Here is some information I provided in a proposal to some investors about five years ago:
The Industry (Cooperative/Multi-level Marketing)
After extensive research into the cooperative marketing industry, experts have developed three criteria that a cooperative marketing company must have in order to make it a most desirable opportunity. They are:
A.) The company must be 18 months old. The reason for this is that 90% of all cooperative marketing companies that fail do so within the first 18 months.
B.) The company must have a product that is both unique and highly consumable. Being unique in this case means that you have an exclusive product that can only be purchased from your company's members. Having a product that is highly consumable means repeated sales, thereby guaranteeing customer loyalty, verses a one-time sale and having to locate new customers.
C.) It needs to be a 'Ground Floor' opportunity. Experts suggests that in order for the Opportunity to qualify as 'Ground Floor" there needs to be less than half of 1% of the population involved in the country or area where this network marketing company exists. This figure is equal to 1.5 million people. Experts also state that if there were less than 0.5 million people involved you would be on the cutting edge of a great opportunity. Additionally, if the company has less than 100,000 members, it is considered to be a once in a lifetime opportunity.
There are (4) stages of growth in a cooperative marketing company. They are:
•§ FOUNDATION - Usually lasts for a period of 6 to 12 months. This is when the company develops its product and marketing plan.
•§ CONCENTRATION - Lasts from 2 to 4 years. This is when the member network is started.
•§ MOMENTUM - This period usually lasts from 2 to 4 years also, this is when the company experiences phenomenal growth. Both retail sales and membership growth explode. It is during this period of time that the company visually sweeps across the nation.
When a company's sales reach $5.0 million they attain what is called "critical mass" (sales go vertical right off the chart), approximately two-thirds of the company's growth of new members occurs during this period.
For example, when Herbal Life reached $5.0 million in retain sales, they jumped to $151.0 million in retail sales in the following twelve-month period. They also added over 80,000 members to their organization.
Let us assume we have an organization that is producing an override bonus check to us of $1,000 per month. When the company reaches "critical mass", members automatically experience a ten-fold increase in their earnings during this period of time. In other words, $1,000 becomes $10,000, with very little effort on our part. This is the reason for getting involved on the "GROUND FLOOR', so that we will receive the benefits of explosive growth.
•§ STABILITY - This period lasts for the life of the company. A network marketing company that is dedicated to the success of its members will experience longevity; thereby ensuring that an active distributor will realize continued earnings and growth.
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