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5 Things I Wish I Had Known Before Starting an MLM Company

Getting Expert Help

The first thing I wish I had known is the importance of engaging a seasoned professional consultant.

There are amazing and very affordable companies out there who specialize in helping to launch MLM companies. I wish I had known this and taken the time to track them down and get some advice. I didn’t! As a result, my first MLM venture was a disaster and my second attempt came within a whisker of going under. Peter Drukker says that learning from experience is the worst way to learn. There is always an infinite number of ways to do something wrong and very few ways to do things right. I read this pearl of wisdom in the 80s but it was only in 2003, after struggling through a very tough time in my MLM business, that I realized why. There are people who can tell you exactly how to do it and if you follow their advice, chances are you will be successful. This is the reason that franchises are so successful. They give you the formula and they force you to follow it. If you deviate from their prescribed course, they are there, with their lawyers, to show you the error of your ways.

In my case, I thought I knew it all. I had run several successful companies and had no doubt I would succeed in MLM. I was wrong. MLM is a different animal. You have all the complexity of traditional business with the massive additional burden of managing and motivating an army of volunteers who will jump ship if they don’t like what you are doing, saying, not saying, or just don’t like your personality. 

You may be a networker with a wealth of experience building a team but if you have never actually run an MLM company there are some serious paradigms that will need to be adjusted. Getting help from experts who have done this before would not only be advisable but, in my opinion, essential.  

I discovered that the cost of learning through experience was far greater than the cost of getting an expert’s advice. I therefore highly recommend that you find a company that can shortcut your learning curve and eliminate the unnecessary mistakes that you will inevitably make.

Click the link to get help from an MLM Consulting firms: Paneuro Solutions

Legal Supplier Agreements

The second thing I wish I had known is the importance of locking down the supplier with a well-defined agreement.

In my first MLM business, we made a deal with a prominent timeshare company. We would sell weekend and mid-week holidays to our members. The timeshare company provided the holidays and all that our members needed to do was sit through a timeshare presentation. 

The network exploded and within a couple of months, we had over 2000 members. That was when the problems started. Each of these 2000 people wanted to avail themselves of the offer and the timeshare company was just not able to deal with the volume of requests. Without notice, they cancelled our deal. I had no agreement in place and therefore could take no legal action to compel delivery. My MLM company folded. It was a disaster!

Ten years later I met a person selling bath products and decided to network her products. The network started to grow and before long we were shipping a great many orders every day. Again, I did not get an agreement with the supplier. Without notice, she decided to no longer supply me. To keep my head above water, I went to the manufacturer and purchased directly from them. This resulted in court action and a great deal of unpleasantness. What a mess! All of this would have been avoided if I had just taken the time to get some legal advice and implement a supplier agreement. 

The agreement should include continuity guarantees, lead times, quality penalties and intellectual property rights. I am sure there are many other issues related to this type of agreement, so I recommend you get legal assistance.

Training is All Important

The third thing I wish I had known is the importance of comprehensive training material and a training strategy.

In both my MLM ventures, training was an afterthought. I am good at recruiting, so I went hell for leather to bring new people on board, but I did little training. As a result, the attrition rate was very high and the reputational damage that resulted was severe. The people who succeeded in the early days did so despite me and not because of me. 

By the time I realized the error of my ways, I had an army of leaders with absolutely no direction or training and, as a result, everyone was doing their own thing with very little attention being paid to what the company wanted.

It took years to train the leadership and get everyone on the same page.

If I were starting over today, I would either hire a professional trainer or, if that is not an option, I would take the time to develop the necessary training material. I would then train the initial leaders until they could not only succeed at the business but could effectively pass that knowledge on to their new recruits.

Compensation Plan

The fourth thing I wish I had known is that every company requires a unique compensation plan. 

In both my MLM companies, I looked at what other companies were doing regarding compensation and then adopted their plan. What a mess! Unless you have access to their full compensation specification, there is almost no chance you can understand all the nuances from the published plan. There are issues like normalization, breakage and company-sponsored lines that determine the profitability of a compensation plan and I have yet to see a company that publicizes these mechanisms. 

Furthermore, are you sure that the company you are copying is happy with their plan? This issue was highlighted when I was approached by a company to help them redo their compensation plan because it was overpaying the network - and then in the same week I had another client who wanted to copy their plan.

The compensation plan is forever. I can tell you from experience that the quickest way to destroy your network is to change the compensation plan. Once you have designed and adopted a plan, you need to live with it. It therefore seems totally foolhardy to rush headlong into a plan that you think will work when you can have an expert design a plan for you. There are people around the world who specialize in developing compensation plans and I recommend that you get expert advice.

IT Systems

The fifth thing I wish I had known is the importance of an enterprise-level IT solution. In 1989, I had zero experience with software development. Computers had green screens and software developers were Gods. I found an amazing developer and we created a software solution using a database program called Paradox. It worked but all it did was calculate the commission and it cost a living fortune! The company failed fast and we never had a chance to really test it but I have a feeling it would never have coped with the high volumes generated by a successful MLM company. In 2000, things were different. The internet was a thing and software was going online. I contracted a developer and scoped out what I wanted. The project was predicted to take 6 months and cost $100K. Two years and $400K later, the system finally went live. 

The NetReady system worked perfectly until we started getting some real traction and then things went pear-shaped. It was then that I realized that if your business fails, any system is good enough but if your business succeeds, you need a powerful enterprise-level solution.

Ultimately, the NetReady system went through several iterations to get it to the point of being a world-leading solution but if I had it to do over, I would have simply purchased a tried and tested system and saved myself a lot of trouble.

Today NetReady is one of the most powerful MLM management systems available anywhere. If you are looking for a system to manage your new or existing MLM business then take a closer look at the NetReady system - it will blow your mind!

Click the link to check out the NetReady MLM Management Software