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Your number will be unique to your business but for the sake of this blog post, we will assume you require $100,000. What’s next? Raise money!
Now that you have determined your capital requirements, the next step is to raise the money. There are several ways to raise funds. I am going to start with my favorite - the Founding Member program.
The very best way of funding your Multi-Level Marketing (MLM) venture is through a Founding Member program. You can find many people eager to be the Founding Members of a company. This is particularly attractive in MLM as the Founding Members will be well aware of the benefits associated with being at the top of the network.
However, you’ll have to promise them special dispensation and dedicated incentives in addition to inviting them into your inner circle. The main advantage is that Founding Members are not shareholders, and they should never be. They are your team members who have made a small investment in return for a larger than average share of sales.
If you want to use Founding Members as a source of funding, then you should have a proper strategy in place to recruit and motivate them. This strategy should have four key ingredients:
This is an essential part of acquiring Founding Members. You have to make your offer financially attractive to convince the correct caliber of people.
I recommend the following:
1. Set aside 5% of turnover and split it between the Founding Members for a limited period. Twelve to eighteen months is the norm. It is important to remember that your compensation plan will initially pay substantially less than what would be the case for a mature network. The retained commission, known as breakage, is used to fund the Founding Member pool bonus.
2. Pay maximum commission to the Founding Members for the same period. This provides them with an opportunity to earn a substantial commission as they build their team and your business.
Recognition is a major driver for Founding Members. We all want recognition for our contributions, and Founding Members are no exception. The following are some ideas for recognizing your Founding Members:
1. Provide each FM with a badge
2. Give them the top rank in the company for the first period
3. List their names on the company website
4. Have a framed picture of each Founding Member on the office wall
5. Give them special front row seating at all meetings
6. Take every opportunity to show your appreciation for what they are doing for your company
Your Founding Member program could be your single biggest resource for growing your network. It therefore follows that you should incentivise these members with a competition. If you can get your Founding Members to compete with each other you will not only have the required finance but, more importantly, a team of people to grow your business.
Founding Membership is forever, but the rewards are for a season. Make sure your Founding Members understand the parameters of their reward and that you have a signed agreement that determines the duration. When the time comes to terminate their special dispensation, you want to make sure there are no misunderstandings.
Running the numbers
Before you start pitching your business idea and concept to attract Founding Members (FMs), you should know exactly how many Founding Members you are targeting and what they will be required to invest. This is a very simple calculation.
Let’s suppose you need $100,000. Your next step would be to determine the value of a Founding Member. Base your estimate on the value of the offering. Include projected sales and the potential commissions over the predefined period. This will provide you with a good idea of what the Founding Membership is worth and what type of people you should be targeting. What you then need to decide is what investment each member would be likely to make based on your Founding Membership proposal.
Let’s say you have a very low-value offer and you are pitching to a grassroots group. You may find it tough to get $100 out of each member. On the other hand, if you have a high-value offer that you are pitching to a wealthy target market you could easily get $10,000 out of each member. Traditionally you would pitch your membership at a price that most people would be able to afford.
Setting your Founding Member price at $100 will open the offer up to a much larger audience while a $1000 price point would allow you to target fewer high-value individuals. It would stand to reason that a Founding Member who invests $1,000 would expect greater rewards than a person who is spending $100. You therefore need to structure the rewards accordingly. In other words, you can raise $100,000 by recruiting 100 Founding Members who each invest $1000, or 1000 members who invest $100.
With the Founding Member program, you not only get the funding to start and sustain your business, but you also get an army of people with a vested interest in your success. This army will be the basis of your three-step launch strategy.Click the link to check out the amazing NetReady MLM Management Software