Well-known brands in the direct selling world both in India and internationally are struggling to survive as they come to learn that they have ignored the most crucial element that leads to success - Sustainability!
In an attempt to survive, companies implement various Compensation plans, announce various incentives and shortcuts, which do nothing more than delay the inevitable demise of the company causing more damage.
And why is this?
Because the element of sustainability was not included in the initial business plan as the only criteria seem to have been low start-up costs, fast turnover, anything sells, easy to manage, easy to set up, anyone can do it. All of which are wrong.
Three direct selling companies originating from Europe and North America have closed down their operations, not because of regulatory issues but primarily because they could not sustain the business, thereby causing hardship not only for the company in financial terms but for the many direct sellers whose livelihood depended on the continuing success of the enterprise.
Had the companies done their groundwork properly they would not have incurred such massive losses and not caused anguish among the direct sellers who toiled and invested time and money to build their networks on the confidence that these companies were a part of some association and therefore fail-safe.
The question, therefore, needs to ask “what can be done to ensure that these issues do not trouble the employees and direct sellers in the future?”
The answer is simple - Focus on Sustainability / Viability / Feasibility during the initial writing of the business plan thereby avoiding the closure of what could be a successful enterprise.
Sustainability is the assessment (SWOT) of past, current and forecasts relating to the fiscal scenario, competition from E-commerce, Retail (traditional and new format) and other direct selling companies. This assessment also covers the Products - Cost of goods, expenses (fixed and variable), regulatory challenges and opportunities, training systems, opportunities (online and offline), resources available over a period, and of course the management skills, experience, and insight.
Lack of sustainability risks the careers of talented corporate personnel working with established direct selling companies by offering higher designations and higher salaries. Even the direct sellers are enticed by the minimum guaranteed income along with the start-up advantage to unwittingly become victims of people wanting to “try” their hand at exploring this model.
Therefore it is vital for all companies to make sure that they know the real scenario and the commitments (financial and others) they would have to make before deciding to launch the direct selling venture.
Regulatory oversight is also responsible for the losses incurred by direct selling companies.
Strategy India Worldwide – Direct Selling/Network marketing consultancy – SL/MLM firm is well placed to plan and implement systems towards “Sustainability ” as well as “Regulatory Compliance” during the initial writing of business plans to help companies avoid potential damage.