Build It Small, build It Big
I was recently at the Intrepid Sea, Air & Space Museum in New York City. Both the technology involved in this aircraft carrier, though decommissioned, and the sacrifices made by the people serving aboard it and other vessels in the U.S. Navy at the time left me in awe. One of the things that caught my eye was the giant mixer you see pictured at the left. I snapped the picture to show my mother (who is a lifelong KitchenAid fan) so she could see that the U.S. Government values the same quality she has come to know and rely on over the years. You can see a mixer designed for the home next to the one used on the Intrepid; that’s the same model my mother uses.
Then it hit me: It’s the same mixer! The only significant difference is the size!
With that thought echoing in my brain, I realized my experience aboard the Intrepid planted the seed for this blog. In business, one can truly grow and expand with minimal effort if they have the right model. It’s just a matter of scale.
Growing in Spite of You, Not Because of You
Let’s discuss two concepts that lend themselves to massive organizational growth: duplication and scalability. For the purposes of this discussion, duplication refers to the ability to clone your business model, thus creating a separate distribution point. Scalability refers to exponential growth through duplication. True scalability requires duplication, and true duplication requires creation of a separate, autonomous unit, even though that unit still remains part of and plugged into the overall corporate culture.
An example of this is a McDonald’s (McD’s) franchise. When a new franchisee pays the fee and goes through the process of opening a new McD’s, the organization now has an autonomous point of distribution. Though still connected to the overall organization through promotions, support, and the like, each franchisee conducts their own business within the guidelines of the McD’s home office, and generates revenue for McD’s. This structure allowed McD’s to grow into the worldwide powerhouse it is. In fact, in 2009, McD’s worldwide sales eclipsed that of the next three competitors combined (Subway, Burger King, and Starbucks), and generated 87% of the income earned by the next four competitors (add Wendy’s to the list).
This is great news for McDonald’s. How does it help you? Looking at a typical franchise business…it doesn’t. Using McD’s as an example, let’s say you decide to become a franchisee. You get started, work hard and have great success. One of your good friends takes notice and wants to start a McDonald’s franchise as well. Naturally, you want success for your friend, so you introduce him or her to the folks in the McD’s home office, tell your friend everything required to get started, and most importantly, share anecdotes of things to avoid based on your personal experience. Your friend takes the plunge and also becomes successful! You’re both pleased as punch! Yet, for all the assistance you provided your friend, what did it benefit you (other than the great feeling that comes from knowing you did right by someone close to you)? It didn’t. The only one who benefits from your efforts in helping your friend other than your friend is McD’s.
The Power of Direct Selling and Relationship Marketing
Enter Direct Selling and Relationship (or Multi-Level) Marketing. By combining sales with the multi-level model, you now have a way of rapid duplication with extreme scalability. Literally, you can build it to any size you want! When it comes to your direct selling business, you can build it small, or build it big. You get to choose.
This blog isn’t about defending this industry. With such respected figures as Warren Buffet, Donald Trump, and Robert Kiyosaki all saying great things about direct selling and MLM, the support is already there. Private investors are also taking note. According to Scott Van Winkle, CFA, a Research Analyst at Canaccord Genuity, confidence in the direct selling model from the private investment community is growing. A Special Supplement to the Wall Street Journal prepared by Direct Selling News, quotes Mr. Van Winkle as saying, “I don’t go a week now without getting a phone call from a private equity firm looking at a direct selling asset, and that was just nonexistent 5 years ago.”
What’s the point for your business? This: If you can incorporate the direct selling model into your business, you can grow exponentially, and your income will continue whether or not you are personally doing business.
If you’re like me, that prospect is exciting! You can either transform your business by directly incorporating the direct selling model, or you can add additional services provided through an established direct selling company. The first option is cost prohibitive for the average business owner, but you may not be the average person. If that’s true, and you feel you have a niche in an existing market that begs development, then by all means, explore the possibility! If, on the other hand, you don’t have the time and finances to get a fledgling direct selling company off the ground, then see if any of the existing companies complements what you currently do, or appeals to a passion you have. Do your due diligence; attend the meetings, meet the leaders in your area, contact the home office and speak with some of the officers there. Then get started.
As the supplement to the WSJ says in its title, this is prime time for the direct selling industry. The model is sound, and effectively combines duplication and scalability. You can grow your business as big as you want, and you’ll learn the skills you need along the way. Like the picture at the outset of this blog, you can either have a home-use sized organization, or an aircraft carrier sized dynasty. Small or Big: It’s your business, and YOU get to choose!
 Fast Food Facts, downloaded June 13, 2012 from http://www.fastfoodmarketing.org/media/FastFoodFACTS_Report_Results.pdf
 Why Now Is Prime Time for Direct Selling, a Special Supplement appearing in the Wall Street Journal,January 10, 2012. Downloaded June 14, 2012 from http://directsellingnews.com/index.php/site/view/category/special_publications/exclusives