MLM Start-up : Where and What Are The Risks Involved?

MLM Start-up : Where and What Are The Risks Involved?

The high initial costs for setting up your MLM business in the initial phases is the investment costs.  Although network marketing is still lower than other traditional industries, particularly due to the nature of the potential that it has, we still see that the starting capital can be a challenge to many people who are venturing into this business.

Although many MLM companies have low entry point for new members, the extra-ordinary expenses that arise still pose as major obstacles for people who want to start doing business in this industry.  Obviously this appears to be an advantage at the first instance, as it brings a message how that the risk involved is very low, however, this is not necessarily the trust because what they forget to do is to inform you about the amount of time you will be investing into getting your new business start running and making profits.

The other very important is the MLM company itself.  You have to be very well informed as to the viability of the company.  If the viability of the company is questionable for you because you are seeing that it’s a driven pyramid scheme or money scams type of company, then its time that you seriously review whether you want to join the company notwithstanding this very important information which you have found out.

Possible Company Collapse:

You need to consider what will happen when the company collapses tomorrow, and you do not have access to your funds, simply because they have a payment system, which maybe is based on 30 days, 90 days etc.   When and if this happens, members are often left with nothing to show for it and have to either cut their losses or move onto something else, or start again with another MLM company.

You want a company that offers direct payment into your account without any diversions, no waiting period and also should something go wrong you do not have of your money outstanding because of lack of transfer of payments.

As an experienced MLM marketer, you will know just how valuable time and energy is especially in starting up new programs all the time. Not only are you damaging your reputation as somebody constantly hopping from one program to the other – gives your prospects somewhat an uncomfortable feeling of insecurity.


You need to find a company that your invested money and time will bear fruits, which you are financially liquid and able to meet, pay your bills and not driving you into debts.  You want to avoid getting into with scams or pyramid type of MLM companies that the only people that are benefitting are the ones at the top and that on the backbone of their downlines.

The real risk in the market is lack of sufficient knowledge which you need to have before you jump into one of those scams that I have seen being marketed on social media sites alleging that you only need to pay $5 to make a millions of dollars.  Joining such schemes can only mean that you have not done your homework enough to be able to remove the bad apples from the good ones.


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11 Responses so far.

  1. Great post. I typically do not join a company that is younger than 7 years old, that helps decrease the possibility of company collapse. As with any business there will be start up costs. If you are serious about your business you will be willing to invest in it! You must invest for success!! I look forward to your next post!
    Margaret Wilson recently posted…How To Overcome The Fear of Failing In Network MarketingMy Profile

    • admin says:

      Hi Margaret,
      This is really a good tip to look at the age of the company because this is one way of avoiding joining companies that maybe designated to collapse. Thanks for visiting and leaving your valuable comments!

  2. Michael says:

    Hello Elizabeth,
    A lot of MLMs are coming under heavy fire from their credit card processors as well as politicians. But this is truly great advice all around. You want to get into an MLM that is more of a “sales” based position rather than a pyramid. These do exist, and offer the greatest benefits by far.
    Michael recently posted…Phases of the HCG Diet PlanMy Profile

    • admin says:

      Hi Michael,
      That is true and good that the law is keeping above the game when it comes to pyramid building type of companies who are only out to destroy and ruin the reputation of the network marketing industry. Thanks for leaving your comments here!

  3. BG Jenkins says:

    Hi Elizabeth,

    This is wise advice all around. You point out about compensation policies and how they may tie up your well earned commissions, that is not something that most people would be patient enough to wait on. A strong company with proven methods seems to be the best bet. Great post.
    BG Jenkins recently posted…Passion’s PearlsMy Profile

    • admin says:

      Hi BG
      That is very true, winding up in a company that will waste your time, money and energy is really bitter! Thanks for leaving your valuable comments here!

  4. Phil Sanko says:

    Hi there Elizabeth,
    Great article! I liked that you pointed out the “$5″ start-up cost companies. I would never join a company that promised millions for only a $5 entry fee… that sounds a little sketchy. Due-diligence is HUGE when selecting a network marketing company and you layed it out perfect in your article.

    Thanks for sharing the info!

    -Phil Sanko
    Phil Sanko recently posted…5 Steps For Day One In Your MLM BusinessMy Profile

  5. Tom Coleman says:

    Hi Elizabeth,
    Great post. Attraction marketing and You, Inc are critical to success because MLM’s sometimes come and go and so many marketers switch companies seeking success every 90 days. One of the main things that drives success in MLM is product development and sales. When you have an affiliate program that pays 100% commission directly into your account, it relieves the pressure to create products and increases your probability for success in MLM.

    To Your Success

    Tom Coleman recently posted…MLSP 5 Fast Start TipsMy Profile

    • admin says:

      Hi Tom,
      Yes that is really true and more so there is no more complications that the money is going via another company so that your money is aways safe in your account! That is why I really like Empower Network and its concept!

  6. Hi Elizabeth,

    Doing strict due diligence separates contenders from pretenders.

    Of course, nothing in life is certain so an MLM can fold at any time. Gaining confidence in a company can certainly help you make the proper choice, and live with the fact that companies do come and go.

    Overall, if you are willing to see yourself as giving yourself a chance instead of taking a chance, you are all set ;)


    Ryan Biddulph recently posted…Utter 5 Words to Take Your Home Business from 0 to 60 FastMy Profile

    • admin says:

      Hi Ryan,
      That is absolutely true and well said! We need to give ourselves a chance instead of taking the chance! Thanks for leaving your comments here!