I’m also convinced that the decision must begin by knowing what you want from your MLM software as well as the technology support team behind it.  And the best way to know what you want is to define your requirements before you choose which software solution is right for you.  Consider these points:

• MLM software programmers are smarter than most people I know.  But don’t forget that they are programmers, and many do not have the real-life experience that comes from running a company.  They’re analysts, generally speaking.  And doggone smart.  They’re the guys and girls who tell the computers what to do.
• If you don’t know what you want from your operation, the software you select will tell you what you want.  Then, as you learn more about your business and MLM best practices, you’ll find that there are better ways to do things, and you will want to refine.  Those refinements will cost substantial sums, many of which can be avoided by knowing what you want before you jump in.
• The smart people who program MLM software understand their applications, and many are as creative as can be.  But it’s not fair to expect that they will know which settings or custom programming will be right for you.  So, if you ask them for advice, keep in mind that they’ll tell you either (a) what they’ve only been exposed to, or (b) what their software does, and (often for good reason) they will assume that what they have created is the best way to do things.  Naturally, these will become your practices.  Whether or not they are MLM best practices is a different question.
• In the pool of smart MLM software smart people are the REALLY smart people.  These are the rare analysts and consultants who have the uncommon experience from the front-lines of business as well as a keen understanding of how their software is designed.  These ranks include people such as David Siembieda at Thatcher Technology Group, Mark Rawlins at InfoTrax Software, Chris Yadon at NetSteps (Congratulations on 2010 Inc. 500), Solomon McCluster at IDSTC Software, and Tim Transtrum (my younger brother) who has worked with some good and some real bad applications.  At the risk of leaving out some great resources, the point is that as you go about selecting which MLM software will serve your needs, get real close to the REALLY smart people.
• MLM Best Practices become the key to setting up your business rules and making MLM software decisions to support the work flow and fulfillment of those rules.  For help in streamlining the selection and decisions surrounding your business rules, we now offer the new Business Rules and Best Practices Manual.  Created for the big companies, this MLM Best Practices system is ideal for MLM startups, especially for guiding the establishment of the business rules.

MLM Best Practices. Sooner or later, the demands of fast growth will force you toward best practices.

MLM Best Practices, when reflected in your business rules and key decisions, become the surest way to succeed in starting and running a successful MLM company.  There are no shortcuts, but if you’re willing to do the work and pay the price at the beginning, you’ll reap the rewards of a bountiful harvest.  Selecting MLM software can be haphazard and subject to luck of the draw, or it can be a clearly defined, stepped-out process, based on the right practices, tested and proven in the trenches.

For help with these topics, give us a call.  Call or email and see if we really answer!

• MLM Best Practices
• MLM Consulting
• MLM Legal
• Launch Blueprint
• Project Management & Support
• Full-Service MLM Consultants
• MLM Startup Capital
• MLM Software

MLM Software

For decades, we’ve provided MLM Software guidance as an objective MLM consulting team.  Since we do not accept commissions for referrals, our advice comes right from the heart and head, not from the pocketbook.  Whether the needs are Downline Software, MLM Party Plan Software, Self-Replicating Websites, Website Replication Software, Replicating Website Software, or network Marketing Software, we know the players who do a good job.  Party plan and downline software can be the difference between explosive growth and fast death.  Choose wisely.

MLM Legal

Co-founder Terrel Transtrum is a licensed attorney and is highly networked with MLM Attorneys, MLM Legal Teams, and MLM Law firms specializing in the intricacies of MLM legal issues, regulations, and the ever-changing tides of legislatures and courts.  With the proper law firm consulting, you not only sleep better but you also save aggravation and money when fast growth sets in because you are handling legal matters correctly from the start.

MLM Consulting

For over two decades, we have provided comprehensive MLM Consulting, and as insiders in the direct selling profession, we understand not only MLM Legal issues, but we care about the MLM Community.  We have learned that it’s true, “a rising tide lifts all ships.”  Our long-standing membership in the Direct Selling Association (DSA), and recent recognition of the 2009 DSA Partnership Award by co-founder and MLM Consultant Terrel Transtrum and ServiceQuest, are indicators of our stability and commitment to excellence in MLM Distributor Service and MLM Best Practices.

We provide relevant solutions, business rules, and best practices for MLM Software, Comp Plan Design, MLM Marketing Systems, MLM Business Plans, MLM Merchant Accounts, MLM consulting and legal review.  Our growing archive of articles and posts is intended to provide the best MLM resources for startups at no cost.  We know how difficult it can be to raise capital for starting and running a successful MLM business.  That’s why we’ve devoted our careers and resources to helping.  We succeed when you succeed.

MLM Compensation Plan Design

There are only a few differences between good MLM companies and the best MLM companies.  One will always be found in the MLM compensation plan.  Properly designed on a bedrock understanding of behaviors, specific company culture, product mix, and market response, a good comp plan can make all the difference.

For a free consult, contact us.  We’re fast to respond because success will not wait for you.

1.  The presenters genuinely deliver value.

As MLM consultants we advise our clients what to watch for and what to expect from an MLM startup conference:

• Expect “meat” on the “bones,” not just “bones.”  For example, if a presenter asserts that there are numerous legal pitfalls to avoid, expect the issues to be listed and top-level solutions offered.

• Think in terms of actionable information.  Principles and concepts are important, and so are pragmatic, actionable steps that you can take home and implement right away.  Especially for MLM startups, we recommend a “good, better, best” approach as they move to action on each item of their launch checklist.

• Take responsibility.  When all is said and done, you’re the one who is responsible to get the learning and then go apply it.

2.  The MLM seminars are not veiled sales and marketing conferences.

Justice Potter Stewart of the United States Supreme Court is famous for his expression that hard-core pornography is hard to define, but “I know it when I see it.”  The same standard holds for those who spend money on registrations, travel, and accommodations to attend an MLM conference but get hustled to buy goods and services.  They just know the good presenters from the tacky hustlers when they see it.

3.  The outcome of your attendance is a much clearer understanding of what you must do, and how you can do it.

If you get nothing more from an MLM startup seminar, be sure to learn everything you didn’t know that you should know.  In the end, it comes down to your level of trust and confidence in the individual presenters and the overall feel of the startup conference.

MLM Attorneys

The building blocks of successful MLM companies consist not only of the compensation plan, business rules and best practices, products, MLM software, marketing, recruiting, training, and branding, but also a careful handling of the legal issues that face all startup MLM, home party plan, and direct selling companies.  The unknowns that lurk are the issues that a proven, battle-hardened MLM Lawyer, MLM Consultant, and MLM Software Provider can work together to identify.  They will help you to learn the right questions and guide you to making the best decisions that will pay huge dividends in coming years.

You’re not alone if you worry that “I don’t know what I don’t know.”  Working with an experienced MLM attorney and legal team will make all the difference.

It’s been our sad experience that most new startup companies begin by selecting an MLM software to track sales and compute commissions, resolving that they will look into the legal aspect of their business once they are launched.  Days quickly turn into weeks and months, while the legal environment in the United States, Canada, and worldwide constantly evolves and changes.  New laws, rulings, and regulations (from FTC to SEC, from FDA to Attorney General, and from ministries to agencies) are constantly woven into the direct selling fabric.

MLM Law Firms and MLM Legal

The Legal Firms, MLM Lawyers, and Attorneys we interact with almost daily are the best on the planet.  They are called on by governments and legislatures to advise in drafting laws that protect their citizens while still allowing direct selling and MLM companies to operate within their borders.  They have connections in the state and federal offices that help to keep legal “mole hills” from becoming mountains that often destroy companies.  And they devote their time and talents to clients who look to them for expert legal guidance.

We guide you through selecting the best law firm, attorney, or legal team.  We keep your information highly confidential, and we honor the attorney-client privilege as we refer you for legal assistance from lawyers that contribute to a legally sound MLM business.  Even if you are not our client, we will gladly refer you to one of our approved legal associates who will provide you the best legal assistance for your situation.  Since we do not accept referral fees, we are able to assure you of our highest commitment to being objective and providing you with straight talk, help you to sort out which issues to discuss with your MLM legal team, and help you to set budgets and choose the MLM lawyers that will work for you.

On the topic of MLM software, I decided to devote an hour to update my list of MLM software providers.  What I found blew my mind.  I used some of the following search terms to see what would turn up:

• MLM Software
• MLM Startup Software
• MLM Plan Design Software
• Party Plan Software
• MLM Business Plan Software
• Home Party Plan Software
• Free MLM Plan Design Software
• MLM Software and Party Plan Software

To my amazement, and possibly  to yours, as well, I stopped counting at several hundred MLM software companies, with the growing conviction that I would find hundreds more should I continue clicking through to all the MLM software links.  What amazed me even more was that upon clicking through a few links, I learned that these folks claim they have served thousands of clients.  Each.  I stopped after a few minutes and backed up.  Between just two of the hundreds out there, these are some incredible claims.  Now my purpose in sharing this little bit of “head scratching” is to try to convince the needle on my B.S. meter to quit dancing; but the purpose is mostly to put a perspective on the importance of carefully selecting the right MLM software for your enterprise, and then starting by defining business requirements instead of leaning too heavily on the MLM software team to define the requirements for you.  I’ll address MLM software requirements in future articles and MLM blog posts.

Unexpected Findings From my One-hour MLM Software Research

Now, what I’m about to report from my MLM software web research is likely to be true, and I’m the first who will send congratulations.  I’m the kind of person who commonly takes things at face value, especially from those I have no reason to doubt.  I know Mel Atwood (only casually), and he looks me in the eye.  And people I trust say good things about him.  That’s good enough for me.  I don’t know the folks at MLMsoftware2000, and I’m going to do more to change that, because I want to learn how they do what they say they are doing.  And, they may have a solution that we can offer to our MLM startup clients.

But the math doesn’t add up.  And what’s more, I’m feeling a little stupid for not having heard of the vast majority of these MLM software companies that Google finds when I search for MLM software solutions even though I’ve been in main stream MLM since 1988.  Where have I been?

For example, MLMsoftware2000 comes 4^th entry pn page 1 of Google when I search, “MLM software.”  Clicking through, the website reports that this particular MLM software developer has served thousands of clients, and has been developing MLM software for more than 30 years.  Break it down.  Let’s say that the number is 2,000 (“thousands”) clients.  Dividing this number by 30 yields about 66 clients per year.  Assuming an even distribution throughout the year, that’s just over 1.2 new clients per week.  For 30 years!  How do they do it?  And where have I been when it comes to their MLM software?

The coveted number 1 link that comes up in Google when I search MLM software goes to Mel Atwood’s site, YourSolutions.  I’m a big fan of Mel Atwood.  He’s a marketing genius, and people I trust speak respectfully of him.  We’ve not had the opportunity to work together, but I am in awe of his breadth of offerings, including MLM software and the MLM consulting that he provides.  His website states “hundreds of active clients,” and “thousands consulted.”

MLM Consultant Consulting

It’s time for me to pay Mel for some MLM Consultant Consulting!  In our MLM consulting work, we go morning until night guiding our clients through business rules, best practices, and distributor service coaching, and it’s all we can do to have worked with just over 300 companies since 1988, 22 years.  Again, I’m not saying it can’t be done.  I need a serious lesson on how to scale my business growth.  But again, break it down.  And in Mel’s case, his website says that including (or perhaps addition to?) the MLM software, he has worked with “well over 2,500” different MLM companies since 1997.

These are some amazing, almost super-human numbers, and I’m sincere when I say that I welcome an opportunity to learn how to do this.  Three conditions: (1) I have to be able to maintain my sanity, (2) I must stay married, which means at least Friday nights with my wife, and (3) my clients must continue to have a memorable client experience.  As an MLM consultant, a profession that includes MLM software consulting, I’m once again going to run the numbers.  The results of Mel’s numbers are simply astounding: 13 years (1997 to 2010) and “well over 2,500” companies, we’ll just use 2,500.  That’s 192 new MLM’s per year, or right around 4 new clients per week.  I’m scratching my head because I know how much time and energy goes into delivering quality consulting and guidance through the delicate MLM startup-up stages.  I’m definitely going to Mel with my hat in my hand and see if he’ll share some of the secrets behind his success in MLM consulting and MLM software.

If this comes across as disparagement, that is not my intent.  Perhaps a little tongue-in-cheek, but not disrespect.  I’m going to get my butt in gear and pay more attention, and I here and now renew my commitment to really understand how to share more of my passion and MLM consulting expertise with more of the MLM companies out there, especially those looking for MLM software.  And this all started by simply Googling the phrase, “MLM Software.”

Debt financing is an interest-bearing loan, the cost of which has no direct relationship to your business’s sales, profits, or future growth.  Instead, the cost of money is determined by the terms of the loan – interest rate and term of the loan.  Equity financing exchanges ownership for capital.  The investor looks for a future return through ongoing participation in profits and the eventual score that may come to them when the company goes public or is acquired.  For instance, the Home Party Plan company Silpada started from idea, and with unwavering commitment to quality, ken focus on its market niche, and relentless and tireless persistence, it became a small empire that AVON reportedly purchased for $650 million in cash in 2010.   In the current economic climate, we have seen some interesting and creative arrangements involving mixes of debt and equity as funding for MLM.  Thus, especially in these challenging times, debt and equity MLM funding are not mutually exclusive.

Here are some of the more common sources of MLM capital that often fit the MLM funding strategies:

Internal financing. In your business planning and in running your business, don’t overlook four important sources of internally generated capital for funding MLM growth.

• First, make sure you collect your accounts receivable (your income) as quickly as you can.  For MLM funding, this is routine except in a few rare models where the product / price mix demands financing arrangements (such as Enagic water systems or Quantumwave health lasers).
• Second, optimize trade credit by seeking out vendors and suppliers who will give you the longest possible payment periods.
• Third, improve your inventory turnover and MLM forecasting.  Simply stated, inventory that sits in the warehouse is not earning anything and is tying up cash.  Inventory that turns over more rapidly ties up less money and generates income more quickly.
• Fourth, consider leasing versus buying and subcontracting tasks versus doing things in-house.

Private investors. You can approach people you know very well to request starting capital for MLM, and even those you might not know as well, to invest money in your business.  Investors may be passive or active.  Passive investors desire less involvement in the day-to-day operations of the business, whereas active investors desire more involvement in the day-to-day operations of the business.  Private investors are almost always equity financers, although sometimes your arrangement with them will also include debt financing.  In our adventures to assist with MLM growth analysis and helping clients obtain funding for MLM startup, we have seen deals that involve equity and debt in the following basic model:

• The client attracts startup capital for MLM by offering equity
• The investor responds by requiring a controlling interest
• The client offers these conditions: (a) controlling interest of 51% of which 26% or 36% or even 46% is returned to the client upon (b) the timely achievement of growth and profitability milestones, and (c) repayment of the amount funded, without interest.  In essence, the investor’s risk is both covered as well as compensated, and they remain a stakeholder but hand back control as the company proves its capabilities.  For more insights and strategies, including a thermo-nuclear, ironclad Private Placement Memorandum (PPM), contact us at the LaunchSmart offices.

State and Local Development Agencies. Your state government, local community, and universities may have economic development or business development organizations who may provide MLM budgeting, MLM budgeting services, MLM financial analysis, and MLM growth analysis in support of obtaining startup capital for MLM.  These organizations can be an excellent source of information for locally available low-interest loans and even business grants for those looking for help on how to fund and MLM startup.  Sometimes these organizations actually manage their own investment funds

Commercial Bank Loans. Commercial banks offer several types of loans, although today’s climate has chilled support of MLM funding and MLM startup capital:

• Lines of Credit – The bank makes available a certain amount of money.  You draw out funds as you need them.  Interest is generally charged only on the funds drawn.  Sometimes the bank requires the line of credit to be periodically paid down or even paid off (for example, once a year), after which the line of credit can be used again.  We are finding the best scenarios here are when the company has a track record and the funds are secured by inventory and assets with ample revenues and margins to keep the bankers comfortable.  It’s a tough game, although some still play it in support of MLM forecasting and funding.
• Straight Commercial Loans – The bank loans money for a period of less than 90 days, after which the complete loan plus interest, is repaid.
• Character Loans – The bank loans money for a short-term, and the loan is unsecured.  These loans are generally made only to individuals or companies of high credit standing.
• Collateral Loans – These loans are made to individuals or companies who give security in the form of real estate, inventory, or other assets.
• Bank Credit Cards – Although not thought of as such, the bank credit card is a source of funds.  Credit cards generally carry relatively high interest rates and should be used only for small amounts of money to be repaid quickly.
• Term Loans – A term loan is a business loan with a maturity of not less than one year and usually no more than ten years.  Interest rates can be fixed (set for the life of the loan) or variable (vary tied to some index like Treasury Bills) and payments are made monthly.  Sometimes lower monthly payments can be negotiated with a “balloon payment” (paying off a lump some) at the end of the loan.
• Leases – More MLM and Home Party Plan companies are turning to leases for hard assets such as office furnishings, fulfillment and warehousing equipment, hardware, and even software.  A good example is eLease (www.elease.com) who leases from $5,000 to hundreds of thousands of dollars.

When pursuing any of these sources of funding an MLM startup, a professionally prepared business plan is a vital tool to inform the lender or investor of your credit worthiness.  Most will want to thoroughly review your business plan prior to making a lending or investing decision.  If possible, try to arrange for an oral presentation to accompany the presentation of your business plan so you can communicate your passion and vision for the business.   It is important to realize that many investors and lenders will be initially skeptical of network marketing or party plan concepts, and must be educated as to the viability of your MLM business model as they consider providing funding for the MLM startup.

• MLM funding
• MLM startup capital
• MLM budget services
• MLM forecasting
• MLM budgeting and MLM budget services
• MLM financial analysis
• MLM growth analysis
• Starting capital for MLM
• How to fund an MLM startup
• MLM raising capital
• Other similar requests

There is indeed a high degree of interest and hope centered on the topic of, “where do I obtain the necessary financial backing to start and operate a successful MLM enterprise?”

To these questions, we offer insights and encouragement.  First, the encouragement.

From mid-2008 until today, we have seen the single biggest surge in the history of MLM startups.  We’re believers in the entrepreneurial spirit that drives the brave men and women into the front lines of battle.  People are starting strong MLM companies, and they are succeeding!

One of our clients launched in January of 2010, and within 90 days, they had achieved more than 2,800 enrollments into their monthly autoship program.  If you consider that most attain breakeven at our around 500 to 1,000 active accounts, you can only imagine the great relief and confidence that this company already enjoys.  And, they attribute much of their success to thoughtfully and effectively arranging the necessary MLM startup capital.  This came as a result of rigorous MLM forecasting, MLM growth analysis, and careful attention paid to how to fund an MLM startup.

We can barely keep up with the vision and determination of so many brave and visionary souls who are tireless in their MLM budgeting and MLM forecasting which assure that they have sufficient MLM funding.

Second, allow us to share some of the important insights we have gained in the journey.  In creating your forecast for MLM funding, start by giving very careful thought to the growth model, including the assumptions behind behaviors that drive MLM growth.  Since the sales model is completely dependent on the results achieved by your voluntary sales force, it follows that a close analysis of the behaviors will be the key to forecasting MLM growth and financial demands.

Thus, here are some the key considerations for MLM growth modeling and MLM financial forecasting:

• What percentage of distributors will join your company simply to be able to obtain a favorable price on the products and services?

• Of those who join, what percentage will introduce 1, 2, 3, 5, 8, 13, and 21 new customers and other distributors to the company?

• What attrition percentage will you apply to your MLM growth model?  From all our years of researching retention trends, we offer a basic rule of thumb:  for Home Party Play Companies (such as Pampered Chef), distributor retention is 40% per year.  This means that of 100 distributors who join in January, 40 will still be active in December.  For MLM retention, the norm is 20%, for hosts of reasons we will explain in other articles and seminars.

In my next blog, I will share the “not-so-secret” secrets of how to raise capital for MLM startup.

Question: Hi, Terrel. On average, how many distributors can one person in Distributor Support take care of? Backing into this question, how many support personnel (CSR-1 or CSR-2 as defined in your Customer Service Duties document) will we need if we go live with 200 – 300 distributors? MB, Colorado

Answer: A typical day for an MLM Contact Center CSR (Customer Service Rep) is 35 to 65 calls. I keep a short list of superstars who produce 85 to 120 calls daily, but they are rare and special people who hold the key to a special place in my heart. When an MLM contact center is humming, the average call time for a senior CSR is 6 minutes (10 per hour) with 1.5 to 2 hours for projects and promised follow-ups (in an 8-hour day); for a company that sends order and enrollment calls to one CSR group and advanced business calls (commissions, policies, etc.) to an advanced CSR group, the order entry calls are in the 4.5 minute average and the senior CSR calls are about 6.5 minutes on average.

At a larger scale, and depending on variables described in the ServiceQuest MLM contact center Staffing Analysis Tool, much depends on the company’s technology team, the marketing team, and those who often create the problems about which people call. These range from the CEO who announces something without thinking through a lot of details (so distributors end up calling customer service to get the rest of the story), to the more disastrous episodes of checks getting stuffed into wrong envelopes, etc.  So, as in some “Terrel” answers, the answer is, “it depends.”

With a few hundred MLM distributors, you can set a very strong precedence by (a) treating them as royalty, so that when they call, we assume they are solving many of the problems they encounter and that they really need our help; (b) we consider shorter hours than big companies, simply so that we don’t have to staff extra just to cover the start/stop times each day (for example, and 8 to 5 schedule at first creates a 9-hour target that we can later expand); and (c) we adopt the 2-step from the start: STEP 1, solve the immediate problem for the caller while we have them on the phone, and STEP 2, figure out what is broken or how to improve training and field communication, and cut down the future calls by fixing things.

The simple answer is that with 200 to 300 distributors, if you’re doing some good distributor training (so they don’t have to call in for training-related support), you can confidently launch with 2 overlapping CSRs. If you have a manager who also works on operations but who can take calls in overflow, escalations, and lunches, you’ll give yourself important space to expand as calls ebb and flow. Then keep track of the daily metrics and cost per contact (don’t forget to track email volume and handling time).  Keep your metrics simple at the beginning.  Start by measuring how many calls and emails you receive, average length of time to handle calls and emails, and hold times.  Then break it down for each employee.  As you expand, you will also start measuring call types, hold times, average answer times, and the more advanced metrics that help you to refine efficiencies and keep costs on budget.

In my experience, MLM Startup companies wait to start measuring until they have the right equipment, or the right software, or more experienced people, or more sales . . . but the best time is to start at the very beginning by capturing and reporting the 3 key metrics.  When performance is measured, performance improves; when it’s measured and reported, improvement is faster; when performance is measured, reported, and rewarded, improvement is optimized.

If you have a question for the MLM Startup Specialist, send it to terrel@launchsmart.com.   The Staffing Analysis Tool is available to LaunchSmart clients as part of their MLM Startup support services.

• Get in touch with views and opinions of the leaders in MLM and direct selling
• Learn cutting-edge practices from the front-lines of MLM and direct selling
• Develop startup teams that can meet the challenges of MLM launch and fast growth
• Get access to the resources that shorten learning and implementation curves
• Get personal coaching by the top authorities in starting and running successful MLM and Party Plan businesses
• Receive the latest news and views in MLM and Party Plan issues, opportunities and trends
• Study and apply the distributor service organizational competencies
• Get the resources for training and energizing front-line reps
• Stay informed on best practices

Every MLM company, whether new or established, must be aware of its responsibilities for sales taxes.

In recent years, state and local jurisdictions have become increasingly aggressive in the sales tax area through both legislative changes and enforcement. The likelihood of being audited has increased.  MLM and Party Plan companies must know, understand and comply with the various state sales- and use-tax laws.

Currently, 45 states, the District of Columbia and more than 7,500 local jurisdictions (counties, cities, etc.) impose a sales tax.

The majority of these local taxes are collected by the respective state. But approximately 300 are “self administered,” and if an MLM company will collect the sales tax it must register with the jurisdiction itself.

Sales tax rates are subject to constant change, and vary state by state and even within most states that have local jurisdictions imposing a sales tax.

Exemptions vary from state to state; currently there is no uniform definition of exempt products, services or entities among the states. Some of the more common exemptions among the states are for food products; dietary, food and nutritional supplements; vitamins; and clothing.

With the enormous number of taxing jurisdictions, determining the correct sales tax for your MLM and the complexity of filing numerous returns and making payments, dealing with states and localities with inconsistent laws and administrative procedures, and handling audits is a substantial compliance burden.  Regardless of the burden, an early decision to be a good corporate citizen as an MLM company by collecting and paying the sales tax on behalf of independent representatives will pay dividends for many years to come.