How to Build a Successful Direct Selling Company Continued - Page Two

By Jeffrey Babener, © 2013
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, you may have a cash cow on your hands.  If recruitment will go slow, 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.  The likelihood of public financing for the new MLM is very remote.  Time after time, the
best source of capital is literally "closest" to home.  Your ability to manage expenses will be very determinative of
your need for buffer capital and you will find that payroll infrastructure will "eat up" capital faster than anything
else.  Can you make it in this business by starting in a back room or garage?  Absolutely!  The fact is that most of
today’s giants started precisely this way…with little capital, but much passion.

Recruitment Capability

You need to be honest with yourself.  Do you or those who are key owners in the business have MLM recruitment
background?  Without this talent, the best products will continue to languish on the shelf.  Companies like Amway,
Tupperware, Mary Kay and Home Interiors were not only founded on a very limited budget, but by individuals with
strong backgrounds in direct selling.  Develop a recruitment strategy for initial key leaders.  It may seem odd, but
your top distributors may not come to you for years.  To those would-be leaders who come to you seeking special
benefits or corporate positions, design remuneration that is "results oriented."  Do not pay high salaries to
individuals who claim to be able to recruit, but cannot demonstrate a strong track record of success. As a general
matter, if individuals are strong recruiters, they would be distributors because the remuneration is much higher.  
Obviously, track your warmest market, then move on to lead generation systems and advertising.  You shouldn’t
expect initial advertising to bring you distributors, but consider it instead a foundational industry announcement that
you have arrived on the scene.  For instance, the best place to create the institutional announcement of your
existence is the industry’s leading trade publication, Money Maker’s Monthly.  Notwithstanding all of the hype,
however, about internet, direct mail or mechanized  recruiting campaigns, history demonstrates that this will always
be a person- to-person relationship business and that there is no substitute for "pressing the flesh."

MLM Legal—Don’t Leave Home Without It!

At first blush, one might question the role of the MLM Law expert in a marketing driven business.  However, your
MLM Lawyer may well be the single most valuable resource that you ever utilize.  This individual, and there are very
few in this gene pool, has intimate practical knowledge as well as legal knowledge of the business, often
understanding the business better than most of his/her clients.  It is a unique melding of marketing practical
knowledge and experience together with practical legal experience that may cause this individual to answer
questions off the top of his or her head in five minutes that would take typical business lawyers five years to
research…and, in which case, they would still probably not understand the "issues," let alone the solutions.  

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