For this issue, it is best to look at 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. This business is 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 it 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.

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The need for capital is in inverse proportion to your ability to recruit.

The need for capital is in inverse proportion to your ability to recruit.

This is the million dollar question. The need for capital is in inverse proportion to your ability to recruit. Your network marketing company will either have hired that talent or you will bring on a vice president of marketing to help search for key first leaders, typically under some type of Presidential Founder Program, which will include protocols for products and rewards to key first leaders.

Distributors should first search their “warm market,” that is to say, family, friends, work, church, clubs, etc. Surprisingly, if one looks at the top distributors of many companies, it will be noted that they did not have experience in MLM, but rather their success was driven by their passionate bonding with product, management, sales leaders, and vision of

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February 27th & 28th, 2014 - The MLM Startup Conference in Las Vegas

The next Starting and Running the Successful MLM Company Conference is already scheduled for next year! On February 27th & 28th, 2014 we are hosting the MLM Conference for the 26th year! This is now our 66th 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.

WHO?

Direct Selling Attorney, Jeff Babener, Founder of Babener & Associates and Sponsor of the MLM Startup Conference, has over 25 years of experience in the industry, representing companies such as Avon, Nikken, Melaleuca, Discovery Toys, Usana, and NuSkin.

MLM Industry Consultant, Mike Sheffield, with The Sheffield Group and Co-Sponsor of the MLM Startup Conference, has helped launch over 800 companies over the last 27 years.

Over the course of two days, you will hear from many leaders in the direct selling industry, who include:

Jeffrey A. Babener, of Portland, Oregon, Conference Chair and Sponsor, www.mlmlegal.com, is the principal attorney in the law firm of Babener & Associates. He represents leading U.S. and foreign companies in the direct selling industry. He has been advisor to such companies as Avon, Discovery Toys, Nikken, Shaklee NuSkin, Excel, Usana, Fuller Brush, Cell Tech, Kaire, Sunrider, Melaleuca, etc. He is a frequent lecturer and has been interviewed on the industry, and published, in such publications as Money, Inc., Atlantic Monthly, Success, Entrepreneur, Kiplinger’s Personal Finance, Home Office Computing, Business Start-Ups, Wealth Builders and Money Maker’s Monthly. He is editor of the industry publication, Direct Sales Legaline. Mr. Babener is also the author of the books, Tax Guide for MLM/Direct Selling Distributors, Network Marketer’s Guide to Success, The MLM Corporate Handbook, Network Marketing: Window of Opportunity and Network Marketing: What You Should Know. He is editor of one of most frequented network marketing educational web sites, www.mlmlegal.com.

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Recruit Top Distributors

Your ability to recruit directly equates to your success.

When you are starting your MLM, direct selling, network marketing, or party plan business, you’ll find that recruiting experienced distributors is often essential to your company’s success. And if you don’t have the background yourself as a successful recruiter then you need to budget for a “sales manager” position for an individual who does have that capability to recruit.

Your ability to recruit directly equates to your success. If you have a background in recruiting and a background in direct selling, then your need for capital will be substantially lower. Recruiting top distributors will enable your company to have the capital to stay afloat and even grow. If recruiting is slow then you will need to raise one to three years of buffer capital in order to support your company in the event of stagnation or loss. And remember, the remuneration that is offered to top distributors will be effective in their decision to stay and help grow the business.

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Recruiting in Rocky SoilIt is not just about you…

Too often, network marketers are tone deaf as they recruit and sell. It is easy to fall into the easy path in which talking points, which extol the virtues of the product and opportunity, are presented to potential customers or recruits without first understanding the mindset of their audience.

Standing in the shoes of your customer and recruit is essential. There is a reason that Fortune 500-brand companies engage in significant market research and focus group activity before launching products. They understand that “having a good product” is not enough to close the “bonding” loop. Unless, you are the rare genius of Steve Jobs, who was able to create a new product, for which there was no market, and to anticipate that “if we build it, they will come,” then there is no escaping the hard work of finding and preparing the “soil” for planting.

And it’s not about the coffee…

And, as good as the product or opportunity may be, one must realize that the relationship may be the driving factor in success. In a recent book by Starbucks’ President, Howard Behar, It’s Not About The Coffee, Mr. Behar explains that the success of Starbucks was stumbled upon; ie., that Starbucks is not a coffee seller that seeks relationships with its customers, but rather it is a company that fosters store experiential environments that bond relationships with customers first, and a company that sells coffee, second.

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Credit to labarbosa Most direct selling companies permit advertising, but provide specific guidelines and protocols for promotion. Some companies require that all advertising be submitted to the company for approval.

The MLM company does, in fact, have the right to set the rules for marketing of its products or services, and those rules are typically found in the advertising guidelines section of the company’s policies.

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If you missed the May 2013 MLM Starting and Running the Successful MLM Company Conference, or simply wanted to attend but couldn’t, we have another chance for you. MLM Attorney, Jeff Babener, Co-Host of the MLM Conference and Editor of MLMLegal.com will be hosting our next Conference October 24th & 25th, 2013 in Las Vegas! Get more information by reviewing the details below:

WHAT?

The next Starting and Running the Successful MLM Company Conference is quickly approaching! On October 24th and 25th, 2013 we are hosting the MLM Conference for the 25th year! This is now our 65th 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.

WHO?

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This blog post is the companion post to the video Raise Capital in Order to Recruit Key Distributors. MLM Attorney Jeff Babener discusses the need to raise capital in order to recruit key distributors below.

Hi, I’m Jeff Babener of MLMlegal.com and I’d like to talk to you about capitalization, can you recruit? Do you have a great recruitment background, the ability to recruit? Or a lineup of strong distributors? If so, your need for capital will be substantially diminished.

In the end your ability to recruit a talented and motivated sales network will be the number one key to your success. In fact, your need for capital is in direct inverse proportion to your ability to recruit. If you can recruit then you may have a cash cow on your hands. If recruitment is slow then your business plan needs to allow for buffer capital to hold you through one, two, or three years of break even or loss scenarios. That capital should be lined up ahead of time either through personal and close relationship resources or through angel investors.

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Start the New Year off right! If you are starting or running and existing MLM, direct selling, network marketing, party plan company and need the help of industry experts, you should attend the Starting and Running the Successful MLM Company Conference. Hosted by industry expert Jeff Babener in Las Vegas February 21 & 22, 2013!

The MLM Startup Conference introduces executives of MLM companies to MLM industry experts in the areas of:

– Legal

– Software

– Capitalization

– Recruiting

– Technology

– Ecommerce

– Sales

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