Starting an MLM (multi-level marketing) or network marketing company can be a highly profitable venture because of the potential residual income. The founder sits at the top of the organisation, earning a percentage off everyone's sales. Those who start their own MLM businesses can sell anything from vitamins to Internet marketing tools like auto responders or e-mail lists.
- Skill level:
Things you need
- Business opportunity magazines
- Wholesale supplier
- DBA registration
- Vendor's license
- Digital camera
- Price lists
- Distributor's packet
Go to the bookstore and purchase some business opportunity magazines. Look at the different products being sold via MLM or network marketing. Think about products that people purchase frequently and on a regular basis. Consider joining an MLM business opportunity to get some experience marketing and selling products over the phone before starting your own company.
Decide what type of product to sell. Go online and search for a wholesaler for your products. Ask wholesale suppliers if they will dropship or send products out to your customers. That will prevent you from having to carry any inventory. Choose the wholesaler that offers dropshipping, a low unit cost, and a quick delivery time.
Select a name for your company. Call your local county clerk's office and have them send you an application for registering your DBA (doing business as) and vendor's license. Mail the application back with your payment.
Set a retail price for your products. Allow enough of a profit margin so that your distributors can get at least 20 to 40 per cent on their purchases. Determine how many levels deep you will pay those people who join your company. Search online for companies that sell MLM payment software and consulting.
Hire a web designer to create a website for your MLM company. Order samples of your products, take a picture of them, and provide the web designer with a brief description and the price of each one. Notify the web designer that you will need self-replicating sites for your distributors.
Create price sheets, catalogues, and order forms for your products. Develop a distributor's kit that includes a wholesale price list and order forms for your distributors. Include a welcome letter that provides each distributor with information on how to get their business started quickly.
Find an attorney in your area or online that specialises in MLM law. Make sure your payment structure and business plan are legal. Make the necessary changes if the attorney wants you to change anything.
Advertise your MLM company in the classified section of business opportunity magazines. Include a display ad in these publications as well. Test the advertising response of various card decks, which are packets of 40 to 60 postcards wrapped in a cellophane wrapper that are usually mailed to people interested in starting a business. Place an ad with Google's Adsense program. Add your website to the major search engines such as google.com, yahoo.com, altavista.com, and lycos.com.
Tips and warnings
- If you want to be successful in your MLM venture, you will need to get some experience closing sales over the phone. There are many tapes and instruction materials online. You can also take a telemarketing job for awhile and get experience. Finally, the matrix payment plan is one of the most common and effective payment plan for MLM businesses. A matrix payment plan limits the number of distributors that fall under each of your levels as a sponsor. For example a 2x2 matrix allows two people on level one and four on level two (two under each distributor). The rest of the people who join the business under you would fall into level three, four or further down, which can help your downline members earn more money. If you use a matrix payment structure, pay 10 to 15 per cent on level one, three to five per cent on level two, and one per cent on the other levels.
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