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MLM Compensation Plans
MLM Compensation Plans – What You Need to Know
Have you been considering getting into the MLM business? Lots of people are because it is an awesome model for a home-based business with the potential to make tons of money. But it is critical that you develop an understanding of MLM compensation plans in general and the compensation plans of each company on your final short list prior to making a decision.
Ideally, before picking a company, you will have done an appropriate level of due diligence. That means lots of homework about the network marketing or direct sales companies you are considering joining. Hopefully, you will have spent plenty of time online trying to find as much info as you can about those companies.
If you have, you will have noticed that most of the negative press a company gets is either from a frustrated distributor who, for whatever reason, failed to build a successful business with that company. Often, that is because the soured distributor bought into the “get rich quick, no work necessary” hype.
Or maybe the bad ink is from a distributor from another company trying to scare you away from your company so that you join his. (Who’d want to sign up with someone that sleazy?)
At the end of the day, it’s all about getting paid to represent the company you select. That means you need to understand the compensation plan. MLM compensation plans can be challenging to understand. Attend a company presentation and talk to your sponsor until the details are clear enough to support your decision making.
Here’s the deal. The majority of MLM compensations plans are really not hard to understand if you take the time to figure it all out on paper.
And, remember, you only need to know the details well enough to be comfortable with your decision. Forget all of the fancy terms and industry jargon. Don’t be concerned about fully understanding all of the details. Instead, sit down with your potential sponsor and figure out what you have to do to recover your initial investment in a relatively short period of time, say 60 – 90 days. Then what do you need to do to get to $1000 a month, $5000 a month, and so on until you get to your income goal.
And remember, just as with your old 9 to 5, money isn’t everything. Do you feel good about the people on your team, the company, and the product? Does either the company or your team have a marketing plan that works for you?
Still, without enough income to support your business expenses, you’ll eventually have to give up. You need a plan to cover your expenses until you generate at least a break-even income and have a plan and budget for marketing and advertising until you get there.
So, commissions earned for your personal production could make or break your business.
One other thing to consider when comparing MLM compensation plans is what happens when you sponsor a big hitter – a person who get in, gets busy and builds an especially huge business fast.
Will you get paid fairly for their efforts or, as in numerous binary programs, do you need to discover a second heavy hitter to balance the effort and get paid?
What it comes down to is that, when you are ready to choose a company from among your short list of finalists, you really have to compare their compensation plans side by side to figure out which is going to work best for you. That brings us back to your goals. You know why you want an MLM business, now it’s up to you to decide which of these firms can help you achieve your monetary and business goals.
For more information about selecting the best MLM opportunity for you, check out my earlier post entitled What’s the Best MLM Business Opportunity.
