Mistakes transforming a company into multilevel.
After more than 15 years as a global corporate direct selling company and having founded 10 startups with traditional and natural selling models, I still see the same problems in companies that want to move from being a traditional company with a conventional approach to a direct selling or multilevel company.
I want to expose them in this post in case it can be helpful for companies in the process of taking this step or those thinking about it.
1.- See everything from the point of view of leadership.
I have often seen entrepreneurs who want to transform a company into a multilevel because they have been distributors to a large multilevel or because they know distributors who have told them about the benefits of direct selling.
This is very good because it allows you to understand that, indeed, the potential of direct sales is enormous; however, the internal organization processes of a multilevel, the management systems, and the type of strategic information that the multi-levels have never or very rarely reach the ears of the distributors, even when they are of the highest rank.
The information that the sales network or the leadership has when it is well organized has to be very biased to make them always share relevant information, which keeps the network active and in constant focus of attention towards the business. This implies that there is information, often internal brown information, that the distributor does not know about because it could demotivate him and could demotivate the sales networks. It would take hours for them to jump to another company that offers them more confidence.
2.- Not filtering strategic information to leadership.
Additionally, another big problem I have experienced in transforming a company to multilevel is when the management team is responsible for filtering information to the leadership of strategic areas; that makes the network starts to move towards a goal when perhaps the project on which you want to work is not even created yet, and that makes things are accelerated in excess and that there are many errors in the management processes.
When this happens the first time and the corporate team is forced to endure the downpour, there is usually double thinking, on the one hand of the leaders and sometimes of the owners of the companies who think that this is what the corporate team is for.
However, there is often a second way of thinking on the part of the corporate team, which is to start looking for other companies to develop their work. The fact that the strategy is not kept secret and forces the teams to rush into the projects can cause management resources to suffer.
It is, therefore, key, in addition to a balance, to know when and when not to share strategic information with the network.
3.- Seeing everything from the point of view of B2B companies
Another big mistake when transforming a company to multilevel is understanding that working with a leadership team is like looking for companies to sell to; if one doesn’t work out, another one will come in. Well, this is a mistake. When a leader is often willing to change companies or dedicate his time to yours, what he is going to look for from you is, above all, the ability to execute. The leadership will want it to be all by yesterday, even though they know it can’t be.
It is certainly not a question of planning for the day before yesterday but of listening and getting involved in the project, which means that the pace of activation and speed of execution cannot be that of a B2B company, which is extremely slow.
If you cannot understand this, chances are that your project will become a burnout of people, in this case of leadership, and keeping the project over time does not assure you, under any circumstances, that it will guarantee success.
The launch speed and growth in the first months after the leadership is involved in the project is key.
4.- Apply resources to the direct selling business as results are seen.
This, which in a business of almost any type would be the most normal thing, is not the case here since you need to have all the resources prepared in advance so that when the company comes to light, you do not dedicate yourself to making false starts over and over again.
This is very common when a B2B entrepreneur wants to transform a company into a multilevel, he thinks that you have to invest little by little, and that is a mistake since a large part of the investment you have to make before launching the project, your challenge is not to hold the company as long as you can, your challenge is to hold the pull of the start, which is just where 95% of the multilevel die.
5.- Not knowing how much the investment will cost you to transform your company into multilevel.
Another huge mistake I see when a company wants to transform a company to multilevel is that they have no idea how much it will cost them in reality, and they are trying to adapt the budget as they are selling.
As I said before, if you have a leader who bets on your company, it is probably because he will make the numbers jump. You run out of stock (in the case of physical products) or you have to evolve very quickly at the level of customer service (especially in the case of the digital product).
And that he doesn’t do it because he thinks your product is excellent. Since all entrepreneurs believe that their product is the best of all, he does it because he wants to make as much money as he can as soon as possible, you as a leader, are a means, not an end, just as he is for you.
And making a small aside, let me remove the blindfold if you think you have the best product in the world because a good product does a lot. Still, the market is full of good products, and in network marketing or direct sales, not only sell a product that solves something, but what you mainly sell is marketing, your product is constantly marketing, and the product you sell is the excuse why your marketing exists.
6.- Telling experienced corporate teams what they have to do
I have seen and experienced companies that want to control everything and companies that allow you to do and trust the judgment of the people they have hired.
I guess if I ask you the question … which ones are the ones that grow? I am sure you will think of the second one. The first ones are halfway there. They are missing a leg to be genuinely competitive, and that leg is the team. Yes, you read that right, the team. The reason is that they override the people who know how to do things in the end, leading them to usually mediocre execution.
Think about this … do you want to bring in top executives who have managed to raise companies 100 times more than yours to tell them how to do things? Maybe it’s best to know their thoughts to see how you can incorporate their ideas.
If you want to tell people how you want them to think, hire interns, train them and those who are not good enough to stay with you because surely those who are good enough will be recruited by other companies.
7.- Use the workers of the traditional company simultaneously in the multilevel company.
Understandably, an entrepreneur wants to maximize the resources of his company and use them for all the projects he can think of. However, in a multilevel company at the beginning, they will not see results, and those teams will be very slow, and when they have them, the work will surely overwhelm them.
They should know how it will work and also that the people of your traditional company that you are going to treat as part of the corporate team of the multilevel values this work in some way, not only for the fact of collecting a salary, because you will need real involvement when the direct sales company or multilevel begins to grow.
8.- Do not count on profiles that have already experienced global growth.
I often see that companies that want to transform the company to multilevel have profiles that do not have a truly global experience; maybe they have been able to operate in a couple of countries and little more, but finding profiles with a global vision and experience is not easy, among other things because finding corporate profiles of companies that have exceeded a billion dollars is not very common.
However, the information and experience of these profiles, if you want to transform a company into a successful multilevel or direct sales company, is key; with a small corporate team with that experience, you can create an empire; however, if it is the other way around, you will need people with less experience to take it and have to take hits along the way that maybe they do not know how to solve.
One of the points in which you see the seriousness of transforming a company to multilevel is precisely this. Ultimately, the corporate market of global direct sales is relatively small.
9.- In globalization, size may be more important than quantity.
I am referring to the size of the markets in which you operate; let’s say that the usual thing is that each call is a country. It is not the same for a company to launch in Mexico (a large country) and expand to Panama (small compared to Mexico), as it is for a government to launch in Spain and grow to Portugal.
In the second case, working in a country within the EU may have specific cultural, regulatory, or legal changes, but the environment is almost the same. It is a bit more than implementing the company in a distant region.
In the first case, Mexico, besides being a huge and robust market for the multilevel business, has completely different connotations at operational, management, fiscal, and cultural levels. In the case of Mexico, in addition, within Mexico itself, there are many Mexico’s, just like in the USA or Brazil.