This blog post is the companion post to the video: Role of Compensation Plan in a Successful Direct Selling Company. The following is the transcript of MLM Attorney Jeff Babener’s own words:

Hi, I’m Jeff Babener of MLMLegal.com. I’d like to talk to you today about the compensation plan. It better be good.

Does a compensation plan make or break a startup MLM company? History suggests that a good compensation plan is helpful and absolutely necessary. Does it drive financial success? Probably not. Will a bad compensation plan contribute to failure? Probably, together with other unlucky breaks. As industry expert Michael Sheffield notes with respect to a good compensation plan, “Its absence will be noted more than its presence.”

Is there anything new under as far as compensation plans are concerned? Probably not. The goal is always the same regardless of the type of compensation plan: motivate varying behaviors of distributors, ranging from direct sales, to building wide to building deep, to supporting a downline, to maximizing sales volume production and retention.

It is of key importance is that the compensation plan is easy to explain to recruits and that it is perceived as fair and balanced.

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Seven reasons why network marketing offers a unique business opportunity:

1. It is low cost to start a business with minimal initial investment and overhead costs. Some companies charge as little as $20-$30 dollars to get started.

2. You can work part-time or full-time to make supplemental income or limitless earnings. The more you work, the more you’ll make. The amount of your income is completely up to you.

3. There is high income potential without years of experience or an expensive college degree. Direct selling companies don’t usually require experience of any kind. Therefore, there is no college degree or lengthy resume necessary.

4. You can have independence while still benefiting from a full network of support. Distributors can benefit from the support they receive from their sponsor and the company’s training programs.

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