5 Costly Mistakes When Launching an MLM Project

Network marketing remains one of the most resilient business growth models: according to Direct Selling News, in 2023, more than 125 million people were involved in the industry, and global turnover exceeded 186 billion dollars.

At the same time, according to CB Insights, about 10–15% of new network marketing companies and multi level marketing companies close already in the first year after launch.

The reasons most often lie not in a weak product or unsuccessful region, but in erroneous management decisions made at the start stage. This article describes the most common mistakes made by owners and teams of MLM projects, and offers practical recommendations on how to avoid them.

If you are just forming a launch strategy, we also recommend reading the article: “How to Create an MLM Company from Scratch”.

Error 1. Product chosen without market analysis

Even a reliable business model will not work if the product does not resonate with the audience. One of the main reasons for project failure is the lack of product-market fit. This is a situation where the product does not meet the expectations, habits, or values of the target audience. According to Startup Genome, 35% of startups close precisely for this reason.

In MLM, this can manifest as: the structure does not build, sales do not go, motivation drops. The business starts looking for reasons within the team, marketing, or logistics, although the initial error is strategic: the market was not ready for the product.

What to do to avoid the mistake:

Conduct market and competitor analysis in a specific region;
Check the saturation of the niche and demand level;
Test the offer through MVP (landing page, closed launch, pilot structure);
Take into account mental, cultural, and legal features of the local audience;
Do not scale until there is confirmed demand.

Error 2. Technical base does not withstand the load

At the launch stage, everything may seem stable. But after a month or two, the project faces problems: bonuses are accrued incorrectly, the structure “crumbles”, the personal account slows down. Such errors not only spoil the impression — they undermine trust and lead to distributor outflow.

According to Forrester, competent UX can increase team productivity by 25%, and Gartner indicates that up to 60% of users leave the platform due to inconvenient interface and logic errors.

What to do to avoid the mistake:

Participate in the formation of the technical task: do not rely on templates or network marketing software open source;
Test the user path manually, all key scenarios: from registration to accruals;
Check in advance the limitations on maximum bonus payments;
Conduct load testing before start;
Check the stability of all basic functions: orders, structure, withdrawal of funds;
Make sure that the chosen solution is scalable and accompanied by technical support.

If you are planning to launch a turnkey MLM site, it is important to understand in advance which modules are included in the basic version, and which will require refinement. The stability of the entire system and the trust of your structure depend on this.

We at FlawlessMLM help companies avoid technical miscalculations even at the design stage. We develop reliable platforms and affiliate mlm software taking into account real business processes, accrual scenarios, and future scaling. More about our solutions read here.

Error 3. Marketing plan not calculated

Business can be built on enthusiasm, but it is held by a clear financial model. The marketing plan, such as an mlm investment plan, is what determines not only the motivation of partners but also the sustainability of the company. If payments are overstated, the structure may grow… but along with debts. If the plan is opaque — trust leaves.

According to World of Direct Selling, more than 40% of distributors indicate misunderstanding of the payment system as the reason for leaving the project. Up to 30% of closed companies experienced calculation problems.

What to do to avoid the mistake:

Model all bonus scenarios: it is necessary to set commissions and bonuses that will be fair and motivating for participants in network structures at different levels;
Check the legal compliance of the chosen plan type (binary, linear, etc.);
Coordinate the plan with a lawyer and accountant: especially if working in several countries;
Make sure that payments are transparent for the distributors themselves;
Avoid complex schemes without support: if a partner does not understand what he gets a bonus for — he will leave.

More details in the article “MLM Marketing Plan: Common Mistakes”.

Error 4. No positioning and competitor analysis

Even a unique product and strong idea will not help if the project looks “like everyone else”. Users do not remember another mlm cosmetic company, they remember values, stories, style. Lack of competitive analysis leads to repeating others' mistakes and loss of distinctions.

According to DSA, over the past three years, more than 1100 new companies have entered the market, and more than 60% of them could not hold on. Largely — due to the lack of positioning.

What to do to avoid the mistake:

Study not only competitors' products, but also their marketing, UGC, visual;
Formulate your USP: how you are better and why distributors need you;
Build a visual style and communication strategy;
Define mission, values, and formulations that the team shares;
Do not copy others' success, but build your own model adapted to your audience.

Error 5. No system of support and accompaniment for distributors

MLM does not grow by itself — people build it. And if distributors do not feel support, do not know how to act, do not see results — they lose interest. The problem is that most startups are focused on launch and forget about accompaniment.

According to WFDSA, up to 80% of new partners leave within the first year — and not always because of money. In most cases, the reason is the lack of a system: training, communication, feedback.

What to do to avoid the mistake:

Develop onboarding: videos, PDF instructions, FAQ;
Implement a simple training system: step by step, with progress control;
Set up communication channels: chats, auto-mailings, webinars;
Appoint a responsible for structure support;
Introduce intermediate bonuses, motivational goals, gamification;
Recognition and visibility of results are no less important than income.

More details in the article “Why Distributors Leave MLM Companies”.

Summary

Start errors are not always obvious — more often they are compromises made "temporarily", or miscalculations that are regretted later. But it is at this stage that the foundation for future sustainability is laid: partner trust, process stability, scalability.

We at FlawlessMLM know how to do it right. For more than 20 years, we have implemented over 400 MLM projects and helped dozens of companies avoid costly miscalculations.

Our team offers comprehensive solutions for creating and developing network business:

market audit, product selection, and target audience;
development of an effective marketing plan with financial model;
reliable IT platform with process automation and distributor cabinet;
technical and business support during launch and scaling.

If you want to launch an MLM company that will develop stably, bring profit, and comply with the legislation of the chosen country — we are ready to become your technological partner.