For network marketing and party plan / MLM

By Terrel Transtrum, Co-founder LaunchSmart™

The MLM strategic plan lays the foundation for the MLM business plan. The value of a MLM business plan is not measured in dollars, although many attempt it. The value is in the decisions it influences, and ultimately, how much money is in the bank as a result.

What Makes a Good Business Plan?

A good MLM business plan is actually part of a process. Some qualities in a good MLM business plan make it more likely to create results and these are important. The better practice is to see the MLM business plan as part of the whole process of achieving results, because even a great plan is wasted if nobody follows it.

A party plan business plan will be hard to implement unless it is simple, specific, realistic and complete. Even if it is all these things, a good plan will need someone to follow up and check on it.

The plan depends on the human elements around it, particularly the process of commitment and involvement, and the tracking and follow-up that comes afterward. Let’s look at the qualities that make the plan itself better or worse.

Start with the Basics: What is a Business Plan?

A business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities. Business existed long before computers, spreadsheets, and detailed projections. So did business plans.

Unfortunately, people think only of business plans first for starting a new business or applying for business loans. They are also vital for running a business, whether or not the business needs new loans or new investments. Businesses need plans to optimize growth and development according to plans and priorities.

What is Most Important in a Plan?

In creating a plan for a startup MLM company, focus on the cash flow analysis and specific implementation details.

• Cash flow analysis is both vital to a company and hard to follow. Cash is usually misunderstood as profits, and they are different. Profits don’t guarantee cash in the bank. Lots of profitable companies go under because of lack of cash. It just isn’t intuitive. It must be planned and understood. A cash flow analysis examines the inflow and outflow of cash and the timing of when that occurs.
• Implementation details are essential because that’s what makes things happen. Your brilliant strategies and beautifully formatted planning documents are just theory unless you assign responsibilities, with dates and budgets, and then regularly and consistently follow up and track results. Business plans are really about getting results, improving your company. The tactics and programs from your strategic plan provide an important starting point.

Is There a Standard Outline?

Your plan depends on your specific situation. If you’re developing a plan for internal use only, not for sending out to banks or investors, you may not need to include all the background details that you already know. Description of the management team is very important for investors, while financial history is most important for banks. Make your plan match its business purpose.

There are predictable contents of a standard MLM business plan. For example, an MLM business plan normally starts with an Executive Summary, which should be short and interesting. People almost always expect to see sections covering the Company, the Market, the Product, the Management Team, Strategy, Implementation and Financial Analysis.

If you have the main components, the order doesn’t matter that much, but here is the order that we suggest:

1. Executive Summary: Write this last. It’s just a page or two of highlights.
2. Company Description: Legal establishment, history, start-up plans, MLM legal, etc.
3. Product or Service: Describe what you’re selling and your unique value proposition. Focus on consumer benefits and distributor incentives.
4. Market Analysis: You need to know your market, customer and distributor needs, where they are, how to reach them, how you will exploit the trends in direct selling, etc.
5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results. Address MLM software, MLM legal, party plan compensation, network marketing operations, etc.
6. Management Team: Describe the organization and the key management team members.
7. Legal Plan: Address the legal environment for direct selling and how you anticipate meeting the regulatory requirements through your Field Policies & Procedures, Distributor Agreement, and State Registrations
8. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables and reports.
9. International Plan: If your plan calls for a global network marketing reach, make sure to address the fundamentals associated with the roll-out and ongoing operation on foreign soil.

Successful Implementation

Successful implementation starts with a good MLM business plan. There are elements that will make a plan more likely to be successfully implemented. Some of the keys to implementation include:

1. Is the plan simple? Is it easy to understand and act on? Does it communicate its contents easily and practically?
2. Is the plan specific? Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible, and specific budgets?
3. Is the plan unique? Does it address the unique characteristics of the direct selling profession? Does it adjust for many of the known cycles and unknown contingencies that are peculiar to Party Plan and Network Marketing companies? Is it consistent with the best practices in MLM companies?
4. Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Nothing stifles implementation like unrealistic goals.
5. Is the plan complete? Does it include all the necessary elements? Requirements of a business plan vary, depending on the context. There is no guarantee, however, that the plan will work if it doesn’t cover the main bases.

MLM Business Plan Checklist & Key Considerations

• Do we have a basic MLM business plan and budget?
• Do we have inventory and growth projections?
• Do we have financial projections?
• Is the MLM compensation plan competitive?
• Have we secured sufficient capital?
• What type of business will we form (Corporation, S Corporation, LLC, etc.)?
• What MLM software will we use for business accounting and inventory control?
• What type of business insurances will we need?
• Will we use MLM software? Party Plan software?
• Do we have a basic business plan and budget?
• Do we have inventory and growth projections?
• Do we have financial projections?
• Have we secured sufficient capital?
• What outline will we follow and can we expand on existing content?
• Do we want to create our own from scratch, or would an MLM business plan template speed things up?

David Taylor and Terrel Transtrum are co-founders of LaunchSmart™.