The MLM Business Plan

The MLM business plan sets a proper foundation for funding and launching your new venture. 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 MLM 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 good 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 that surround it, particularly the commitment, involvement, and the tracking and follow-up that comes afterward. Let’s look at the qualities of an extraordinary plan.

Start with the Basics: What is the MLM Business Plan?

The business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for challenges 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 loans or investments. Businesses need plans to optimize growth 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 but 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 these occur.
• Details and checklists are essential. Brilliant strategies and beautifully formatted planning documents are only theory unless responsibilities are assigned, with dates and budgets, and then monitored. Business plans are really about getting results and improving your company. Tactics and programs from your business 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. Structure your plan to match its business purpose.

Standard contents exist in the MLM business plan. You are presenting business cases for direct selling, your products and services, and your own vision.  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 entity, history, start-up plans, MLM legal, etc.
3. Product or Service: Describe what you’re selling and your unique value proposition, with emphasis on consumer benefits and distributor incentives.
4. Market Analysis: Demonstrate that you know your market, customer and distributor needs, where they are, how to reach them, and how you will exploit the trends in direct selling.
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: Introduce key management team members and organizational strategy.
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. Below is an excellent checklist of questions to guide implementation of the plan:

1. Is the plan simple?  Does it communicate its contents easily and practically?  Is it easy to understand?  Are next steps and action items specified?
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 make a case for direct selling? 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.

The 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?

LaunchSmart specializes in helping you write the MLM Business Plan and placing your ideas for consideration by funding sources.