Raising capital to fund your network marketing startup company can be tricky. In fact, there is no clear-cut answer to finding funding. However, there are options available to MLM company owners. There are several giant direct sales companies operating today that began with a very limited budget, just like you: in their basements, bathtubs, garages, and space bedrooms. Many of these companies grew organically to the huge size that they are now. You, however, may be in a different situation, where an influx of capital is absolutely necessary to keep your business afloat.

This article will help to provide you with details about how you can get free and trusted information about how to fund your MLM business. Experts generally suggest that it costs around $100-$200 thousand to start up a direct selling company. This article will provide you with some ideas as to where to find startup funding and links to information online, written by experienced MLM industry experts who’ve been asked thousands of times, “Where can I find funding to start and grow my MLM business?”

Here are three of the most common options MLM business owners consider when they are looking to fund their network marketing startup:

1)      Do you have a substantial recruiting background? If you are a seasoned recruiter and are able to attract a strong line of consultants then your need for capital will decrease considerably. Expert MLM Attorney Jeff Babener always says, “Your need for capital is in direct inverse proportion to your ability to recruit.” If you are able to attract a strong sales force then your need to raise capital outside of the company may greatly diminish. Consultants will be the key to your success. If you are not a seasoned recruiter, then you may want to consider hiring someone who does have recruiting experience.

2)      Do you have personal capital? MLM startups often find the capital that they need in their own bank accounts, or the bank accounts of family and friends (often referred to as your ‘warm market’). In some cases, an angel investor will be willing to invest in the company (a wealthy uncle, perhaps?). These sorts of investments are based primarily on the personal relationship, as well as trust and loyalty.

3)      What about public financing? Unfortunately, not many venture capital firms are interested in investing in startup network marketing companies. The startup MLM company has the tendency to be run by inexperienced business owners needing only a few hundred thousand dollars, which isn’t very attractive to large investors. In nearly all cases, investment into the company will come from a close source. Once your business is worth millions, then the investment firms will take notice. You can read about some of the most famous MLM success stories on these pages: Silpada, Herbalife, Pampered Chef, and Visalus.

Another great place to get information on raising capital for your business is at the Starting and Running the Successful MLM Company Conference where industry experts will provide you with individual, one-on-one time and attention. Each speaker will sit with you and discuss your personal situation and specific needs. The easiest was for you to attend the conference on a budget is to visit the page of our Innovation Campaign. The October 2015 Innovation Campaign offers network marketing company owners the ability to receive two free tickets to the next Starting and Running the Successful MLM Company Conference in Las Vegas (a $345.00 value!). All you have to do is fill out a brief survey at our sister website: www.mlmattorney.com, and we will contact you right away to confirm your free tickets to the event! Attending this event will give you direct access to several MLM industry experts, including capitalization experts and MLM legal expert, Jeff Babener. Visit our Innovation Campaign page for complete information about the conference, including the topics that will be covered, the speaker/expert list, videos, and much more. For additional questions call 800-231-2162.

It won’t be easy raising capital to fund your MLM startup, but we hope that we’ve given you some ideas on where to start. We also hope that you better understand that it is possible to start small and make it big in this industry. For more information on raising capital visit www.mlmlegal.com and www.mlmattorney.com.

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.

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.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

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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.

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The costs of startup vary widely, depending on the type of product or service and need for infrastructure. It is obvious that a company which is engaged in its own manufacturing, ownership of warehousing and distribution facilities, etc. will expend much more in cost than a company which is furnished by suppliers of private label products or is involved in a service-type product. With respect to the initial infrastructure costs of a startup MLM, it may be reasonably expected that a company will expend, during the first year, $100,000-$200,000 for four key infrastructure elements: legal, software, compensation plan design, and creative design for online and offline promotional materials. Beyond these costs, the variables are far too extensive to predict without development of detailed pro forma projections.

Watch the video with expert MLM Attorney, Jeff Babener by CLICKING HERE.

For more information on any topic on network marketing that comes to mind, please visit www.mlmlegal.com and www.mlmattorney.com.

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It is recommended that companies seek references and contact those references to learn about past performance record of the software provider.

Virtually all new startup direct selling companies utilized an outsourced technology solution for managing genealogies and commission payouts. In addition, such technology serves distributors by providing back office access for reviewing sales performance, commissions, etc.; replicated websites; communication tools, etc. The software is hosted on the server of the technology provider where it is maintained 24/7. As companies grow to substantial size, they typically may purchase a source code license and run the software on company computers.

There are many good software providers in the direct selling industry. For a list of some of various direct selling vendors, see the MLM Resources section at www.mlmlegal.com.

Choosing the right provider presents an important task because, the technology solution is integral to a successful business. Not only should the platform serve all the internal IT needs, but also, it should demonstrate that it can integrate with other outside software applications such as ecommerce and sales and use tax compliance.

The search process should be deliberate. It is best to seek the advice externally or internally of an advisor with significant IT experience, preferably in direct selling. Companies should interview multiple software firms to examine the offerings, the service record and the right personal connection. It is recommended that companies seek references and contact those references to learn about past performance record of the software provider.

Watch our videos on software and technology.

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Our next Starting and Running the Successful MLM Company Conference takes place October 27 and 28, 2016 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register. If you’d like to see how you can get free tickets to the next MLM Startup Conference, visit our Innovation Campaign page.

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Multilevel Marketing

In multilevel or network marketing, individuals sell products to the public — often by word of mouth and direct sales. Typically, distributors earn commissions, not only for their own sales, but also for sales made by the people they recruit.

Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.

If you’re considering buying into a multilevel marketing plan, get the details.

Consider the Products

Many companies that market their products through distributors sell quality items at competitive prices and some don’t.

Find out what will you be selling. Are similar products on the market? Is the product priced competitively? Is it safe? Can your sponsor — the distributor who is recruiting you — support the claims about the product’s performance?

Almost any product or service could be sold through multilevel marketing, including health, beauty, and fitness products that aren’t available through retail sales. Apply a healthy dose of skepticism before buying or selling products advertised as having “miracle” ingredients or guaranteed results. Many of these “quick cures” are unproven, fraudulently marketed, and useless. For instance, if you are considering selling nutritional supplements, you may want to check with a health professional before using them — or selling them.

If you decide to buy into the program and promote the products, you must be sure your marketing materials are truthful and that there’s solid evidence to back up the claims you make about the products. Before you repeat any claims the company has made, verify that there’s competent and reliable research to back them up. That’s the standard the FTC uses when evaluating advertising claims.

Learn More About the Company

Find — and research — the company’s track record. Do an internet search with the name of the company and words like review, scam, or complaint. Look through several pages of search results. You also may want to look for articles about the company in newspapers, magazines, or online. Find out:

• how long the company has been in business

• whether it has a positive reputation for customer satisfaction

• what the buzz is about the company and its product on blogs and websites

• whether the company has been sued for deceptive business practices

• Check with your state Attorney General for complaints about any company you’re considering, although a lack of complaints doesn’t guarantee that a company is legitimate.

Evaluate the Plan

Don’t pay or sign a contract in an “opportunity meeting.” Take your time to think over your decision. Your investment requires real money, so don’t rush into it without doing some research first.

Ask your sponsor for the terms and conditions of the plan, including:

• the compensation structure

• your potential expenses

• support for claims about how much money you can make

• the name and contact information of someone at the company who can answer your questions

Get this information in writing. Avoid any plan where the reward for recruiting new distributors is more than it is for selling products to the public. That’s a time-tested and traditional tip-off to a pyramid scheme.

Keep in mind that when you recruit new distributors, you are responsible for the claims you make about how much money they can earn. Be honest, and be realistic. If your promises fall through, you could be held liable, even if you are simply repeating claims you read in a company brochure or heard from another distributor.

If you don’t understand something, ask for more information until it is absolutely clear to you. Your sponsor and other distributors should be willing to answer your questions. Remember that your sponsor (and others above your sponsor’s level) will make money if you join the program. So take your time, and resist pressure to join. Be aware of shills — fake references paid by the company or distributor to pretend they were successful earning money through the plan.

Find out about refunds.

Get the company’s refund policy in writing. Make sure it includes information about returning any unused products, including restrictions and penalties. It may seem like you’re minimizing your risk if you can return products for a reimbursement, but policies vary on whether you’ll get a full refund — and how long it may take. Many plans require you to buy training or marketing materials, or pay for seminars if you want to get product discounts or create your own network of distributors. Find out how much time and money other distributors spent on training, marketing materials, and seminars when they joined the plan, and whether the plan requires you to participate in periodic training. What happens if you opt out of the training?

Ask a friend or adviser to read the materials.

You may want to consult with an accountant, a lawyer, or someone else you trust who is not affiliated with the plan to review the terms of compensation, determine whether the plan can back up its claims about the amount of money you can make, and analyze the information you’ve been given.

Think about whether this kind of work suits your talents and goals.

Ask yourself whether you would enjoy selling products to the public. Find out how many hours a week your sponsor and other distributors spent on the business when they joined and how much time they spend now. Remember that no matter how good the product and how solid the plan, you’ll need to invest sweat equity and money for your investment to pay off. Consider the other demands of the business — for example, going to training, recruiting new distributors, managing paperwork, recording inventory, and shipping products.

Ask Questions

Ask your sponsor and other distributors tough questions, and dig for details. Don’t consider it nosy or intrusive: you are on a mission to check out a potential business deal that will require your money and your time.

Their responses can help you detect false claims about the amount of money you may make and whether the business is a pyramid scheme. Here are some questions to ask before making any decisions:

• How many people have you recruited?

• How long have you been in the business?

• How much time did you spend last year on the business?

• How much money did you make last year — that is, your income and bonuses, less your expenses?

• What were your expenses last year, including money you spent on training and buying products?

• What percentage of your sales were made to distributors?

• How much product did you sell to distributors?

• What are your annual sales of the product?

• What percentage of the money you’ve made — income and bonuses less your expenses — came from recruiting other distributors and selling them inventory or other items to get started?

It’s important to get a complete picture of how the plan works: not just how much money distributors make, but also how much time and money they spend on the plan, how long it takes before they’re earning money, and how big a downline is needed to make money. One sign of a pyramid scheme is if distributors sell more product to other distributors than to the public — or if they make more money from recruiting than they do from selling.

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

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Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call Charity before September 1st to receive a discount! 503-226-6600 or 800-231-2162.

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1)      Be a leader: “Leaders don’t follow the masses. They lead them.”

2)      Be simple: Create one goal per year and stick to it no matter what distractions come your way. “They may sound good at first, but they can derail your goals, your team, your culture, and, ultimately, your sales.”

3)      Be goal-driven: Make one goal, achieve it, and then set another. “Even after achieving $100 million in sales five months early, we didn’t stop making goals or focused decisions – we just started making bigger ones.”

4)      Be an executive: Make decisions for your company based on its culture and cash flow. “Why not make that one decision right now that can take your business to the next level?”

Mr. Pentecost concluded that he wrote this article to make an impact on other MLM executives, stating, “…the one decision that will rally your team behind your mission and put you on the map as an innovative company in direct sales.”

The Direct Selling News article titled “One Decision to $100 Million… and Then Some” can be found at http://directsellingnews.com/index.php/view/one_decision_to_100_million_and_then_some

*MLMLegal.com and its sister websites do not endorse It Works! Global.

www.mlmlegal.com and www.mlmattorney.com offer extensive information on how to achieve success as a direct selling business owner. Our Starting and Running the Successful MLM Company Conference is an excellent source of education for startup and existing MLM companies (contact Charity before September 1st to register and receive a discount!). There is also a plethora of information on our blogs, located at http://mlmlegal.com/MLMBlog/ and http://mlmattorney.com/blog/.

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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.