About every other day I receive an email about the last best pre-launch MLM opportunity, the deal of the decade. More and more new MLM companies advertise a pre-launch phase to attract their first distributors and it seems to be the brand new pandemic in the network marketing world.

Whether you are currently looking for a MLM company to join or you are involved in one of those pre launch opportunities, keep on reading because this might open your eyes.

Here are the top 3 points that you should consider with respect to a pre-launch phase of a brand new MLM company:

1. There is a 90% chance that a new company will be out of business within its first two years:

As I wrote in a previous article, The Four Main Reasons For Failure in Network Marketing, the #1 reason why people fail in their MLM business is because they get involved in the wrong company. And one key variable to evaluate a company is how long it has been in business.

It is important to know that only 10% of new companies ever make it to their 24th month before going out of business. And if a company is less than 5 years old, statistically the company is still at great risk of going out of business. You need to understand that partnering with a MLM company younger than 2 years old is exactly like putting your money on a high-risk volatile stock.

You should also watch out for new divisions of existing companies and evaluate them by the same time standards as any new MLM company. The reason why the parent company decided to launch a product or service under a new company rather than with its already existing company is often because they want to protect the existing company in case the new division would fail.

The other possibility is you find an existing company which previously did not use network marketing as its distribution model and is now doing so. Again, past experience does not matter. Many successful companies have gone bankrupt when they decided to try to use network marketing in their new endeavor.

As far as pre-launches are concerned, it is important to recognize that on occasion, a fledgling business will use a pre-launch as a way of raising much needed funds to fund the opening of the business. And those funds are in such case provided by unsuspecting new distributors attracted by hype and false promises.

What happens when the company doesn’t raise enough capital to sustain the business? It crashes and burns, and the new distributors lose their investment. My advice is you should never pay money to partner with any company who has not yet officially opened for business.

2. You would have a very hard time building a downline:

First, MLM brand new companies and especially pre-launches attract all kinds of tire-kickers, definitely not the best quality MLM prospects. Some people I know join a new network marketing company every other month. They are not really serious about building a MLM business, and are permanently looking for some get-rich-quick scheme or easy path to wealth. You definitely don’t want this type of people in your downline.

Then, sudden or constant changes by the company’s management during pre-launch phase, for example with the products or the compensation plan, is not a good sign. These so called product enhancements, compensation plan adjustements or improvements are a proof that they are still experimenting and that their business model is not strong enough. This should be a red flag. Your downline would also probably consider quitting because they feel the business is not on the right track. After all, everyone is looking for some security and stability.

3. You could lose your biggest asset: your reputation:

If you join a company in its start-up phase, you have to be prepared for the risk of losing your investment, your customer base, your business. But much worse, your reputation could also be permanently damaged. And people will be less inclined to follow you into another business opportunity if the last one you recommended crashed and burned.

So ask yourself if you really want to risk damaging your reputation on a highly volatile startup just to make some money. Remember your name is your biggest asset, and make sure you don’t make it a liability.

As a general rule, until a company has proven itself by staying in business for 24 months, they should still be considered high-risk, and I would not recommend a pre launch or MLM start up of any type. There are enough reputable companies out there for you to build a successful MLM business without taking any greater risks.

Then, after joining the right MLM company, you will want to learn the secrets that will allow you to sponsor 20+ people per month leveraging the power of the Internet. Make sure you check out Mike Dillard’s Magnetic Sponsoring.

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