Cash Flow Potentials

The way that we have been distributing products has changed throughout the ages. Modern network marketing is over 50 years old now and it is most commonly known as direct selling, MLM, or multilevel marketing. It began in the mid-40s with the NutraLite Food Supplement Corporation. NutraLite originally offered food supplements and was set up as a direct selling company. Independent representatives would buy their products and resell them directly to the consumers.

The products were so successful and beneficial, the company said consumers were recommending them to their friends.  Because they enjoyed the product so much and they liked the thought of additional income, they became resellers of the products. Remember, at the time, this was very different from the cold calling on strangers and the high-pressure techniques employed by the door-to-door sales people employed by the sales people.

Because of this, in 1943, NutraLite restructured its marketing program to encourage each of its distributors to build and be compensated for their own sales organizations. Distributors would receive bonuses on their own product sales and those who they helped build their business (sponsored) through a certain number of levels. This was the beginning of what was considered multilevel marketing. I feel it was the same compensation pan that paved the way for Realtors (Broker / Agent), Insurance (Broker / Agent) and other similar industries.

In 1956,  Dr. Forrest Shaklee joined Nutralite, who eventually founded the Shaklee Corporation to gain wider distribution of the food supplements he developed in his clinic. Since then Shaklee has grown to hundreds of thousands of distributors who have collectively earned over $3 billion in commissions by offering household products nutritional supplements personal care products to consumer.

Soon after, in 1959, NutraLite distributors Rich DeVos and Jay Van Andel started their own company called Amway. Amway stood for the "American" "Way" and they had a vision also to distribute personal and household products. They still distribute the NutraLite health supplements through their large organization of distributors.Shaklee  and Amway were the true pioneers paving the way for this new form of business.

Just like any other new industry in its era, entrepreneurs rushed to adopt this new way of distribution and business opportunity. Some companies and individuals representing these companies overstepped the bounds of ethical business practices. All kinds of different forms of multilevel marketing opportunities showed up and turned into schemes designed to reward individuals solely for signing up other distributors for a fast  buck. Not for marketing legitimate products. Thus also the beginning of giving the industry a bad name. Some of these illegitimate companies forced resellers to pay huge upfront fees, hidden charges for questionable reasons, and then they would disappear or close through bankruptcy. These schemes quickly became known as illegal pyramids because they often rewarded those who first noticed the business and got people to join them first.

Then in 1974 Sen. Walter Mondale declares war in these types of businesses. There were a number on cases of fraud on the public. The companies on his hit list were companies like Holiday Magic, Bestline Products, Koscot Interplanetary, and Amway. And he started his work  to shut them down through government regulations. And rightly so. Unfortunityy, they didn't understand this new business nodel eought to diiferntiuate the "good" from the "bad".

In the 1970's because there were so many illegitimate schemes and people abusing the business model, the Federal Trade Commission and state agencies across the nation turned their efforts to protecting consumers on all multilevel companies. In 1975 the FTC filed lawsuits against Amway alleging that they were an illegal pyramid and that because they refused to resell its products or services in retail stores it was a restraint on trade.

Amway spent four years and millions of dollars in legal fees to defend its name. In 1979, the FTC ruled that Amway was not illegal pyramid and I did in fact generate substantial revenues from the sale of its products and services to consumers. Also, the FTC acknowledged that Amway had built a substantial manufacturing company and inefficient distribution set the system. But some damage had already been done.

Amway and other multilevel companies who fought to prove the legitimacy won an important victory for the network marketing industry. And from then on network marketing has exploded as companies enter this new industry - even more so today. With many changes going on in the retail industry, social networking, and abuse of marketing, many manufactures are looking as a viable industry to distribute their products.

In the 1960s franchising started to emerge. It was also looked at as a scam yet today more than 60% of all businesses are franchises. All businesses models go through transitions - it is part of there evolution. All new business concepts go through transitions and eventually work out the bugs. They eventually work out  the bugs, create new standards and continue to improve. Direct Sales is no different. Network marketing has involved into two different systems - Direct Selling and Multilevel Selling. Millions of independent representatives, men and women, are representing these companies with integrity, honesty and passion for their product or service while reaping the vast rewards. Many are doing it with the same honesty, integrity, and ethics they carry in their own personal lives while others are persuaded to use alternative methods.

The companies and many of the individuals representing these businesses are now forging the new frontier... And many do have integrity and are building these businesses in a professional  business-like-manner.