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© 2011 MLMAttorney.com - Sponsored by Jeffrey Babener
According to an article at MSN’s website titled “Queen Elizabeth’s eating habits revealed,” former royal chef Darren McGrady states that Queen Elizabeth enjoys a bowl of cereal every morning topped with fruits or nuts from her garden, which are stored in one of the most popular direct selling products, Tupperware. Perhaps even the Queen of England owning and using Tupperware products shouldn’t be a surprise considering Tupperware was ranked the seventh largest direct selling company in 2010, with $2.3 billion in net sales.
As one of the largest MLM companies in the world, Tupperware operates in over 100 countries and has over two million salespeople.
As one of the largest MLM companies in the world, Tupperware operates in over 100 countries and has over two million salespeople. Tupperware’s top five consumers are Germany, America, Mexico, France, and Australia. The company itself was founded in 1945 by Earl Tupper and grew to be quite competitive with its “burping seal” technology.
The top ten largest global direct selling companies include 1) Avon Products, Inc., 2) Amway,
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Surprisingly, many of the giant direct selling companies in the industry today had humble beginnings, often with one individual’s dream. That individual usually had little or no money and became a MLM mogul after years of dedication; stirring laundry detergent in their bathtub or selling bibles door-to-door. Some were lucky enough to grow their companies without the financial backing of investors, but others were not. (Like the rest of us!)
For purposes of raising investment capital, the market section may be the most important part of your business plan.
Many MLM entrepreneurs are lucky enough to have a dream to start a MLM company but lack the capital needed to fund the project. Most people turn to family and friends, to co-workers, then to angel investors, and finally to private placement venture capitalists to find the money they need to grow their business. Investors may listen to the presentations, but the money is never a guarantee.
Searching for MLM Startup Capital – Funding the Direct Selling Company
What is the first step in the process to secure capital to fund the MLM startup dream? It is the business plan, of course! Before any sophisticated investor or angel financier will consider funding your marketing program, they will look for an organized presentation of your ideas, projections and abilities. A good business plan will be the backbone for any private investment of capital and will also help to bridge financial gaps as your company grows.
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This blog post is the companion post to the video: Success Stories in the MLM, Direct Selling, Network Marketing Industry, in which MLM Attorney, Jeffrey Babener, discusses the successes of leaders in the direct selling industry.
The great companies of this industry were started by charismatic individuals.
There have been many studies done in regards to what makes successful direct selling companies. Many case studies have been done about Mary Kay and her leadership, which have been cited at schools like the Harvard Business School and the Wharton Business School. Many schools have lectured on the institution of direct selling. Many people have added business modules on entrepreneurship in an effort to understand what it is about these renegade, visionary and charismatic individuals that cause people to flock to them, follow them and build this type of business for themselves.
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This blog post is the companion post to the video: Why Do Distributors Stay with MLM Companies? Find out how to retain the most important asset to your MLM company, distributors.
In the realm of any business, if people feel ignored then they vote. They vote with their feet and leave.
We are often asked the questions “why do people stay with MLM companies” and “why do they leave?” Retention is essential for a successful MLM company. We are in an industry that has a lot of attrition due to the nature of the work environment. Many distributors work part time and are competing for peoples’ time. Distributors (or representatives, consultants, etc.) come and go all the time. Losing a distributor is worse than being unable able to recruit new consultants, making retention essential.
There are interesting answers given by distributors as to why they stay with the company. You may think they stay for the earnings, but income often comes in fifth or sixth place in industry polls. As a general matter, consultants usually stay with a MLM company because they are connected and bonded with the products the company sells, as well as with the company’s mission and with top management/leadership. Distributors also like to be recognized for the work that they do. Recognition is very important in the direct selling industry. These are factors that really propel distributors to stay with a MLM company.
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This blog post is the companion post to the video: Why Choose the MLM Model for Your Business? – A CEO Interview. Find out what makes MLM, direct selling, network marketing, and party plan business plans desirable to so many CEO and executives.
I believe one thing that is really going to change the climate today and that is if we create a way to support the entrepreneurs of this country.
Babener: It’s my pleasure to be speaking with Kris Krohn, he is one of the Founders of Strongbrook (REIC). When www.mlmlegal.com sponsors conferences in Las Vegas, we often have the CEOs of companies attend because it’s important to know what makes MLM companies great. And, of course, my observation is that nobody starts on top.
Kris: That’s right. Everybody starts at the bottom.
Babener: I’m curious, Kris. Tell me about Strongbrook, tell me about its origins, tell me about the triumphs and difficulties you had in creating this company.
Kris: I appreciate that, Jeff. I’ll tell you, Strongbrook is five years in the making. And, in fact, I can tell you that for the first four years we kept tweaking our formula because we have a very complicated product that produces amazing transformations for people who leverage and use it. And, it took a long time to really dial that in. It came down to very humble beginnings where we started with absolutely nothing. We were encouraged to keep formulating our product in helping people achieve success through real estate investment with the feedback we would get from our clients.
Then we would bring them more clients. And then we would tweak our program so more. And then we’d figure out how to help them successfully purchase more real estate. We learned along the way things like sleep-well-at-night accounts. There’s a certain amount of money that people want to have in bank accounts to feel comfortable. And really, it comes down to an amazing team and culture here at Strongbrook; where everyone works together very, very well. We have a culture of being very hardworking and putting the client first. That is a really short answer for our history over the last four years. It was about a year ago when we finally said, “You know? With this product we have helped over 1,000 people experience some pretty powerful principles, concepts and even financial changes. It has been a major influence in their lives and created some very positive changes.” We decided that we were not going to tweak our formula anymore.
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This blog post is the companion post to the video: Short Course on Network Marketing: Q&A with Jeffrey Babener on Pyramid Schemes. Expert MLM Attorney, Jeff Babener, answers the question, when it comes to pyramid schemes, how do you tell the difference between one that’s legitimate and one that is not? How do compensation plans affect a company’s legality?
You don’t just play the notes. You need to lose yourself in the music. And, that is true for every successful MLM company.
Jeff Babener: There’s a famous Supreme Court decision that where one of the Supreme Court judges was asked to comment on the definition of pornography. He replied that he couldn’t define it, but he knew it when he saw it. Sometimes you need a metaphor to understand the difference between an illegal pyramid, headhunting, recruitment scheme and a legitimate MLM company.
This story is a good example of the difficulty in defining pyramid schemes. And, you may come to your own conclusion. Here is a metaphor that I use a lot to help people with the definition of pyramid schemes:
The metaphor is about a gentlemen, will call him Party #1, and he sells a case of canned tuna fish to Party #2 for $10. And, Party #2 sells it to Party #3 for $20, and Party #3 sells the case of canned tuna fish until it gets to Party #10, who buys the case of canned tuna for $500. And, Party #10 opens up the case of tuna fish and it’s rancid. It’s inedible.
He goes back to Party #9 and complains, “I bought this case of tuna for $500 and it’s rancid.” Party #9 tells him to take it to Party #8, and Party #8 tells him to take it to Party #7, and so on until Party #10 goes all the way back to Party #1 and says, “You’re the one who started all of this! I have a problem!”
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This blog post is the companion post to the video: Role of Compensation Plan in a Successful Direct Selling Company. The following is the transcript of MLM Attorney Jeff Babener’s own words:
Hi, I’m Jeff Babener of MLMLegal.com. I’d like to talk to you today about the compensation plan. It better be good.
There are obviously significant legal issues in evaluating and implementing compensation plans. Review of the compensation plan a competent MLM lawyer is essential.
Does a compensation plan make or break a startup MLM company? History suggests that a good compensation plan is helpful and absolutely necessary. Does it drive financial success? Probably not. Will a bad compensation plan contribute to failure? Probably, together with other unlucky breaks. As industry expert Michael Sheffield notes with respect to a good compensation plan, “Its absence will be noted more than its presence.”
Is there anything new under as far as compensation plans are concerned? Probably not. The goal is always the same regardless of the type of compensation plan: motivate varying behaviors of distributors, ranging from direct sales, to building wide to building deep, to supporting a downline, to maximizing sales volume production and retention.
It is of key importance is that the compensation plan is easy to explain to recruits and that it is perceived as fair and balanced.
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This blog post is the companion post to the video Choosing the Right Product for Your MLM Company. The following is the transcript of MLM Attorney Jeff Babener’s own words:
Hi, I’m Jeff Babener of MLMLegal.com, and I’d like to talk to you today about how to get your product right the first time.
If your business is the machine and your software runs the machine then your product or service is, as the French would say, your reason for existence. In looking back on the history of the direct selling industry, a chicken and egg analysis makes it difficult to determine whether the business opportunity or product was the essential reason for commencement of the business. There are instances of both being true. The founders of Avon, Mary Kay, and Home Interiors came from successful experiences in marketing other products. They found a product suitable for their marketing talents. On the other hand, the founders of Nikken, Amazon Herbs, and Shaklee had a passion for bringing uniquely-new products to the world and direct selling became the best vehicle.
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This blog post is the companion post to the video MLM Startup Tips, Educational Resources, Answers to Network Marketing Questions. The following is the transcript of MLM Attorney Jeff Babener’s own words:
Hi, I’m Jeff Babener of MLMLegal.com, and I’d like to talk to you today about how to find MLM startup answers at you fingertips.
The umbrella term for the business is “direct selling.” Whether companies such as Tupperware, Amway, or The Pampered Chef practice a variety of business models, the business species is known as “direct selling.”
Under the direct selling umbrella you can find party plans, MLM or multilevel marketing, network marketing, and direct sales. The objective is always the same; however, to build a consumer products or services marking company that distributes through a vast network of sales persons, who sell both consumer products and services, as well as recruit and develop an even larger network of salespersons. Remuneration is paid on the sales volume of those downline recruited networks.
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This blog post is the companion post to the video Raise Capital in Order to Recruit Key Distributors. MLM Attorney Jeff Babener discusses the need to raise capital in order to recruit key distributors below.
Hi, I’m Jeff Babener of MLMlegal.com and I’d like to talk to you about capitalization, can you recruit? Do you have a great recruitment background, the ability to recruit? Or a lineup of strong distributors? If so, your need for capital will be substantially diminished.
In the end your ability to recruit a talented and motivated sales network will be the number one key to your success. In fact, your need for capital is in direct inverse proportion to your ability to recruit. If you can recruit then you may have a cash cow on your hands. If recruitment is slow then your business plan needs to allow for buffer capital to hold you through one, two, or three years of break even or loss scenarios. That capital should be lined up ahead of time either through personal and close relationship resources or through angel investors.
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