To answer this question, it is best to look at the two phases of MLM companies: start up and maturity.

Although many things can go wrong in a startup direct selling company, two factors are repeated with frequency for the failure to launch. The first factor is inability to recruit. MLM is a business based on recruiting a successful sales force to market products. (Obviously, there are many important factors ranging from logistics to personnel to technology to quality control to distribution… and all these can go wrong as well.) It should be noted that the need for capital is in inverse proportion to the ability to recruit. A MLM company that can recruit is often positioned for fast growth and may even become a cash cow. If the company does not have that native ability, it needs sufficient capital to hire the talent to make recruiting happen. And in the absence of the recruitment asset, a company should plan on a much longer trajectory to profitability.

And the recruitment challenge dovetails with the second major reason that companies fail at the onset: lack of adequate capital or funding. Many companies start the business without adequate capital to allow for a one or two year run to become profitable. In fact, many companies assume that they will be profitable within months or that they will not need capital for growth. The lack of buffer capital to survive the early unprofitable days of a company is a prescription for early failure.

As to mature companies – who’ve been around for years and years but find themselves on a downward spiral, the key answer is to continuously innovate and create ways to bond with both distributors and customers. Companies that can’t grow with the market, or maintain loyalty of distributors and customers, will find that sales will plateau and ultimately decline. This is a branding business and a relationship business. Unless a mature company is ready to continually reinvent itself and stay fresh, it may find itself on a slow, or sometimes rapid, road to contraction and failure.

MLM, network marketing, otherwise known as direct selling, is a relationships business. Those that succeed do so because they have a deep relationship with their customers and distributors. To maintain long-term success as a MLM business owner, you too have to make sure that you’re not just running a company, but a business of relationships.

As mentioned, networking is a big part of MLM. Come network with us. If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register. It’s run by the most trusted and knowledgeable man in the business, offering legal services for over 25 years to companies like Avon and Mary Kay, Jeff Babener.

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Learn more: Watch the Video. What are the two main reasons for a MLM company’s failure?

Visit us at www.mlmlegal.com to learn more.

Hi, I’m Jeff Babener of MLMLegal.com. I’d like to talk to you today about MLM technology and software, the engine of the machine. Having great software won’t recruit one single distributor for you.

Having said that, lousy software and inferior support will no doubt ruin what might have been a tremendous business opportunity. The MLM business is a “numbers” business. It is built on recruiting, payouts on thousands of generations, genealogy reports to thousands of distributors, timely calculations, and payout of commission checks to vast networks of salespeople. The moment you fail in the technology area, you will lose confidence amongst your distributors. Prepare for sales recruitment, retention and momentum to plunge to ocean depths.

Recovery may never occur, and so remember; being cheap is not good in the technology business. Good value is great but being cheap is not. “You get what you pay for” is true in this acquisition. The fact is that cheap software usually means software that is flawed and for which there is no backend support service of worth. Your software must work, it must be scalable such that your data tracking solutions, your web and e-commerce solutions, and your reporting and communication solutions can grow with your business.

These are important questions for those bidding for your software. Statements like “up and running in 24 hours for $100” are as invalid as “join our MLM and earn $10,000 in the first week.”

Of course, expensive technology and software are not necessarily good either. At least one software firm became infamous in the industry for promoting seminars that were little more than high pressure sale presentations in which unwary MLM startups were induced into astronomical price offerings.

Beware the high pressure sales tactics that do not afford you the opportunity to compare in the marketplace and check references/opinions. Your best sounding board is your MLM business consultant or MLM lawyer.

Look for established technology and software providers with track records with established MLM companies. But that is not to say that you should not hold their feet to the competitive fire. Established MLM software companies all bring different, but important, strengths to the table. Most major providers also offer design solutions for the MLM startup that involve web-based software support that can grow to licensed, onsite technology, as the company grows.

Wishing you the best in your direct-selling business, I’m Jeff Babener.

For more information visit our websites: www.mlmlegal.com and www.mlmattorney.com.

Or, visit these links for more information:

Technology’s Impact on the Direct Selling Industry: The History of Technology video

Starting and Running the Successful MLM Company Conference – May 16th & 17th, 2013

How Much Does it Cost to Start a MLM Company?

MLM Software and Computer Systems

MLM Software

Choosing an MLM Software Supplier

Make sure to visit our blogs for the latest information on the direct selling industry: MLMLegal Blog Home and MLM Attorney Blog Home. HINT: Chose a category to narrow your search for discussion topics!

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And, as always, visit MLMLegal.com, the best MLM resource on the web. The next Starting and Running the Successful MLM Company Conference will be here before you know it! On May 16^th and 17^th, 2013 we are hosting the MLM Conference for the 25^th year! This is now our 64^th annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener. Call 503-226-6600 or 800-231-2162 to register. (Can’t make this event? Keep an eye out for our October and February conferences as well.)

Visit us at www.mlmlegal.com to learn more.

Attitude makes all the difference in survival and success of the startup MLM. Every successful MLM company was driven by a leader who had a passion for the product, the opportunity, or both. The charisma of the leader could not be shared successfully without passion. You must be, in a sense, what the philosopher Eric Hoffer referred to as “a true believer.” A true believer is a founder of cultural, religious, or business movements, and that’s what you must be. There’s little room for the skeptic or cynic.  An Eminem would say, you can’t just sing the song to succeed you must “lose yourself in the music.” Only with passion will persistence and patience occur. And, only with those two additional attributes will an individual be successful in the launch of an MLM company.

It is a rare day that an MLM company is an overnight success. Some companies become overnight success stories because of the migration of thousands of seasoned MLM distributors as the result of the collapse or implosion of other large MLM networks or companies. This occurrence is the exception to the rule. In the end, it is often the case that the company will not experience a more rapid trajectory until it has been in existence for two or three years. It is usually at that point in time that the combination of its stability and some other fortuitous event in the marketplace causes its discovery by legions of distributors and customers. So, in the end, attitude – the culmination of passion, patience, and persistence is a defining factor in the success of the startup MLM company.

– Wishing you the best in your direct selling business, Jeff Babener.

For more information about passion and success in the MLM, direct selling, network marketing, party plan industry, visit the following links:

Jeffrey Babener’s Youtube Channel Reaches 60,000 Views

Explaining Your MLM Company to the Public: Answering the Hard Questions

MLM Success: Thoughts to Consider

Can You Make It By Starting Small?

Bare Basics for Success in Network Marketing

Does Celebrity Involvement Spell Success for an MLM Company?

It’s Passion that makes a MLM Company Successful

Is There a Magic Pill for Success in MLM?

If My MLM Business isn’t Working What Should I do?

Can You Create an MLM Company and Make it By Starting Small?

Watch the companion video to this blog post:

In Order to Achieve Success in MLM, One Must Have Passion, Patience, Persistence

And, visit www.mlmlegal.com for a plethora of information on the MLM, network marketing, direct selling industry.

The next Starting and Running the Successful MLM Company Conference is quickly approaching! On February 21^st and 22^nd, 2013 we are hosting the MLM Conference for the 25^th year! This is now our 63nd annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener. Call 503-226-6600 or 800-231-2162 to register. Ask Charity how to get a discount! (Can’t make this event? Keep an eye out for our May and October conferences as well.)

Visit us at www.mlmlegal.com to learn more.