It’s no secret that Canadians are moving toward modern career models of owning a business and moving away from the more traditional career paths of the past. It has become very easy for aspiring business owners to start a Multi Level Marketing (MLM) business that gives them more flexibility to create a lifestyle that they love, and a way for them to build relationships within their community.
If you are wondering how to start a business with Multi Level Marketing, or you want to learn more about this business, you are in luck! This article will give you background information on MLM as well as the steps to starting a business.
What Is a Multi-Level Marketing Business?
Multi Level Marketing (MLM) is a networking and referral marketing strategy for the sale of products or services. MLM has 3 distinctive features:
- Income is earned when a product is sold or when commission is earned from the membership system
- Products are directly sold to customers (end-user) by means of relationship referrals or word of mouth marketing
- The purchases of a startup kit and membership are required in order to become a sales representative
What Are the Benefits Of Starting a Multi Level Marketing Business?
- You can earn income through socializing and networking
- You can easily balance work and family life
- It is flexible
- If you have participated as a customer for MLM, or know someone who has sold these business products, your experience will be a huge asset
Studies Show the Desire Of Becoming a Business Owner
A study by the University of Carlton surveyed 1,600 adults under the age of 30 and found that 65% of Canadians in their 20’s either owned their own business, or wanted to become a business owner. Of the participants who were not currently an entrepreneur or self-employed, 55% identified themselves as wanting to be within the year.
Let’s Get to the Checklist!
Choosing to become an entrepreneur comes with great responsibility, so we have created a thorough startup checklist for you. We strongly recommend that you follow it top-to-bottom so you will feel confident in starting your own business.
This checklist will walk you through 5 items that are essential to starting a MLM business in 2020. These 5 items are:
- Define your business goal
- Create a budget and identify your pricing
- Pre-startup expenses
- Save your paperwork
- Identify your clients
- Register your business
Let’s dive in!
How To Start Your Multi Level Marketing Business
1 – Define Your Business Goal and Decide Which MLM Is Right For You
Most MLM reps have a steady revenue stream from their side job before shifting away from their full-time day job. Quitting your day job right away will not be feasible. You should start your business on the side, and work on your personable branding until it can pay the bills.
Set an overall goal. Determine what the outcome of your side job will be:
- Is MLM a path to earn extra income on the side while raising a family?
- Do you eventually want to become a full-time MLM because of the lifestyle benefits?
- Are you using MLM business as a stepping stone to achieve a different goal entirely?
Determine which MLM business you would like to represent. Here are some of the best MLM opportunities in Canada.
Set short-term benchmark goals for yourself. Make sure these goals are right for you and the progress you want to achieve for your overall goal. Some examples are:
- I will make X amount of income per month
- I will create a client list that will grow by 10% per month, or achieve over 25 clients served within a month
- I can have over 200 followers over the course of 3 months
It is very easy to start as a MLM business, but you will quickly learn the importance of time management while you balance your full-time job and your side job. When you are running your own business full-time and enjoying the lifestyle benefits, it will be well worth the extra hours and hustle!
2 – Create Your Budget and Identify Your Pricing
What to include in your budget
As your business grows you will need to consider your budget. It is best practice to have an idea of what things cost and what you are willing to spend. You need to determine what your monthly expenses are and what monthly income you are comfortable with. While you can startup your MLM business with minimal cost, you may want to allocate additional costs to the following:
- Purchasing a website
- Purchasing a domain name
- Registering your business
- Getting some professional help
How to calculate what you will earn per year
It will be easier to make a realistic budget if you have some idea of what you will be making within the year. It is best practice to not spend more than what you estimate to bring in. Here is a quick way to calculate your estimated income for the year:
- Start with your targeted annual sales
- Deduct the percentage that will be spent to cover product costs
- Deduct costs for the following:
- Business Registration
How to price yourself
It is important to remember that your time is valuable, and so is your work! Price yourself accordingly. Your MLM business will focus largely on the relationships you are building. You might be inclined to give discounts to certain people, especially when you are just starting out. We recommend that you refrain from doing this. It will also be in your best interest to only allow your clients to cancel or reschedule a maximum of two times.
3 – Pre-Startup Expenses and Taxes
While you are working your MLM business as a side job there will be startup expenses such as purchasing products for example. In your first year of business you will likely have a little income to report and a small amount to pay for taxes. Did you know that in Canada business owners do not need to file their taxes until June? The percentage of tax you pay for your MLM side job will depend on the tax bracket you are paying based on your full-time job. This can be as high as 42% of earnings.
It is very important that you keep track of your pre-business expenses so you can save money during tax season. Keep receipts for any startup expenses and use them to deduct against the earnings you made during the year. Download our free Money Saving Guide to help you keep track of expenses you can write off.
Take a look at our past blogs on these pre-business expenses to make sure you are not missing anything when starting your own business:
4 – Save Your Paperwork
Along with saving your receipts for pre-business expenses, you also need to save your paperwork for business item expenses and invoices from any sales you made. In 2019, the Canada Revenue Agency increased audits by 40% in the following areas: meals, automobile gas and repairs, hotel accommodations, advertising, and proper recording on sales tax. If you get audited and do not have the required receipt or paperwork, you will need to pay taxes on those items with interest.
What paperwork to save
- Sales invoices or deposits from sales
- Purchase receipts of inventory
- Purchase receipts for hosting of parties or events
- Vehicle logbook
- Receipts recorded in your bookkeeping program (Xero or Quickbooks)
- All documents related to a business vehicle (insurance and registration)
How to organize and submit your paperwork
Your business paperwork must be saved and maintained without damage for 7 years. It is best practice to
keep all of your paperwork in one place for security and easy access. We recommend that you use an online program such
as Hubdoc or Receipt Bank. Many small business owners also use a drop box or scan their paperwork onto a hard drive.
5 – Identify Your Target Clients
Clients will come to you based on your experience, quality of service, and reviews. In MLM business it is all about establishing trust with your clients. A great starting point is to join local networking groups to get your name and product out there. Once you start seeing referrals, you will know who your target clients are. More often than not, your target clients will be connected to similar groups you socialize or network with. As your network continues to grow, so will your client list. Most MLM business owners see a peek in a full client list in their third year of operations.
There are 3 important questions for determining your target client:
- What type of lifestyle do they live?
- What type of networks do they have?
- What is their taste in products?
6 – Register Your Business
When people start a MLM they often don’t think about the benefits of registering it as a business. Did you know that when operating a home business, you need to be registered with the town or city you live in? Your home operations will need to have a registered business name or be registered as an incorporation, depending on your situation.
Benefits of registering your MLM as a business:
- Tax advantages
- Liability protection
- Branding and professionalism
- Ability to sell the business once it has reached success
- Protection from the Canada Revenue Agency
We strongly recommend that you register your MLM side job as a business. It will not only set you up for success but also protection and security. There are many resources available to you that will walk you through the steps to starting a business, and make registering your business a stress free process.
CorePro8 will give you the tools you need to successfully start and register your MLM side job as a business.
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