Stages of creating a network company from scratch

Network marketing has its own specifics and business organization characteristics. MLM companies save on many expense items, but at the same time, other concerns arise that are atypical for representatives of classical business.

For example, in affiliate marketing, the need for advertising decreases, as distributors create and reinforce a positive image of the product. At the same time, it is necessary to set up a phased training of partners, update the marketing plan, maintain activity, and stabilize the structure's operation.

If you are inspired by the idea of organizing and scaling your network project to the level of brands like Amway, Tupperware, and Mary Kay, it is worth reading the article on our blog. Let's talk about the stages of launching a partner system.

Stage 1. Product Selection

The product is the first choice that needs to be made, and an error at this stage can be fatal. The product must be of high quality and unique. By selling a product in demand on the market, you can quickly gather satisfied business partners around your brand. Distributors who like the product play the role of "brand advocates," recommending everyone to make a purchase from you.

More details about the product in network marketing can be found in the article Ideal Product for Network Company

Stage 2. Market Research

Having an idea of the product you would like to distribute, study the existing market - players who have already occupied the niche and could become real competitors.

There is always something to learn from competitors so as not to make their obvious mistakes in the future. At the very least, it is worth studying their sales funnel and specific marketing materials that have brought them to the TOP in the niche. It is not uncommon for a situation where a business is built on selling unique and quality products, but it was the promotion issue that was poorly addressed, leaving the founders with nothing.

More details about sales funnels and their optimization can be found in the article MLM Sales Funnel. Business Automation Stages

Based on competitor analysis, try to strengthen the details they overlook - create your own "blue ocean." By expanding the boundaries of the existing niche, you will unlock huge potential for the company's development and set the rules of the game yourself.

For example, the development of the Australian company Casella Wines. Deciding to enter the international market, they chose not to follow the strategic path of their competitors - selling expensive and aged wines for connoisseurs. They entered the space not covered by competitors, creating a simple drink for parties, suitable for people who are not wine experts. In two years, Casella Wines became the top imported wine in the USA, surpassing French and Italian wines in the process.

Stage 3. Marketing Plan

Choosing the type of compensation plan will be no less important stage in organizing a network business.

The marketing plan of a network business is the rules that determine the volume of distributor rewards and the scheme of their accrual.

It is the marketing plan that affects the company's attractiveness to distributors. In addition to attracting and motivating partners, marketing influences the company's turnover, profitability optimization, and the proportionality of compensation distribution.

More details on calculating marketing for your company can be found in the article Your Ideal Marketing Plan

Developing a compensation plan requires an expert approach and experience in marketing for various business sectors. Keep in mind that most contractors in the business analytics field are not familiar with the specifics of the MLM industry and do not have practice in marketing calculations. By turning to IT specialists working in the network business sector, you will save both time and financial resources.

Suppose you have already selected a product and ordered a marketing calculation for the company. It's time for the practical implementation of the idea.

Stage 4. Testing

The most common way to assess the viability of an idea is to implement a project model. By launching a test version of your project, you can analyze the demand for your idea and the company's development prospects. During the implementation of this stage, you will face head-on all the complexities and nuances in creating an MLM company.

The more complex and global the business idea, the more resources will be needed to implement its model. An experimental version will reveal gaps, critical errors, and dangerous situations where the business risks failure.

For example, one of our clients, before importing a full-fledged multi-level partnership program into business processes, followed the advice of FlawlessMLM specialists, namely: they thoroughly studied their target audience and analyzed the demand for their product using the well-known social network Instagram. Simultaneously with testing their idea, they managed to earn money to scale up a small Instagram project into a global network company.

The trial project of Edelstar company was not a commodity company, as one might expect, but the game "HOP-GO". The "HOP-GO" project had no physical product and was intended only for the practical testing of all possible development models of a trading MLM company. Thanks to the game format of "HOP-GO," calculations and initial logistics were prepared, marketing was tested, and user behavior models were analyzed.

Building and launching a project prototype can help attract additional investments to the project. First, you can accumulate capital from test sales. Many entrepreneurs stop at this stage and do not scale their business. Second, the prospects shown by the test results will help attract investors. The project can become an analog of a portfolio, and it is in your best interests to implement the "demo version" of the business as high quality as possible.

Stage 5. Implementation

Before starting serious work, it is worth determining the form of ownership of the enterprise and registering it. Bringing the business into the "white zone" is not only to avoid legal responsibility. Firstly, companies with official registration find it easier to make deals and cooperate with contractors. Secondly, legal companies increase the loyalty of both potential and existing partners, influencing their decision to join the partnership structure. Taking all of the above into account, a registered business has more chances to scale easily and quickly.

Read our article on the specifics of creating a multi-level company from a legal perspective in the post Taxation in Network Marketing. Features of MLM Company Organization

Apart from business registration, it is important to carefully plan comprehensive logistics - take a systematic approach to organizing the entire product lifecycle (from the moment components are produced to the moment the product is consumed). Manage all material, information, and financial flows. Think ahead about the volumes of product sales and the necessary warehouse space. In any case, a trading company will need a main warehouse, and as the business and turnover grow, warehouse facilities can be expanded.

Considering the peculiarities of network business management, don't forget to set up step-by-step training for newly recruited partners. Training with restricted access to the next stages will allow providing information in a measured and necessary order. Thus, the result will be better consolidated, and as a result, you will get the maximum benefit from duplication (the "do as I do and teach others to do the same" principle). The sequence and simplicity of information delivery directly affect the number of partners who can replicate the actions leading to the result.

Online seminars and webinars are basic tools for training. Introduce newcomers to the course, make introductory presentations of novelties, exchange opinions, discuss cases, and promptly respond to questions in real-time.

It is important to monitor the progress of your partners. This way, you will understand how effectively your partners are learning, as their success is a reflection of your work. Beginners, by following the marketing tactics of their network mentor, gradually acquire his experience and build their own business.

Stage 6. Full Automation

If you are too absorbed in numerous individual tasks, you will inevitably get stuck in the quagmire of small matters. Often, network business founders are burdened with the routine of operational tasks instead of focusing on analyzing and optimizing the company's development strategy. An automation system is one of the effective tools for management.

Optimization involves both core processes (those directly impacting company profitability) and supporting processes (those not directly affecting revenue but consuming significant time and financial resources). Process automation in a network company includes:

- organizing warehouse activities;

- managing document flow with partners;

- obtaining statistics and reports on the company's structure, the progress of distributor teams;

- placement of newcomers in the network structure;

- calculation of commission rewards, qualification payments, and bonuses;

- organizing step-by-step training and gradual integration of newcomers into the team.

 

Thus, you minimize the negative impact of the human factor on business processes and enhance the quality of partner communication. Automation will increase the level of technological advancement in the business and enable control over the growing volume of information. In doing so, you will be able to maximize the rational use of your time and financial resources.

Overall, automating the business mechanism and its management will improve the company's performance, and partners will become more productive through quality training and feedback.

More details about the business automation process can be found in the article MLM Automation. How to Manage Living and Working

An important stage in the process optimization is the choice of a contractor company. By trusting experts in the field of network marketing, you will save time and money. Experience in developing solutions for network marketing and understanding the specifics of MLM allows for the rapid reengineering of business processes, increasing the company's conversion rate and competitiveness.

Are you excited about creating a company and automating business processes? The specialists of the FlawlessMLM We are always ready to help and provide you with a free consultation. Contact our manager in the website chat (flawlessmlm.com) and learn more about solutions for your business.