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Disclaimer: The materials available through this Site are for informational purposes only and are not legal advice. The transmission of any information is not intended to create, and receipt does not constitute, an attorney/client relationship. Internet subscribers and on-line readers should not act upon this information without seeking professional counsel.

MLM Startup Guide

1. How to Start an MLM company (Consideration)

So, you’re ready to launch your new MLM business. You’ve got it all planned, Can’t miss product? Check. Hottest compensation plan to hit the streets? Check. Rock solid business plan? Check. Startup financing? Check. You’ve been working for months on end getting ready for your launch and you’re finally ready to pull the trigger.

2. Find Product or Service

Product or Services is also as important as compensation plan. If you have designed a good marketing plan for your company launching then now begin your product search in your present position and where you are. From my experience, during product hunting prefer easily transportable product. Below are the numbers of methods by which you can explore new product concepts.

» Local classified ads in newspapers and magazine

If you really want to know the pulse of the market, must read the classified section. Scan them for new product being offered and find the product and stake your claim, negotiate them for ownership and exclusive right. Now, use your creativity to present the product differently.

» Search Engine

Hunting on the internet is fun, inexpensive and allow you will explore new product ideas. Contact can be possible to promoter instantly through email or IM and soon you are on the way to negotiating for that next hot product to drive your company sales. There are still more products looking for distribution than there are companies looking for products.

Using Newspapers, Trade magazines, Trade shows, Foreign publication, Manufactures you can hunt the product, if you don’t strike it rich with your first product, find another, and another, and another. Good luck and good hunting!

3. MLM Compensation Plan/Marketing Plan

Finalizing the product or services next important thing is to design a lucrative marketing plan also referred to MLM compensation plans. An MLM compensation plan’s ability to influence representative behavior is huge. A well design MLM plan will motivate the sales force to work harder and achieve specific tasks. The bottom line is if distributors understand MLM commissions, they can make better choices about companies in which to invest their money and lives.
Income generally falls into these categories:

  • Fast Start Income or the income you earn by signing up or enrolling a new wholesale member
  • Fast Start Generations Income where you get compensated because people you personally recruited (or people that they recruited etc), enrolled, or signed-up, are becoming productive and enrolling new members
  • Matching Bonus Income where you earn for example a 10% matching bonus on other peoples' monthly paychecks that you personally sponsored.
  • Monthly Signup Bonuses and matching bonuses where you get a financial share in a bonus pool based upon enrolling for example at least five new members in a payout.
  • Infinity Bonuses where you get for example 2.5% of the total business sales volume in your organization simply because you've attained a higher rank.
  • Residual Income is paid based upon repeat product or service purchases and is usually paid monthly for the reorders in your organization or network. This is especially powerful in the unilevel with dynamic compression comp plans.
  • Pool Commission: An amount of money is put into a pool and divided up among those distributor qualify a certain target.
  • Single Level commission: A commission type where the entire amount goes to a single individual.
  • Differential Commission: A type of commission whereby a distributor receives the difference between the amount for which he qualifies and the amount for which his first level distributor qualifies.

  • The most commonly used pay plans are outlined including the Binary, Matrix, and Unilevel-Dynamic Compression, and Stairstep Breakaway. A good company management team will design a network marketing comp plan so that both novices and experienced professionals can succeed in their MLM Business.

4. Picking Partners of your MLM Company

Now, from the beginning, the spark of idea in your mind’…you are about to launch your MLM company. You have to put much thought and planning around the product line, your compensation plan, your marketing strategy and hundreds of other big and small decisions that you made along the way. It’s more probable that you had a partner because it’s unlikely possible to do everything yourself. So, you need a good business partner or team of partners who all contributed, and will each share in the success of the business. You plan on being in business a long time (at least let’s hope so!). Picking your partners is one of the most important and long-lasting decisions facing your business.
A most common question which I have faced regularly as a consultant, by management of MLMs startup companies- what are the top reasons why MLM startups fail. From my experience most of the people surprised by my response, the most common reasons why MLM startups fail result from clashes among the business partners.
The term “partners” is used collectively to include shareholders in a corporation, firm, or anyone else with an ownership interest in the business entity. Some critical issues which normally arise between the shareholders should be consider as

  • Partners should have same mission and vision, if partners don’t believe in common mission and vision and just tagging along because they see a significant financial opportunity. It is likely to lead to clashes down the road.
  • Everyone wants to be the big boss. Avoid this by clearly delineating the roles of each partner. Among those companies that fail due to management clashes, a common problem is a collision of egos.
  • There should be a specific exit strategy and documented in business operating agreement if the partners can’t agree on important issues.


5. Selecting the MLM Startup Software:

Selecting the MLM Startup Software: Now I think, you have made all of your preparation except software to launch a new MLM company with a new idea and in a unique way. Finally, you have to select a good MLM software development company. Software is one of the most important elements in all of your preparation. Only professional and experienced software company can customize the software according to your compensation plan. Readymade MLM software is not suitable for any MLM company because every company has a unique marketing idea with a new compensation plan. From my experience software is the second most common reasons why MLM startups fail. If you plan in being in the business for a long time (at least let’s hope so!), picking your software development company is one of the most important and long-lasting decisions for your MLM business. Most of the future decision related to products, incentive models, weak network chain, city with locality and company progress depends upon your software MIS reports. We recommend you our company NetBIZ Infotech product “MLM Starter Software” as one of the best industry product with 100% customization scalability. You can purchase this software by paying only setup cost on 0% startup cost.

6. Holding Genealogy Positions

Should MLM company owner or partner or management hold the position in Genealogy Tree? Is it legal and wise for holding the position in tree? Straightforward answer of this question is yes, it is legal but not 100% wise as per customer or distributor end. The challenges associated with the management holding a position in the genealogy can be overcome with proper planning and execution. Unfortunately, because startup MLMs normally don't recognize the issues, planning and execution in this area are often lacking. So if you are starting an MLM and are considering taking a position in the genealogy, you should first carefully consider these points:

  • Termination of business relationship in future.
  • Conflict the interest of different genealogy positions.
  • Inequitable distribution of Income at different positions, the owners who most often desire a position in the genealogy are:
    1. Those who receive the very top positions therefore benefitting from the majority of downline volume; and
    2. Those who are in the field and thus are in a position to build a business. That leaves out other owners who, although critical to the success of the business, are not in a position to build the MLM business. For example, a partner who is in charge office-bound functions such as Information Systems is certainly critical to the success of the business. However, they have little opportunity to build a business because they are not in the field. This leads to an inequitable distribution of income among management which can result in animosity and disputes unless the income of office-bound personnel is balanced through other means. If after careful consideration you elect to move forward with owners and/or management holding genealogy positions, ensure that you have your legal strategy in effect before agreements are reached or promises made regarding genealogy position distribution so these challenges don't impede the business.

S.K.Seth
CEO, NetBIZ Infotech

Disclaimer: The materials available through this Site are for informational purposes only and are not legal advice. The transmission of any information is not intended to create, and receipt does not constitute, an attorney/client relationship. Internet subscribers and on-line readers should not act upon this information without seeking professional counsel.




Incentive Models:

In Multi Level Marketing (MLM) by referring any one or by direct selling the product a member/distributor can generate the incentive. Distribution of commission or incentive is called Compensation Plan or Business Plan for a MLM company. We are working on almost all type of incentive models in market and also few of them which were invented by our team. Our R&D team is always working for invention of new MLM incentive distribution models.

Some Popular MLM Incentive models:

» Australian Binary Plan » Binary Plan » Board Plan » Single Leg Plan » Growth Plan » Performance Relay
» Matrix Plan » Forced Matrix » Auto filling Pool » Unilevel Plan » Level Income » Repurchase Model
» Real Estate Model » Differential Method » Career Plan » FD & RD » Agent Model » Working Plan
» Nonworking Plan » Reward System » Royalty Plan » Monthly Income » Tri Binary Plan » Ladder Model
» MLM Salary Plan » Revolving Matrix Plan » Polo MLM Bonus » Sunflower Model » Orbit Binary » Step Binary
» Dynamic Compression Model