Numerous direct selling companies start their journeys in small offices, with few staff – if any, and with very limited budgets. The ease of entry into the market attracts many entrepreneurs, naturally. At the end of the day, they would not need to invest heavily to build a huge manufacturing plant, would not need to hire hundreds of staff or to spend a lot of money on advertising.
Stage 1: Let’s Start
The first steps taken are determining the product line, deciding on the compensation plan and finalizing those few formalities like putting together the application form, the representative contract, and the policies. If the local regulations require certification, that is also have to be taken care of. That close friend’s son who happens to be a young graphic designer designs the web site, and that nephew who has a programming certificate codes the software and voila! The company is in business!
Usually, entrepreneurs are most worried about the field force those days. Would they be able to find and convince those “strong leaders”? Would the business start at a fast pace on the field? These are valid concerns, of course. However, the real challenge in my opinion, is to attract the “right” field members, rather than the “strong” ones. Those much experienced field leaders would come with their own agenda, would try to impose their own priorities and in the beginning, the company might have to accept these. And wait for the times, when they become a real pain that you will not be easily get rid of due their significantly increased importance on the field.
State 2: We’re Doing Good
If everything goes well, the business grows and after a while company starts making millions a month. Well, at this point, the company faces another set of challenges. This is the time when the entrepreneurial culture dominating the home office now has to be balanced with a more professional “corporate” culture.
I am talking about internal policies and procedures, control mechanisms, a structured reporting infrastructure… all those that most probably have been ignored up until that time. Can the company still survive without having all these? Possibly… But at the cost of increasing the risks of a failure and also of risking a possible faster growth. At this stage, both the existing field members and the potential ones will seriously compare their companies with those that are more professionally run.
Stage 3: Time to Go International
And finally, for a company that has passed all these successfully, comes the time to go international. Should a company wait before going abroad? I would strongly recommend that. Expanding into other markets, before the operation is fully duplicable in another country, can make serious damages to the existing business.
Even if the operation is duplicable covering all aspects, this move is not challenge-free. First of all, a successful business will increasingly feel pressure from its sales force leaders for the company to expand into a country where they have claim they have strong connections. While the existence of such ties is an asset, the company will need to make sure the information is true.
When a potential market is chosen, then will come the stage of due diligence. This is mostly in terms of a foreign company making business in that country and of the regulations surrounding the direct selling in particular. So, yes you will have to have the staff knowledgeable enough to manage all these processes. Not only these, you also have to have professionals to monitor those international markets from your central location. These people I am talking about possess very different set of knowledge and experience that what was needed during the earlier stages of the company.
Keeping the focus at this stage is also a challenge. When successful results start coming from few international markets one after the other, companies might choose the shift the gear and speed up. This is dangerous! Prioritizing and making prudent moves always help.
Many direct selling businesses pass through these stages in this order. And unfortunately, a number of these stumble badly along the way because they are just not ready for the next step coming.