Network marketing is an industry that has been continuously developing in different parts of the world for more than 100 years, opening up wide opportunities for starting your own business. However, the creation of a successful MLM company requires an integrated approach and detailed study.

How to open a new MLM company

Every successful network company started with a small project and scaled up to an international corporation with multi-million dollar annual turnover. From the outside, the process of creating an MLM company may seem simple, but in fact it is not entirely true.

To create a growing MLM business, it is important to understand the smallest nuances of network marketing. Also, learn the basics of marketing and branding, understand the principles of financial and sales management, be a good psychologist, organizer and, most importantly, a leader at the same time.

We have identified the main stages and rules that should be followed when creating an MLM company:

  1. Research the market and find your niche

The direct selling model can bring significant profits regardless of whether you sell candles, dietary supplements or tourist packages. Your product and niche are a means of attracting future partners who will sell the product and generate the company's profit. To choose the right niche, study the trends in the network marketing industry and traditional business.

Think about what product is in demand among people and work out a portrait of your target audience. For example, millennials appreciate everything related to a healthy lifestyle. If this is the type of customers you want to attract, choose a niche related to beauty and health. Also, remember that the chosen market should not be oversaturated. With high competition, it will be more difficult for you to develop a new business.

P.S.: To begin with, choose 2-3 interesting niches and study MLM companies that have already achieved results in them. These are your potential competitors, among whom you will need to stand out due to the product.

  1. Decide on a product

Choosing a product is one of the key decisions to make when creating an MLM startup.

Some MLM companies take a simpler path, making wholesale purchases of the finished product from a supplier or on popular marketplaces. So, the founders of the company test their strength in sales and select the most popular product positions among the audience.

Other companies create their own production. This path is more costly in terms of time and financial resources. But, you will be able to create an absolutely unique product, declare the originality of your project and get an additional competitive advantage.

The main goal of this stage is to find a product of excellent quality that will distinguish you from your competitors and meet the needs of your target audience. Since the basis of the network business is recommendations, a project with a product of dubious quality simply will not have a chance to succeed.

  1. Register a company

Grid organizations, as well as all businesses, must be legally registered and operate within the framework of the law of the country in which they plan to develop. The registration of a company with the tax office itself can be a multi-stage process.

To avoid legal risks, you should not enter the market with a project that has not been tested by a competent lawyer who knows the specifics of the MLM market in different countries.

You need to prepare for the fact that potential partners, before entering into cooperation, will carefully study the documentation and all available information about the company. Therefore, in order to avoid public scandals due to missing clauses in the contract, initially work out all the legal nuances and double-check the content of the documents.

  1. Develop a marketing plan

One of the main reasons for network marketing failures is fundamental errors in the marketing plan. The viability and profitability of an MLM project directly depends on how competently its marketing plan is developed. It should be balanced in terms of the company's profitability and motivate your partners. The activity of the project's distributors and, accordingly, the growth rate of the entire business directly depends on the bonus program.

The conditions of earnings in the company, in terms of importance, are along with the choice of a flagship product. In any case, the development of a compensation plan requires an expert approach and experience in drawing up marketing plans for various business areas.

 

  1. Build a company brand

Often, novice entrepreneurs focus on their product and save money on branding the project. In practice, a startup without a brand can be compared to a person who lives without a name.

Branding is a marketing strategy that aims to form a set of ideas, associations, and emotions associated with a company in the consumer's mind.

Branding includes the registration of a trademark, the generation of a name, slogan, logo, and other design nuances (for example, certain symbols and color palette) that can distinguish the company from competitors. At the same time, work with the brand should continue throughout the entire life cycle of the company.

  1. Create a business website and software

A good website is an important aspect for any business, regardless of its size and specifics. Some entrepreneurs think that a business page is created only for online sales, but, in practice, it provides much more opportunities. The MLM company's website serves as a project presentation, sells goods, recruits new partners and acts as an individual content platform for your brand.

In addition, all management and automation of the company's work will depend on the software. One of the omissions of the founders of network projects is the connection of template software, which is outdated and does not correspond to the modern realities of business management. Such a solution gradually leads to the collapse of the MLM company. Therefore, it is better to make a choice towards the individual development of solutions with all the necessary functionality for your business.


  1. Determine the company's promotion strategy

After all the preparatory work, it's time to decide on the methods of popularizing the project and attracting new distributors. In practice, the most effective solutions for MLM companies are:

  • Launch of targeting. We are talking about the type of advertising, when setting up which you can specify the parameters of the audience groups to which the ad will be displayed. Here, you will need a portrait of the target audience, which we talked about at the beginning of the article.

  • Promotion in social networks. According to Statista, more than 5 billion people around the world spend time on social networks. Therefore, this is the easiest and most budget-friendly way to convey information about your product and business opportunities to a wide audience.

  • Creating a personal brand. Distributors will definitely monitor the personal activity of the founder of the company in order to understand what your business is and where it is moving. Therefore, it is very important to create the right personal image, actively participate in the life of the project and competently cover all events with your participation.

As you can see, launching an MLM company from scratch is a time-consuming and complex process, but the result is worth it. By introducing MLM methods into your company's business processes, you:

  • Activate a powerful distribution channel. An affiliate program is a great way to attract the attention of many customers and increase sales.

  • Build a growing network of customers and partners. Distributors themselves are engaged in the marketing promotion of the company, the sale of products and the attraction of participants to the structure.

  • You gather "brand advocates" around you. Your partners will actively defend the interests of the company at all levels - from public statements in the media to friendly conversations.

You achieve high conversion across all promotion channels. Since the popularization of the brand is always in the sphere of interest of distributors, they will help and maintain the effectiveness of the marketing channels for promoting the project.

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