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7 Keys to Selecting a Money-Making MLM Business

Aug 17, 2007
With the ever changing culture of corporate America, many men and women alike are looking toward home-based business solutions. A home-based business is a popular choice for many families today as they attempt to balance income needs versus family support.

One of the most important decisions to be made involves the selection of a home-based business opportunity. Making the correct decision will leave you with the freedom, flexibility, and income levels that you seek. Making a wrong decision may leave you frustrated and force you to spend more money than you ever receive back.

Below are seven (7) tips that everyone must consider in searching for a home-based business:

Tip #1 - Low Start-Up Fee

Tip #1 is to look for a company with a low start-up fee. What is considered a low start-up cost? Anything under $200 is a very reasonable charge for setting up your business. This fee is primarily used to cover the costs of setting you up in the corporate system and providing you with the starter kit.

Why should you care about the start-up cost? It's pretty simple isn't it? The start-up costs are monies that come directly out of your pocket. There is no guarantee that you will make money in your new business. Would you rather risk $0 - $200 of your own money or pay out $500, $1,000, or more to get started? You should look to minimize your out-of-pocket costs and find a MLM business that fits your interests as well as your pocket book.

As part of the start-up fee, you'll also want to understand the amount of product that you get with the starter kit. The start-up fee in many companies is just that - a start-up fee only giving you the privilege to sell their product. Other companies will give you free products (sometimes alot of free products!) to use with your business.

Tip #2 - Find a Ground-Floor Opportunity

Tip #2 is to find a company that is a "ground-floor" opportunity. Ground floor means a new or relatively newer company with a low number of consultants. Many of the large, well-established businesses have 1,000's or even 10,000's of sales consultants throughout the country. The simple fact is that more consultants = more competition.

You'll find that interest levels of people about your business and its products will be higher if your company is newer and less known. Along with the higher interest comes increased sales and a better ability to grow your team.

Tip #3 - Compensation Plan

Tip #3 may be the single-most important concern for many of you. It involves selecting a business with the right compensation plan so that you can make the most amount of money as possible.

It's actually very difficult to compare one compensation plan to another as all are fairly complex and include multiple bonus levels and tiered percentages. However, two of the most important considerations about any compensation plan are the upfront sales commission (%) and bonus pay structure.

The upfront sales commission is the amount (often a percentage of sales) that you will earn on the sale of any product. You want to be careful when comparing one plan to another as some companies offer a commission percentage of retail prices whereas others pay a percentage of wholesale prices. Either way, be sure to understand whether the commissions are paid off of retail or wholesale prices as you compare plans.

When looking at bonus payments, the most important item to consider is the requirements to receive bonus commission on your first-tier team members. You'll want to look for a company that will pay you a commission on all of your first-tier team member sales without requiring you to maintain a specific level in your company. Otherwise, you may find an enticing bonus pay plan only to find out later that you don't qualify for the bonuses unless you're an upline manager.

Tip #4 - Strong Corporate Brand

Tip #4 is to find a company with a strong corporate brand. By corporate brand I mean the reputation of the company in both name and quality of product.

Consumers have a choice when buying products. Your sales job is 50% complete when potential customers know and recognize the name brand of your company. This allows you to focus your time on selling the benefits of your product rather than wasting time explaining or defending your company's background or reputation.

Tip #5 - Strong Upline Management

Tip #5 is to evaluate the level of upline support and select a company with strong upline management and experience.

As part of a direct sales business, one of the most valuable tools that you'll have at your disposal is your upline support. You should take time to talk with the person who would be your immediate upline manager at the particular company that you are considering. Make contact by phone or e-mail to discuss the business, the start-up fee, compensation plan, and any other questions that you may have on your mind.

When speaking with your potential upline person, be open, honest, and ask the difficult questions. Don't be afraid to ask questions such as:

1) How much money do you make?
2) How many hours do you typically work per week? per month?
3) What don't you like about your company?
4) How will you train me in the business?

As you communicate, you should be asking yourself several questions about your potential upline manager. Am I comfortable talking with this person? Is this person a leader? Has this person had prior experience and success in a direct sales business? Will this person be able to help me grow my business?

Your relationship with your upline manager will play a significant role in the success of your new business. You want to be sure to start asking these questions now to help you evaluate the strength of your potential upline management and give you the best chance of ensuring a healthy upline relationship should you decide to join the company.

Tip #6 - No Inventory

Tip #6 is to find a business that does NOT require you to carry inventory.

What is inventory? Inventory can be defined as product that you purchase from the company, hold on your own premises, and then try to re-sell to your customers.

Some direct sales companies require that you purchase inventory upfront and then re-sell the product to your customers. Other companies allow you to sell product to your customers, you place the order, and then the company processes the order and ships the product to you or directly to the customer (i.e. no inventory!!).

The benefits of NOT having inventory are several-fold. First, you must pay upfront for inventory and you must carry these costs until you sell the product. This sometimes (depending on the quantity and cost of the products) requires you to make a large investment into your business to buy the inventory to sell. .

Second, the space required to hold inventory can be cumbersome and annoying. Most people complain that they don't have adequate storage space for normal household items. Can you imagine receving a UPS truck of product that you must store in a place that is safe, dry, and accessible on a moments notice?

The need to carry product inventory should be a significant concern as you evaluate potential business opportunities. You may want to think twice about becoming involved in a business that requires you to carry truckloads of product to your party destination.

Tip #7 - DSA Member

Tip #7 is to focus on a company that is a member of the Direct Selling Association (DSA).

When searching for a direct sales business opportunity you should target a business that is either recognized by the DSA or that has submitted a DSA application.

What is the DSA? The DSA is a national trade association of companies that manufacture and/or distribute product directly to consumers. The DSA can be thought of as a "Better Business Bureau" for direct sales companies.
About the Author
Brad Semp has personal experience in growing successful direct-sales and MLM businesses and has shared his secrets in a FREE ebook that can be downloaded at MLMCashMap.com .
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