5 Common Mistakes Made by Direct Sales Companies #1

As mentioned yesterday, I am going to share a few tips to help your company avoid some of the pitfalls that Marlo Quinn and others have made. Over the next 5 days, you see these mistakes addressed.

1. Do Not Allow Your Representatives to Decide How You Will Operate Your Company.

I know that this may not sound reasonable, after all, if it wasn’t for the reps, the company wouldn’t be in business, right? Well, on several conference calls with Marlo Quinn, I did hear the owner say that she did not intend for this to be a direct sales company but more of an affiliate program. But, after several requests from the reps, they turned it into a direct sales company.

Direct Sales companies are different from affiliates because of the FTC regulations and the tax and legal issues involved. An affiliate program does not have the same obligation as a direct sales company, therefore, it’s less hassel and expense. As an affiliate program, you’re basically giving reps commission for promoting your website. But, as a direct sales company, you’re more of a wholesaler but having to be responsiblie for taxes on behalf of the reps and must abide by certain government regulations. So, when Marlo Quinn changed directions mid-stream, they were in another field altogether. If they didn’t get in trouble as soon as they did, they probably would have eventually had they violated FTC standards or other regulations.

So, if you are a direct sales company, make sure that any suggestions made by your reps are entertained, but get with your accountant to make sure that your company can afford to make the transition. Adding new products a couple of months after launching is not a good financial move-no matter how bad the reps want them. This company could not afford to keep up. Remember, you’re the one holding the business plan, not the representatives. When your doors close, they’ll move on to the next opportunity, and you’ll be sitting in the ashes.

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