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Have you ever asked yourself why many MLM / Party Plan companies fail? From a recent study, there are between 1800 and 2400 new start-ups each year in the industry, but the average life expectancy is only 7 months. Failure can be the result of numerous reasons, but the main reasons they fail may not be what you think! Here are our top four reasons:

1. Lack of Knowledge:

Many MLM /Party Plan companies are started by successful Distributors or Consultants who are really good at building organizations, but have no real business skills. While being a successful consultant in the industry brings expertise at sales and relationships, it is completely different than actually running a company. You don’t need to be in charge to be in control!

The Solution: Bring in a COO or CEO who knows business.

Bonus: If you can find a proven executive from the industry, you are increasing your chances of success. They will have the know-how and answers to all the unique complexities in this industry.

2. Lack of Funds:

Most startups are underfunded and attempt to cut corners or make the business fund itself. But product, consultants, software, attorneys, and fulfillment all cost money!

The Solution: Seek out qualified investors. It may be tough, but in many cases, it can mean the difference between success and failure.

Bonus: Be prepared to present an articulate and powerful pitch on why your product/service will be successful, with the data to prove it! Don’t be that minnow in the shark tank with no answers – be the shark of your business.

3. Cut Rate Software:

Not all software is the same. If the price looks too good to be true, most likely it is. Unless your project is the simplest offering on the market, you can expect to pay $15k to $25k and up depending on your requirements and compensation plan.

The Solution: Separate your needs from your wants. Find a software that meets your initial needs to get the business operational and earning money. The business you start today will be a different business six months from now. The initial purchase is just the beginning of a long-term relationship. IDSTC is your trusted software solution with 15 years of experience and hundreds of successful deployments. We’ll be there as a partner throughout the growth of your company.

Bonus: Your’re operating a MLM / Party Plan company, so don’t let “website development” vendors convince you they can get you going for $500. The power of social selling comes with costs and those costs are the extra layers of complexity to operate your business efficiently with the right software solution.

4. Rapid Growth:

From a logistical standpoint rapid growth can be a pain, but from a merchant processing standpoint it can be a death sentence! Most people don’t understand how a merchant account works. A common mistake is believing “If I make a sale online, that’s my money.” Unfortunately it’s not that simple. That is actually Visa or MasterCard’s money and they are not always your friend. Basically they just gave you a loan for 6 to 18 months. If you are processing $100k a month, that is your monthly loan, because in some cases customers have up to 18 months to Charge Back. All new merchant accounts have a limit and when you reach that limit, they are likely to set some of your money aside (10% to 20% for 6 months) just in case customers Charge Back.

The Solution: Simple, secure more than one merchant account, monitor their processing, and have the ability to switch between accounts if needed.

Bonus: Work with your chosen software solution to find out which merchants they recommend and do a lot of business with. This can certainly help you avoid any ‘mishaps’ with processing orders and collecting payments.

Where is your MLM / Party Plan Company At?

Like the insurance commercial says, “It’s the little things you don’t know that can hurt you”. You can leverage our years of experience at IDSTC to your advantage. If you have not had our software Demo, contact us today! If you have, let us show you how we can meet your software needs now and in the future!