Putting The Odds In Your Favor In Direct Selling

The best way to maximize your chances of succeeding at direct selling is to choose the right company the first time you try. This is not easy. Here are five tips for how to do this.

Tip No. 1: Only Get Into A Business You Are Passionate About

Remember, direct selling is a "people business," in which you have to share with others your passion for the product or service you're offering, whether it be health, wellness, travel, legal protection, clothing, collectibles, home furnishings, or something else. So you need to find a business that you want to talk about all day and dream about all night.

Tip No. 2: Only Sign Up With An Established Company

The best way to avoid heartache is never to be "first" in this business. There's too much risk in being first - and while I know all the stories about how it's the pioneers who get very rich, it's too much of a risk for people who have started late and want to finish rich. Find me a company that's publicly traded, that's already doing a billion dollars a year in sales (and there are at least twelve right now), that has an established track record of earnings and growth - and the odds are in your favor they won't be going out of business anytime soon. Of course, anything is possible (look at Enron). But you do have a better chance of not losing your shirt. At a minimum, I'd want to see revenues of $50 million a year and at least five years of solid earning and growth before I signed up with anyone.

Tip No. 3: Visit The Company And Meet The Management

Nothing beats a face-to-face meeting at company headquarters. It's by far the best way to get a good sense of what kind of people are running the company, now it's doing, and where it's going. You'll get a sense of their integrity, and whether or not they are people you can trust. Go with our gut on this one. Even if it costs you $1,000 to make the trip, you should do it. And if the company doesn't roll out the red carpet to meet you, then cross them off your list. If you can't afford the expense or the time, then study the materials you get from the company extensively and completely. Really read (don't just flip through) the entire distributor agreement and ask questions about items you do not understand. In addition, meet the company's leaders who are in your local area and attend some company events prior to signing up.

Tip No. 4: Read The Financials

Seriously. No joke. You are making a HUGE MISTAKE if you sign up with any kind of company, direct selling or otherwise, without first taking a close look at its financial records. Whether you are buying real estate, investing in a franchise, or getting into direct selling, you have to look at the numbers. This is why I recommend that you consider only direct selling companies whose financials you can obtain. This is easiest if the company is public, since by law the financial results of publicly traded companies must be made public - meaning you can either get them from the company itself or by going online. You should check the company's history with your local Better Business Bureau, your state's Attorney General, and the Federal Trade Commission. Specifically, you want to look for some simple things: Does the company make money? Does the company have debt and if so, how much and why? What's the attrition rate of people who join the business? This kind of information should be readily available from a publicly traded company. If the company you're considering is not publicly traded, they still should be willing to show you their financials. If they're not, don't get involved - PERIOD!

Tip No.5: Consider Only DSA Members

The Direct Selling Association has essentially become the Better Business Bureau of this industry. There are more than 1,000 well-established direct-selling companies in business. Of these, fewer than 200 have applied and been approved for DSA membership. As this statistic indicates, the DSA sets a very high standard. Visit its web site at www.dsa.org and check out its membership requirements and Code of Ethics. Among other things, it subjects companies to a yearlong review process before it lets them join - and to discourage "front-loading," it require members to repurchase unsold materials from distributors for at least 90% of the original cost within 12 months of the original purchase.$