences because you haven’t got the right systems in place – and you’ve lost them!  And without them, you have nothing!

So, attending the Direct Selling Symposium is an acknowledgement that you are stepping into a unique, and very powerful, and potentially very lucrative business model – and that you must learn the best practices from industry experts who are most qualified to teach them to you.  It is an investment in your future, and dramatically increases the probability of your success.  Welcome to the wacky world of direct selling!  I look forward to meeting you, and serving you!

Dave Taylor

Ask the MLM Expert: "Shipping"

By Terrel Transtrum

QUESTION: With the use of new “dimensional weight” formulas for shipping, how much should we charge for shipping?

ANSWER: Determining how much to charge the MLM distributor (and their customers) for shipping is a tricky question. It really comes down to a business decision; Are you trying to recover your actual shipping costs, should you make a profit on shipping, or are you willing to underwrite some of the shipping expense by reducing shipping costs?

Thanks to Amazon-like tactics, many now expect shipping to be free. However, depending on product mix and more importantly now with product size, shipping can be very expensive.

Man working for shipping company carrying boxesUPS and FedEx now use Dimensional Weight to determine shipping cost. True shipping cost is determined by size and no longer by scale weight. Shipping carriers typically do not fill up a truck based on maximum weight they can carry; they fill up the truck based on how many cartons they can fit on a truck. Larger packages means they need to have more trucks on the road and more drivers. To determine dimensional weight, take the Length + Width + Height of the shipping carton and then divide by 166. This calculated value (called “dimensional weight”) is compared to the actual weight on the scale; whatever “weight” is higher is the weight used to calculate shipping cost.

Because size now matters, it’s important to be efficient on both your product packaging choices as well as packing efficiently for shipping. Our shipping expert Dan Kremers advises that as you determine which products you are going to offer in your MLM company or Home Party company, a larger product will be expensive to ship. People tend to freak out if the shipping cost is almost the same as the product cost.

We have observed five methods that MLM companies commonly use for determining how much to charge for shipping. Each method is straightforward and simple, and there are benefits to each that will support your underlying product and marketing strategies:

  • Free Shipping

    • Using this method, a company absorbs all of the shipping charges. It’s an increasingly common feature in e-commerce transactions, and the obvious way to make this happen is to ensure that shipping costs are absorbed in product pricing. One caution is that where MLM products depend on multiple-times markup, we find that the better practice is to keep shipping out of the product cost and allow it to stand alone, because of its potential impact in the mark-up analysis.
  • Free Shipping when the overall Order value exceeds a specified dollar threshold

    • This method allows a company to recapture a base amount of shipping, and the company subsidizes what it does not recover on larger orders. The argument is that the higher dollar volume (and the margin that goes with it) contains sufficient to boost revenues and volume, the extra shipping cost of which the company is willing to absorb.
  • Flat Rate

    • All orders are charged a flat rate for shipping
  • Tiered Flat rate based on Order Value / dollars

  • Tiered Flat rate based on order weight

The threshold problem with each of the methods described is that an MLM startup may not be able to determine whether they are charging too much or too little. Considering that the decision is in part a marketing decision, as well, the early unknown will also include an analysis of the MLM distributor sensitivity to shipping.

Thus, the key questions will be these:
Are we making / losing / breaking even?
Will the law of averages work in our favor?
How sensitive to shipping fees will the distributors be, and will it affect optimizing revenues?
What marketing considerations should affect our decision?

Actual Cost Shipping

Another method worth mentioning is charging actual cost, which works well when an intelligent system is in place. The system automatically calculates the number of shipping cartons required and the size(s) of each carton based on the items in the order. This will optimize shipping “weight.” Through a direct interface with the shipping system, actual costs will be determined based on your negotiated rates and discounts with the shipper. The cost is then captured at the point of sale and included in the order. Though technologically advanced, this approach is my personal favorite; and the formulas can still add a percentage mark-up (small percentages) to cover not only the actual shipping cost but also packaging and an allocation for labor. In this regard, it becomes conceivable that your pick/pack operation is self-funding if not profitable.

Don’t overlook using USPS flat rate boxes, depending on your product mix. As long as items fit in one or more of the box sizes offered, the flat rate is 100% predictable. With some thoughtful planning, you might be able to overcome the USPS branding that screams much louder than your branding could do on a box. For instance, you might lightly campaign that you are a supporter of the US Postal Service. Simple.

In the end, your goal should be to select the method or hybrid of methods that work best for your product mix, marketing and branding objectives, and shipping budget strategies.

A simple way to determine which method makes the greatest sense is to create a sample set of orders that best represent what you will ship to your distributors and their customers, and then calculate the shipping cost for each order. By running various scenarios, you will begin to see patterns emerge that will help you get real close. Then make your best decision and implement, tracking along the way and refining.

Terrel Transtrum is the founder and CEO of ServiceQuest, the Direct Selling Experts. He and his group are the recognized experts in MLM and Home Party success. terrel@servicequest.com

10 Steps Towards Launch! Part 10 - Money

The following is the last segment of our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!
 
The last of ten business segments addressed in the ServiceQuest system for evaluating “launch readiness” is MONEY.  Money and MLM, as in any business, go hand-in-glove.  Here are the best practices to help you determine how prepared you are for launching a successful MLM business.
 

  • Set up Accounting Software that Integrates with your MLM Software and Technology Systems
  • Determine your Capital Requirements for Achieving Launch and Positive Cash Flow
  • Implement Business Controls to Assure Safety and Continuity
  • Create the System for Classifying and Tracking Information Essential for Taxes
  • Pay Close Attention to Commission Payments and Supporting Systems
  • Implement Payroll and Employment Tax Systems
  • Create the Systems for Banking, Treasury and Risk Management
  • Start Early to Set Up the Payment Gateway Systems
  • Set up Your Commission and Payment Processing Accounts

 
Here are examples of descriptions that you might write for your MLM Launch Best Practice:
 

  1. Commission Payments – We have in place the technology for reporting and paying commissions to distributors / consultants, integrated with the commission processes of our enterprise software and accounting software.
  2. Business Controls – The basic business controls are set up to form the information link between business activities, accounting, and commissions.  These include procedural standards, source documents, money-handling systems, documented systems, and approval processes.
  3. Payment Processing Account – We have acquired a Tax ID number, we have our website in place (e-commerce capable), and we have opened a business checking account and have a favorable credit history so that we can successfully apply for a merchant account.


Money is the lifeblood of your MLM business.  Careful preparation and planning will be the key to starting and running a successful MLM. For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 6 - Staff

The following is part 6 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!

 

The sixth of ten business segments that we help our clients to implement is STAFF.  Because a successful MLM is all about relationships, the MLM staff must be selected and developed to provide the highest degree of personable and warm service.  Here are some best practices to help you select and hire the best staff for your new MLM.

 

  • Follow a Comprehensive Staffing Plan
  • Implement a Human Resources Administration System for your New MLM Company
  • Create an Employee Orientation System to Ensure Consistent Training of new MLM Staff
  • Seek Balance in Your Staffing Plan
  • Dedicate Sales, Marketing and Service Executives to their Respective Roles
  • Provide the MLM Distributors with a Chief Customer Officer
  • Coach and Develop the Executive Team to help them keep up with Growth
  • Develop an Effective Accounting Staff
  • Seek and Develop the Right Technology People to Fit your MLM Culture
  • Engage with a Financial Officer or CFO That Understands MLM Business Nuances

 

Here are examples of descriptions that you might write for your MLM Launch Best Practice:

 

  1. Staffing Plan – We have a comprehensive staffing plan to ensure that we select and develop the people who are right for our culture.  We have determined how many employees to hire, when to hire them, and what their various roles and assignments will be at launch.
  2. Field Support – We have a CCO (Chief Customer Officer) or Director of Field Support that is dedicated to understanding and empowered in all aspects of the enterprise in order to fulfill the three-fold mission of field support: delight the rep, improve the company, develop service professionals.


Staffing is at the heart of the people business, and selecting the right staff will pay huge dividends as your MLM company grows and expands.  For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 5 - Operations

The following is part 5 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!

 

The fifth of ten business segments that will help you launch and run a successful MLM company is OPERATIONS.  MLM operations is the vehicle that can transport the vision of a successful enterprise.

 

  • Implement Business Systems that are Scalable
  • Use Wisdom in Selecting and Planning Physical Facilities
  • Plan Your Inventory Management System to align with MLM Best Practices
  • Create a Reliable Daily Settlement System
  • Track Orders so That you are Always Ready to Support your MLM Distributors
  • Set up Essential Reports for Monitoring Key Metrics
  • Implement an Operations Manual for Documenting MLM Procedures
  • Integrate your Operations with Warehousing and Fulfillment
  • Schedule Executive Meetings that are Designed to Drive Results
  • Document the Steps in your Commission Processing System

 

Here are examples of descriptions that you might write for your MLM Launch Best Practice:

 

  1. Business Systems – We are implementing the vital, scalable systems to achieve predictable results with duplicatable actions, documented for training and accountability in processing enrollments, orders, payments, fulfillment, returns, commissions, and support.
  2. Daily Settlement System – To assure accuracy, continuity, and accountability, we have set up the daily settlement system of reporting deletions, adjustments, unposted and/or unresolved transactions, and discrepancies.
  3. Executive Meetings – We have set up our meeting structure for executives, managers, and teams to efficiently and effectively report and communicate, and we follow best practices for conducting effective meetings.


The steps in your Operations Plan are vital for setting a foundation of success and growth for your MLM business.  For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 3 - Compensation Plan

The following is part 3 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!

The third of ten business segments to help new MLM companies get started is COMPENSATION PLAN.  This crucial segment for a new MLM company centers on creating a reward system for the important behaviors that drive sales, recruiting, and growth.

 

  • Creating a Great Compensation Plan that Rewards the Right Behaviors
  • Knowing the Right Behaviors to Incentivize
  • Determining the Distributor’s Dollar-per-hour Earning Opportunity
  • Using the Right MLM Definitions
  • Creating a Successful MLM Founder’s Organization
  • Computing the Commission Payout Percentage
  • Fine-tuning Your Selling Approach & System
  • Determining the Type of Company that is Best for You and Your MLM Distributors
  • Writing the Programming Specifications for Accurate MLM Commission Programming
  • Obtaining Legal Review of Your MLM Compensation Plan

 

Here are examples of descriptions that you might write for your MLM Launch Best Practice:

 

  1. Dollar-per-hour – We have determined the “dollar-per-hour” proposition for our recruiting and sales plan, and the results are documented for reference and tracking. Our plan will generate sufficient earnings at each rank to make it worth their time and keep them working.
  2. Commission Payout Percentage – We know exactly how much we can afford to pay in commissions as a percent of revenue to maximize field performance and support sufficient profit to expand our business.  We have analyzed the margins and our results are documented for reference.

 

A thoughtful pass through these best practices will help you to create your MLM planning checklist for this vital business segment of your new MLM business.  For more information, contact Terrel Transtrum terrel@launchsmart.com.