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2012 DSA Annual Meeting Speech

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The Earning Opportunity : Is It Your Best Product?

The ideal product line sold in the direct selling channel is unique, not offered at retail, and is coveted by customers, creating "buzz" among sellers and buyers.  It helps when the COGS is between 10-15%.  And it would take a competitor a lot of time and money to duplicate it.

Just as important is the earning opportunity.  This is where the coveted product connects with the compensation plan and incentives for sellers to reach higher levels of achievement to create a spark and ignite a full fledged fire of business and career fulfillment.  Without this synergy, a sustainable earning opportunity is not possible, and although your company may flourish for a while, the sales force churn or the lack of consistent field leadership achievement is a dead giveaway that there is trouble with the earning opportunity, product, or both.

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Are You Sipping The Kool-Aid?

Powerful suppositions exist within the management team of every organization regarding why results are the way they are, or why some avenues of revenues aren't deemed worthy of being attempted.  These suppositions are soothing, they help management explain or justify limitations or losses.  Often times they are somewhat true, though creativity could blow a hole in the suppositions, and sometimes they are merely a repetition of a faulty philosophy, learned over time and repeated until everyone believes it.  It's not hard to fall into this trap, and it always seems like the right answer.  

Countless times, these suppositions go unchallenged among the management team.  However, challenging the suppositions is one of the major tasks of a Board of Directors, or an Advisory Board member.  A good Board Director should challenge the executive management in their thinking.  They should serve the shareholders by helping the CEO.  But helping can also mean pushing back against a mantra, and keeping them honest, if applicable.  

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Think Like A Beginner, Again.

Starting a new business; finding that angle that sets the product and company apart and will appeal to a wide audience - that is the daily routine of the entrepreneur who is looking to break through the ordinary with something new and different.

Reinvention; obsoleting your current offering - this type of innovation is vital for every business at least once in its life cycle.  

While the former activity is happening every day at thousands of startups, the latter is not done enough, or at all, by established businesses. 

As a former CEO of a multinational corporation, I know that the higher up one goes in an organization, the more time one spends on things that will not directly affect sales.  Of course hiring people will have an indirect effect on sales.  But that is maintenance, not disruption.  

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Party Plan Is Making A Comeback

The single greatest return on my time investment when helping direct selling startups is the ability to tap into the mind of the current entrepreneurs who are starting their ventures in today's market.  

Startups are the guerilla fighters of any industry.   I am able to see how they think, and how they plan to offer a better value proposition than the heavyweights in their arena.  Helping them keeps me close to the front lines of our industry, where the battle is being fought for survival.

One of the insights I've had in the last year has been how the party plan model has been making a comeback with entrepreneurs.  We know that MultiLevel Marketing companies have had, and still have, a lot of the sizzle.  Of the top ten Direct Selling Companies in 2012 (the 2013 list has yet to be published), 5 list their selling method as person-to-person, with MultiLevel Marketing Compensation

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Is The Bill Ackman Short Threat Finally Over?


5 Examples Of Super-Growth In Direct Selling


Is Menswear The Next GoldMine In Direct Sales?

The most viewed article on my site since I started it over a year ago is a somewhat obscure piece called,  "7 Direct Selling Companies For Men".  Intrigued by this, I began looking at the search terms that brought traffic to the site, and found that, overwhelmingly, people were arriving at via Google by searching for "direct selling companies for men", or some variation of that.

Typing that search term into Google,  I found it was one of the most searched terms in direct selling, and my blog had the #1 organic search result.  

So are men desperately seeking direct selling companies for men?  Yes.  Everyone knows direct sellers are predominantly women.  The companies being started in our industry are predominantly serving women.  Women, selling to women.  

But clearly, there seems to be a demand by men for companies & products that men will feel comfortable selling.  Although men sell Avon Products, they are the few and the brave.  

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When Is A Direct Selling Company Ready To Scale?

The hardest thing to tell an entrepreneur who is ready to start is that they aren't ready yet.  I do this as diplomatically as possible, using the Socratic method, because I don't want to dampen the spirits of the leader of the startup.  

Most entrepreneurs like to go as fast as possible.  They like to see what works, and then slam the accelerator hard.  In many businesses, it works.  But in direct selling you have to secure the back-end, before any growth can be accellerated.

A direct selling company has a lot of incubating to do before it's ready.  Venture capital hates to hear that, but it's true.  You cannot pile on hyper-growth before the company can handle it.  At its core, direct selling is about providing someone an opportunity to sell your product, and make money doing so.  If you cannot make 100 consultants and their customers happy

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Direct Selling & Are Killing Off Retail Startups

Have you noticed all the empty retail spaces that are STILL out there?  Nowhere is this more apparent than a Mall.  With real estate and the economy coming back, it seems commercial real estate might be the last part of the equation to make a full recovery.  

I took a walk through a mall outside of Boston a month ago, only to pass several empty stores in order to arrive at an open one, and then repeated the process.  Even the anchor stores aren't anchoring like they used to.

The mall was once where you would do the majority of your shopping.  Now you go there for the "sale", or to the Food Court, and to see a movie if there's a cinema.  And every time a store like Borders goes out of existence, many Americans find a mall's value proposition less appealing to a broader demographic.

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Does Personalization Help Create Explosive Growth?

What makes for the perfect direct selling product?  One that is demonstrable, certainly.  One that you likely will not be able to get anywhere else, or that geography precludes you from being able to access easily.  All these things helped propel Avon, for instance, into the distribution company it became, especially in countries like Brazil, when product traveling down the Amazon river to a captive audience was unique and powerful.

Today, Amazon (the company) has actually taken the geography factor out of the equation in the US for many direct selling companies.  With a computer and the willingness to wait a day, a consumer can order a wide variety of products that will be delivered to the door.  Even Walmart's distribution strategy has not had such a powerful impact on direct selling as has.

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Become Ruthless With Overhead

While watching the TESLA MOTORS Annual Shareholders Meeting a few days ago, Elon Musk, the CEO, said something that struck a chord.  While discussing profit, he mentioned that "even an airplane had to clear treetop level".  

I don't often discuss overhead on this blog.  But overhead is one of the most important single elements in a business.  It reflects what the leader thinks is important to "fly".  It can either help destroy a business or propel it.  It should be thoroughly and often reviewed by the leader of a company.  

When startups ask me for assistance, overhead is one of the first things I look at after I sign the Non-Disclosure Agreement.  It tells me so much about how that organization thinks.  When I finish understanding what and why the company is spending, and there is mutual agreement about future goals and spending, then I proceed with the revenue part of the equation.

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5 Tips On What A Direct Selling Startup Needs

Several startups I have advised ask what the ideal headcount for their startup is.  Or what functions are needed and how many people should be assigned to complete them.  Every startup is different, and sometimes their competitive advantage dictates more personnel needed in the order fulfillment area than in the sales and marketing area.  

Others outsource everything not pertaining to their competitive advantage, and that minimizes the need for headcount in areas that otherwise might be greater.  But the most important ingredient in a successful startup is a dedicated Team, working together towards the same goal.  The right people are the reason a company wins.  

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Direct Sellers: What is Your Company’s Crisis Plan?

In today’s hyper-connected world, crisis planning is a key corporate investment. Yet, most companies wait until issues arise to create or update plans. It’s been over a decade since the 9/11 attacks – an important technological decade giving rise to instant online news, social media, Twitter, and Smartphones.

The crisis plans that were conceived in 2001 are outdated and will prove ineffective. For direct sellers, the task can be ominous due to the volume of distributors and geographic considerations. 

In the wake of the Boston attacks, and now ricin mailings, there are several questions for companies to consider for future planning, including:

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Mary Kay, Leaning In, & Women In Business

Sheryl Sandberg's book, "Lean In," was written to provoke women in corporate America to aggressively pursue success by speaking up, raising hands and not backing down.  It has become a national dialogue now, as it seems I can't open my Facebook or LinkedIn accounts without seeing friends/connections share another article about it.  I can't help but notice that the dialogue is about opportunities that are there for the taking, but one must have the courage to pursue them as they come, when they come up.  We are having a dialogue about "how" to land the opportunity.

It puts me in mind of another time, in the mid 90's, the first time I met Mary Kay Ash.  After being hired as President of Mary Kay Germany, I went to Dallas to meet the founder of the company, to hear her story, her advice, her wisdom.  Above all, she was wise.  She was, and still is, a legend.

I met her in the lobby, as she and I were both coming from separate meetings, and we rode up the elevator to her office to meet.  On the way up, she started to tell her story of how she entered corporate America.  She mentioned that when she was brought in to become a corporate trainer, she got the distinct impression that she was there to train, and entertain the men who were in the corporation.  Serious, upwa

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25th Annual ROTH Conference

Every year ROTH Capital Partners holds a three day conference of presentations and meetings which act as a forum for connecting emerging growth companies with premier institutional investors.  

This year, at the Ritz-Carlton in Laguna Nigel, there were over 370 companies presenting to more than 2,500 attendees.  ROTH's aim is to provide institutional investors with new investment ideas in mostly small cap companies; and this year the event included an increased number of private companies.  

Some of the metrics that fund managers look for are the O'Neil ratings, 3-yr and 5-yr Revenue and EPS growth, as well as the usual Ratios like PE, ROI, Pre- and Aftertax margin.  Some of the current data they look at are the Alpha and Beta values, Debt Percentage, R&D as a percent of sales, and what percent of stock the management of the company holds.  

With direct sales companies, fund managers look for the number of distributors of product, or "stores", and average sales per month of those "stores".  They look for a run rate on number of distributors.  Which means they are looking for future growth potential based on current growth.  All this means that the direct sales startup is not where the institutional investor typically invests.   Get the incubation pe

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Anne Butler Joins 3000BC Board Of Directors


Philadelphia, PA - March 19, 2013 - Anne Butler, CEO of Butler Advisors, and a prominent direct selling executive and industry thought leader, has joined the 3000BC Board of Directors.

Anne is a highly accomplished senior executive with 20+ years of domestic and international management experience.  During this time, she created substantial growth and led international expansions in both public and privately held companies.  Most recently, Anne served Blyth, Inc. as Worldwide President of PartyLite, and now serves Blyth as Senior Advisor.  Anne also serves on the board of the Direct Selling Education Foundation.  Previously, she held senior positions with Avon Products and Mary Kay Cosmetics, and served as Vice Chairman of the Direct Selling Association.

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7 Tactics For Your Next Negotiation

Are you always negotiating?  You should be.  Life is a continual series of negotiations.  And the reason we negotiate is quite simple: we may get something at a better value than we would accepting it at face value.  Making purchases at the best value can get you something you need, but could otherwise not afford, and it can be the best bet against inflation we have.  Whether setting pricing with vendors, or making large purchases for your business, leasing rental space or negotiating salaries with your employees, your negotiations will be the most important decisions your business makes.  Their effects on your profit can last for a very long time

The reason you negotiate is what the cost will mean for you, not what it will mean for the supplier.  Have a good idea what the math is for what you can afford and still keep your profit goal.  If the "ask" exceeds it, negotiate until you can afford it, or do not accept the product or service.  This is where the maxim, "necessity is the mother of invention", comes into play.  It is what you do after you walked away from the negotiation.

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Helping Direct Selling Startups 2012: Overview


Direct Selling Angel Investors: Focus On Profit

I was doing some searching on Google today, and stumbled onto something I wrote for The World of Direct Selling back in July last year.  The reason I'm posting this, is that it is extremely relevant to a conversation I had with an investor of a direct selling startup the other day.  

“As an angel investor in direct selling start ups, my main focus is profit. Profit Euros or Dollars, not profit percentage. Profit is the oxygen for any business. I don’t look for explosive growth. Most explosive growth opportunities went through an incubation process. They usually took many years to become what they are today. If a company focuses on having profit, then the business will pay for its own self-discovery costs, and they can take the time they need to realize their most powerful value proposition. I also gauge the entrepreneur I invested in. Are they laser focused on the few things that will make them successful? Are they wasting money? Have they tacked on too much overhead, and deprived the company of a quicker break-even point, or more investment for higher revenue? The efficient allocation of money is an art, and I’m looking for Da Vincis!” - A.Butler

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Rule #1: Always Invest In The Entrepreneur First

After speaking recently to two promising direct sales start up companies this week, I began to distill in my mind what constitutes a good investment in direct selling.  And simply put, it begins and ends with the entreprenuer who starts the company.  

You can have an exploding industry, great product, high markup, and great back end, but without the entrepreneur, the maniac on a mission, the enterprise will be hard pressed to meet expectations.  This is the first and most important factor I look for before asking others to invest their money with a company.  

Thinking about this topic brings to mind my former boss,  Bob Goergen, Sr., with whom I worked for 12 years. The Chairman & CEO of Blyth Inc., an entrepreneur himself and a promoter of other entrepreneurs, he knows a thing or two about investing in direct selling start ups.  He turned an approximately $100K investment in a small candle company, into a $1B+ publicly traded company.  About four years ago, he recommended that Blyth invest in a tiny company named ViSalus Inc., which is now one of the fastest growing companies in the direct selling industry.  

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