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.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

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.

1) In your first year, what is your objective as a distributor? It is important to establish long-term goals and remind yourself of them frequently. If your objective is to sponsor 25 distributors in the first year, then you must recruit an average of two people each month. Once you develop long-term goals it is easier to see, and therefore reach, the short term goals.

2) How many people are you going to need in your organization? If your answer to the first question is monetary, then you will need to determine how many people you will need to recruit in order to meet your sales goals. Be sure to study the company’s compensation plan to understand what you need to do in order to succeed.

3) How much time do you feel it will require each week? Depending on your objectives, you may decide to spend ten hours a week or 30 hours a week recruiting, advertising, and selling. Keep in mind that most companies state that home parties average around 1.5 hours. 

4) What strengths do you have that will assist you in reaching this objective? Whether you are part of a community group or church or are great at approaching people, realizing your strengths will contribute to your success.

5) What weaknesses do you have that might inhibit you from success? Knowing your weaknesses are just as important as knowing your strengths. If you are honest to yourself about your weaknesses then you will be able to improve on them. Late-risers wake up earlier, the unorganized get organized, and the shy become speakers, for instance.

6) Do you have realistic objectives? If you plan to make $100,000 the first year and don’t know any people that may be willing to attend a party, then is a $100k sales goal realistic? Be realistic and start with goals you know you are capable of achieving.

7) Ask yourself how you would feel if you failed to reach your goal? It’s okay to fail; the key is to restructure your objective list and retry until you’re successful.

8 ) Vividly imagine yourself reaching your objective? How does it feel? Remind yourself regularly of that feeling.

9) Are you going to need the assistance of significant others in your life? What steps can you take to ensure their assistance? Remember to consider each individual’s strengths when you answer this question.

10) What will you need to invest in sales aids and inventory to do business? Be sure to budget sales aids, inventory, office space, gas, travel, and other expenses into your overall budget.*

* This is an excerpt from the book The Network Marketer’s Guide to Success available to order here.

Watch the related video by expert MLM Attorney Jeff Babener: Do You Have Some Tips to Become a Successful Network Marketing Distributor?

Visit www.mlmlegal.com for the most reliable, credible legal information about the MLM industry.

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

It has long been recognized that there is high attrition among network marketing consultants, perhaps as high as 80-90%! The vast majority of MLM distributors are part time and they join and leave for many reasons. The fault is not necessarily with the company. In fact, a direct selling company is competing for their time. MLM companies are competing for time with consultants who may be involved in the PTA, little league, another part time job, family demands, shifting duties as work, etc.

What is most important is that a MLM company use its time with its consultants to demonstrate great products and great service. Surely, it is important to try to keep distributors active; but if they do go passive, hopefully they will continue to buy products and services in the same fashion as preferred customers. Whether or not that happens is dependent on whether the distributor has truly bonded with the quality of product and service. At that point, MLM companies should take a lead from online sellers such as Amazon to determine what drives customers to continue coming back again and again. And at some point in the future, when the time is right, the passive individual who has a continuing positive experience, may well be back again as an active distributor.

For more tips on being a successful network marketing company owner, visit expert MLM Attorney Jeff Babener’s websites: www.mlmlegal.com and www.mlmattorney.com.

In addition, our next Starting and Running the Successful MLM Company Conference takes place October 22 and 23, 2015 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

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

What is most important is that a MLM company use its time with its distributors to demonstrate great products and great service.

It has long been recognized that there is high attrition rate among MLM distributors, perhaps as high as 80-90%. The vast majority of MLM consultants are part time and they join and leave for many reasons. The fault is not necessarily with the network marketing company. In fact, a MLM company is competing for the consultant’s time. Companies often compete with the PTA, little league, another part time job, family demands, shifting duties as work, etc.

What is most important is that a MLM company use its time with its distributors to demonstrate great products and great service. Surely, it is important to try to keep distributors active; but if they do go passive, hopefully they will continue to buy products and services in the same fashion as preferred customers. Whether or not that happens is dependent on whether the distributor has truly bonded with the quality of product and service. At that point, MLM companies should take a lead from online sellers such as Amazon to determine what drives customers to continue coming back again and again. And at some point in the future, when the time is right, the passive individual, who has a continuing positive experience, may well be back again as an active distributor.

Visit www.mlmlegal.com and www.mlmattorney.com for more information on the network marketing industry.

Find us on our social networks:

Google+

LinkedIn

Twitter

Myspace

Facebook

Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

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

In 2008, 91.1 percent of direct sellers were part time. That figure rose slightly in 2009 with 92.5 percent of direct sellers working part time. The statistics steadily decrease in 2010 with 91.1 percent of direct sellers working part time and in 2011 with 88.8 percent working part time.

Full time direct sellers represented 8.9 percent of sellers in 2008, 7.5 percent in 2009, 8.9 percent in 2010, and 11.2 percent in 2011.

The statistics show that the majority of direct sellers work on a part time basis.

For more statistics on the direct selling industry visit www.mlmlegal.com and www.mlmattorney.com.

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