How to Start a Network Marketing Company


A network marketing company has a business model that provides people the opportunity to become independent distributors of goods or services, and then pays them commissions for the sales of those goods or services.

As an independent distributor, you can build your own team of people who will help you sell products and recruit other distributors.

As a business owner, you will benefit from a very efficient business model and distribution system for your company. You will be able to focus on product development and brand growth, leaving the burdens (including financial) of distribution to your independent representatives.

But how to get started?

In this guide, we’ll make an in-depth analysis of the process of how to start a network marketing company.


How to start a network marketing company: Overview

Network marketing is one of the most popular ways to make money, both offline and online, but it can also be quite tricky.

The good news is that there are many resources available for those who want to learn how to build their own network marketing company.

There is no shortage of books or websites that can teach you everything from choosing which products or services you’ll sell, to how to market them effectively and make sales through social media platforms like Facebook and Instagram.

Before we jump into specific details about how to get started building your own network marketing company, let’s take a look at some of the most critical factors when it comes to building any type of business from scratch:

  1. Knowledge + Experience = Successful Business Model
  2. Time + Money = Successful Business Plan
  3. People + Environment = Successful Marketing Strategy

But when it comes to a specific sales model (direct selling and MLM), the general paradigm changes slightly.

There are unique factors that define a network marketing company, and which might recommend (or advise against) starting it.

In short:

Pros: low marketing and distribution costs (due to distributor network).

Cons: difficulty in finding the right market niche and risk of being accused of pyramid schemes.

How to start a network marketing company: Video

The benefits and drawbacks of a network marketing company

The first thing you need to understand is that network marketers are not salespeople, they are entrepreneurs.

In fact, a correct term would be “business owner” or “entrepreneurial consultant” because they take care of their own business and do not depend on anybody else for their income.

This sales model greatly relieves the business owner with respect to personnel and marketing costs but simultaneously causes less corporate control on his part and potentially greater legal risks.

Determine a market niche and conduct market research and feasibility studies.

To build your own company, there are some preliminary steps common to all businesses, no matter what their distribution model:

  • Define the market niche.
  • Conduct market research and feasibility studies.
  • Use the information you collected to create a business plan, which will help you decide whether or not to pursue your idea for a network marketing company.

Market research helps you identify your target market as well as your competitors in that specific industry, so you can focus on what it is that makes them different from each other and from other companies in that same field of work.

The market research also helps identify who would be interested in buying their product or service if they offer one—this information is incredibly valuable when it comes time to developing your compensation plan too!

Understand your industry’s major competitors 

As you begin to understand the industry and how your products fit into it, you must also develop a thorough understanding of your major competitors.

Understanding the competitive market is essential to developing a successful business plan. It’s important to know what other companies in your industry are doing well, as well as what they could improve upon.

This will help you determine where there is an opportunity for growth or innovation within the industry.

It’s also important that you understand why consumers choose one product over another and what kind of value proposition attracts them to each company’s offerings. This research should include:

  • What price do customers expect from an item like yours?
  • How does this compare with competitors’ offerings?
  • Are some competitors able to sell at a lower price point because of superior distribution or production costs?
  • Do certain brands offer discounts for bulk purchases or membership programs?
  • If so, do people think those discounts are worth paying for or would they rather pay full price for their favorite brand(s)?

These questions all contribute toward determining how much profit potential exists at different pricing levels within this market niche (or niche segment).

The answers may be different depending on who exactly buys these types of products — whether they’re millennials looking for bargains or baby boomers who refuse anything less than top-shelf quality when purchasing luxury goods.

Choose between buying a franchise and starting from scratch.

When you buy a franchise, you have the advantage of knowing that another company has already done the work for you. You can focus on selling and marketing your product or service instead of worrying about things like hiring new employees or creating a website.

However, there are some downsides to buying a franchise as well:

  • It’s expensive. The initial investment for buying into most franchises is six figures or more—and even if you don’t pay upfront, the ongoing royalty fees will take a bite out of your profit margin each month.
  • You still have no control over how things are run internally—and sometimes this can cause problems when it comes to customer satisfaction and retention (more on this later).

Trademarks, copyrights, and patents

Trademarks, copyrights, and patents are all ways to protect your intellectual property.

Trademarks are names and logos. Copyrights cover creative works like songs and books. Patents are specific inventions that can be patented for a fixed period of time (usually 20 years) if they meet certain standards of novelty and non-obviousness.

The most common form of protection is trademarks because they’re relatively easy to obtain, but you should consider other forms of protection such as copyrights or patent applications if necessary.

To start a network marketing company you will need to make sure you have all the legal requirements.

These may vary depending on where you will put your company’s headquarters and what industry you will be dealing with.

While these requirements are the first step for any startup or new company, you must immediately keep in mind that operating through direct selling and multilevel marketing modes falls under additional–and more strict–rules.

Determine Your Compensation Plan by Setting a Price Structure

You should consider all the factors involved in setting a price structure, including market research, competition, and the cost of goods or services.

To determine a price structure for your business, conduct market research to assess current trends in your industry and similar industries.

This will help you identify what customers are willing to pay for similar products or services and whether there is room for increasing prices without losing customers.

You may also want to consider how much competitors charge for similar products or services so that you can stay competitive while maintaining healthy margins on each sale.

The cost of goods sold (COGS) refers to all costs associated with producing a good or service (including labor costs).

Sales prices are often based on COGS plus a markup percentage calculated by industry standards or other factors such as demand elasticity (how easily consumers will switch between competing brands due to price changes).

The COGS/markup model can be applied across many different industries as long as they’re selling physical products rather than providing services like consulting, where pricing structures are more complex.

Create Your New MLM Online

Your first step in creating your new MLM online is to choose a host. There are many options out there, but we recommend WPX because they offer quality hosting at affordable prices. As a plus, their support service is mindblowing.

Next, you’ll need to register your domain name and build your website with a host. 

After that, it’s time for choosing templates and functionalities for building your site and eCommerce. This is when two crucial factors for the success of your network marketing company come into play:

  1. developers
  2. MLM management software to be associated with your compensation plan

Select an MLM Software Marketing

Selecting the right MLM software is critical to your business’s success.

You need to manage your team, keep track of leads and prospects, and analyze your marketing efforts in order to be able to grow your network marketing company.

There are many MLM softwares out there.

According to Capterra, one of the most popular portals of independent user reviews of management software and programs, the most reliable network marketing software are:

  • MarketPowerPRO
  • ProMLM Icon
  • Bravon Direct Selling & MLM
  • Epixel MLM
  • Krato Journey
  • Infinite MLM
MLM software
Screenshot from Capterra (2022)

Promote Your New MLM

To promote your new MLM, you’ll need to use a variety of tools and techniques.

You will have to choose the marketing channels best suited to both your product and your business model and distribution system. 

The best way to do this is by using as many of them as possible at the same time. Some examples include:

  • Social Media – Facebook, Twitter, YouTube, Instagram
  • Email Marketing – Email campaigns, auto-responders
  • Paid Advertising – Google AdWords or Bing Ads (both pay per click), Facebook Ads (Facebook’s ad platform), Solo Ads strategies.

Create a Corporate Identity and Develop Strategies to Increase Brand Awareness

Now that you have a core idea and the right people, it’s time to create the framework for your business.

This includes creating a corporate identity, developing strategies to increase brand awareness, and establishing systems for customer acquisition. Let’s take a look at each one in detail:

  • Create a logo. Your logo is the visual representation of your brand identity—it’s what people see when they think about your company or product. When choosing an image for this part of your identity, keep in mind that today’s consumers can be easily distracted by bright colors or busy patterns (so don’t use them). Instead, stick with simple shapes like circles and squares; these are easy-to-remember images that will make any viewer remember what they saw once they’ve moved on from looking at it. A good rule of thumb here is “the simpler the better.”
  • Create a website (and social media presence). Once again: if there were just one thing you could do before launching your network marketing company tomorrow morning without breaking stride on anything else…this would probably be it! Websites make all kinds of things possible these days—from collecting email addresses from potential customers who want more info about upcoming offers…to enabling those same leads into actual sales conversations and new distributors registrations.
  • Create promotional material to give your customer/distributors
  • Create information and education courses for your future representatives. These should include clear communication of brand values, in-depth product information, online marketing concepts, and mindset fundamentals for success.

How to launch your own MLM company – Recap

A thorough guide for how to launch your own MLM company.

  1. Market Research: Where to start?
  2. Who is your target market? What is their demographic makeup, income level, etc.?
  3. How do you plan on getting the word out about your company and products?
  4. Where can you find a good location for the business (office space) and employees (if needed)?
  5. Product Development: What are the benefits of this product or service? Who will use it and where will they use it? How will it improve their lives if they have access to it regularly? If it’s an existing product or service that already exists somewhere else, why should people buy from you instead of just going out there themselves and finding what they want/need at another location nearby or online store elsewhere online?
  6. Legalities: Make sure everything is legally compliant before launching anything into production mode. Especially important when dealing with things like finances or laws related specifically towards specific kinds of work environments such as home offices versus working from home full time vs part-time jobs vs full-time employment at other companies.
  7. Compensation Plan: You need both creative ideas for how much money each person gets paid per sale made as well as marketing strategies so people know how much money they can make too.

FAQs

How to start a network marketing company from scratch?

If you want to start a network marketing business, then you need to know what kind of product you are going to sell. The first thing you should do is create a plan for how much money you need to invest in your new venture. Next, you must find out where you will be able to market your product. Finally, you must ensure that you are in compliance with all the specific regulations governing the network marketing industry, with particular reference to product quality standards and the distributor compensation plan. 

How to start a network marketing company without much knowledge?

Launching a new network marketing company requires taking the time to study the market, understand the business model, and create a detailed business plan. There are no shortcuts. The risk of producing goods unsuitable for the market, not having sufficient capital for the first few years of operation, or setting up an illegal pyramid scheme is very high.

Is it advisable to open your own MLM business?

Yes and no. Starting a network marketing company will give you the opportunity to build your company and develop your product by delegating marketing and distribution to a network of independent distributors. However, if you do not have entrepreneurial skills, experience in business management, and a strong aptitude for risk, it is not advisable to launch your own network marketing company.


Conclusion

With the right tools, you can build a successful MLM business.

You should also remember that it may take several years to reach your goals. The important thing is to keep working hard and not give up when things get tough.

But, also, do things right from the first steps: planning, budgeting, and market analysis.

Feel free to comment below or contact us on Twitter if you want to discuss this topic further.


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