MLM PreLaunch

November 12th, 2007 | by Chris |

Almost all the new MLM companies that starting business begin with a phase called prelaunch. Usually it is a short time-period, before the full launch of the company, during which new distributors can join for free, most of the times. During that time frame individuals can bring in their teams or do prospecting through favorable terms since the “free to join” and “secure your position now” sentences allure a lot of people.

But why the companies do it?

Well, first of all, the more distributors a company has, the more sales it makes. In business there is something called the break even point, when in general the revenue from the sales equals the total expenses and costs of running the company. To put it simply up from a certain number of monthly sales the company makes a profit and under that number is losing money.

As you understand no business is in for losing money, but unfortunately it is a common reality for every start up that it would have to sustain some losses for some months or even years before it becomes profitable. A Network Marketing company is no exception to that rule and like anyone else it seeks to come to that break even point as soon as possible.

Here comes to play the pre-launch phase. Since more distributors equals more sales, the company wants to sign up an adequate number of them as fast as it can so it can turn profitable in a short period of time.

By offering a free sign up during that phase, it offers an incentive for people to join and start building an organization before it starts its operations. In that case it can keep its expenses in a very low level since there is no sales or products distribution until it reaches a critical mass of distributors. A number that the company considers adequate for reaching the break even point.

Secondly it helps to create a buzz for the company, something good from an advertising point of view that can boost recruiting.

Should you join at this stage?

It’s a hard fact that 90% of all start ups fail within their first two years of operation. By joining a new company, instead of an established one with a lot of years in business, you accept a great risk. The company may fail and all the effort and money you have put to build your organization are wasted. Of course, there are also things that offset that risk such as the possibility to build a larger downline faster and acquire customers more easily which translates to more profits. That can happen because of the relative small number of distributors in the new company compared with an old one which means you are facing less competition. At least at a company level since there can be other companies promoting a similar product.

The trick here is to make an evaluation of the company so you can decide if it worth the risk to participate. You can take into consideration various things like the administration of the company, the market it serves, the sales system, the product, the training program etc.

If you are a seasoned Network Marketer you have the skills to make good judgment of whether it would pay to participate or not. Unfortunately if you are just beginning the most certain is that you are not capable to make a sound decision so you have to rely on your potential sponsor and his ability to make such an evaluation. So it comes down to how much you trust his judgment and skills.

If you are still uncertain, I believe the best for you would be to start with an old established company instead of seeking a prelaunch MLM. After all, if you doubt whether the company would have a successful future or not how can you expect to give the best of yourself to build your business?

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