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5 Reasons Why Multi-Level Marketing Businesses Fail

Multi-level marketing businesses are a dime a dozen, but few last longer than a year. Many do not make it beyond the first few weeks of business life. Knowledge is a powerful tool in business of any kind, so what does the prolific failure of multi-level marketing businesses teach us about how to make an MLM business succeed?

Many multi-level marketing businesses fail because of a few common problems. Being aware of these potential pitfalls before beginning an MLM business can help your business succeed where others have failed.


A new multi-level marketing business owner needs a great deal of support, guidance and encouragement during the first few months of business ownership. Good multi-level marketing business owners take a personal interest in the success of their new recruits and plan to spend extra time with these fledglings to help ensure their success.

If a new multi-level marketing business owner does not get prompt and adequate attention by a more experienced team member in the upline, they may change their mind or lose their desire to work towards a productive business profit.


Fresh opt-in leads are the lifeblood to any multi-level marketing business. A failure to generate leads means certain failure for your business. Most new recruits are hesitant to approach their friends and family about their newfound business opportunity. If they are unable to generate a list of acquaintances or approach strangers about their business, there will be no sales.


If a multi-level marketing business’ system of promoting products or services is not easy to duplicate, the business is not likely to thrive. Not every person can become skilled enough at wining friends and influencing people to generate enough sales to make the business succeed. The main concept of an MLM business is to sign up more business owners who will in turn create their own succession of thriving businesses. This requires an easy to duplicate system.


Many new recruits are still on the fence about the legitimacy of a multi-level marketing business. They also battle a lack of confidence in their business, communication, leadership and sales skills. This lack of trust and confidence is often conveyed to potential customers and new recruits during business interactions. Large doses of educational materials may help overcome these fears if they are available early enough. Once the excitement of owning an MLM business wears off, new recruits may become bewildered and hopeless unless they receive a fresh direction for their energies. Providing them with concrete skills that they can feel confident about will help overcome this obstacle to success.


Making any business successful takes time. Many new business owners become impatient and frustrated at a lack of progress or slow growth. Dedication, persistence and patience are necessary for the success of any business, multi-level marketing or traditional.

Safeguarding against failure is a wise step when setting up your multi-level marketing business. Proactive planning and education are great tools that can help ensure your business’ success.

Business Purchase Financing

Business purchase financing is one of the major hurdles that both the buyer and seller need to address early in the process. Many deals are not completed because the funding could not be secured. In the current lending environment, banks are more stringent than ever, so both buyers and sellers should be aware of what is needed to successfully secure a lending partner.

An overview of Business Purchase Financing

SBA 7a loans are often used for business acquisitions for transactions that range from $250,000 to $2,000,000. Banks underwrite the loans and the SBA guarantees them. Many buyers think that because the SBA / federal government is guaranteeing the loan that it will sail through. This is simply not the case. Banks will lose money if the buyer defaults, and the SBA has rigid guidelines that the banks must follow. More information on this topic later.

It is difficult to secure business purchase financing for deals below $250,000 and above $2,000,000. For deals below $250,000 buyers usually use home equity, savings, grants, seller financing or combinations thereof to purchase a business. For deals that are above $2,000,000, small M & A deals, the financing structure varies and is beyond the scope of this article. Banks usually will not finance a business unless that business has a documented history of profitability.

A View of Business Purchase Financing from the Bank’s Point of View

What exactly is the bank financing ? Unlike real estate, the bank is primarily financing goodwill which is intangible. The bank is financing an ongoing concern, a income generating operation, that is switching from one owner to another. The transition represents risk to the bank. A business may have been successful under one owner, but that owner is leaving! The new owner could run the business into the ground. Since the bulk of the sales price is goodwill, not hard assets, the bank would be left with very little to recoup any losses. Enter the SBA. Without the SBA these loans would not exist. With this being said here are the concerns of the banks – Cash flow, fixed assets, credit and history of the buyer and collateral. The SBA has criteria for these areas and each bank also has their own ratios for each of these items and some are more aggressive than others. (Remember, the banks do their own underwriting) Banks look at both the financial history of the buyer and the business to make their decisions.

Important factors buyers should know about business purchase financing before beginning their search

1. Down payment. Business purchase financing almost always requires 10% – 30% cash equity from the buyer. A seller’s note may be counted as a part of the down payment but the buyer will still need at least 10% – 15% cash to invest. The buyer can use home equity, pensions, IRAs etc. for down payments.

2. Credit. Buyers need to have excellent credit. Any negative credit history at all will be a problem. A very detailed personal financial history form must be completed and approved by the SBA. If you are married the SBA will also look at the credit of your spouse. If your credit is less than above average you may be able to get approved with non-spouse, co-signer.

3. Experience of the Buyer. For business purchase financing to be secured banks and the SBA will look at the experience of the buyer to gauge the degree of risk involved. If a business is highly technical or require significant expertise then the buyer will probably need that on their resume. For less complicated businesses, any sort of business leadership experience is very helpful. Buyers would be smart to have a resume prepared that documents past business operation experience. (Any, however insignificant, is better than none)

4. Interest rate. The rates are negotiable and it is advisable to shop the market. SBA loans are limited to 2.25% above the prime rate in the Wall Street Journal for loans with maturities of less than 7 years, and limited 2.75% with maturities of 7 years or more. As of this writing, Feb 2008, the WSJ prime rate is down to 6% from 7.25% only a month ago and 8.25% a year ago. Great news if you want to purchase a business. (6+2.25= 8.25%)

5. Term of Loan. Varies by bank. Many banks advertise up to 25 years for SBA loans. This is usually for a SBA loan that involves Real Estate. Straight business purchase financing is usually 7-15 years.

6. The discretionary earnings for the business should cover the debt and provide the buyer with a reasonable income. (Another reason that your personal financial history is required) Banks are realistic, you need to pay your bills. Alternative sources of income helps – spousal, investment, rental, etc.

7. Seller involvement. If the seller is involved with the business post sale and has a stake in the outcome that reduces the risk to the bank. Small seller’s notes are often needed and the seller may be required to continue to work in the business for an extended period of time.

A good idea is to speak to a banker that specializes in SBA loans, a business acquisition loan broker early in your process. Also, when inquiring about a business ask the seller or the broker if the business qualifies for SBA financing. is another great resource. Check to see if there is a SBA small business development office in your area.

7 Simple Steps to Freedom – Getting Your Home Based Business Off the Ground

So, you’ve been thinking about getting out of the corporate rat race for years, and starting your own home-based business. But your old friend FEAR keeps reminding you about how good you have it – paid vacation, benefits, a good steady paycheck… Still it’s hard to leave your kids every morning and let someone else shape their lives for 10-12 hours a day. It’s hard to give up the dream of being in control of all of your time.

Are you ready to pay the price for the freedom of owning your own business? Are you ready to create a business that feeds your spirit – not just your bank account? If so, how do you get ready mentally and emotionally to take that leap of faith? Leaving the past behind and focusing on these 7 steps will help you kick into high gear and launch your new business.

1. As a new business owner, one of the first things I did was hire a business coach who could support me mentally and give me a kick in the pants when it was needed. Since I was new to the construction industry, my coach gave me ideas about how to market my business. I couldn’t tell you how to frame a window or put in a faucet, but today I know how to market our business and get the telephone to ring.

2. The second thing I did was attend a class called Calaveras Entrepreneurs. This class took me through all the steps to write a business plan. I don’t know about you, but before I became a business owner writing a business plan rated right up there with going to the dentist. But a funny thing happened as I was going through the process. I could see what we needed to do to make the business work, and how we could get out of the debt we were incurring as a new business start-up. That alone was worth the time and effort it took to go through the process – not to mention my peace of mind.

3. After I got my mental state on the right track, and I had a plan developed, I began working on my internal belief and motivation. Since I worked for AT&T for 24 years, I was deep into the corporate mindset and sorely missed that regular paycheck. It was critical that I develop the belief that I could survive outside my old mode of operation.

Building belief is a matter of getting your mind to accept that you can (1) survive, and (2) thrive in a new home-based business that you’ve created. In other words, it’s an inside job.

I’m a spiritual person, so that’s the first place I turned to work on building belief. I believe that we’re all put here to lead a wonderful life, but sometimes we get in our own way. If you’ve been exposed to the movie The Secret you understand the principles I utilized. For you, building belief may come from studying how other successful people have reached their goals, or surrounding yourself with people who have already done what you’re trying to do, and emulating their steps to success.

4. Action, action, action… We worked the hours and did what our coach told us to do to the best of our ability – no excuses. We sat many a night stuffing envelopes with our marketing information to reach potential customers – and it worked. The more effort we put into reaching out and finding customers and joint venture partners, the more rewards we reaped. The bottom line here is the Universe has to know you’re serious. If you get all this information, then sit back and expect a yellow page ad to bring you all the business you want, you’re fooling yourself, but not the Universe, which has the power to bring you all the business you want. So get busy and take action!

5. Since my husband and I were new to the community, we made sure we attended the local business and Chamber of Commerce functions. We networked with other business owners and with our suppliers. Visibility is another critical component of a new business start-up, whether it is a face-to-face or online presence. People need to know you exist and what you have to offer.

6. No matter how discouraged I got during this process, I kept doing what I had to do to keep our business “healthy”. In those days to me healthy meant that we maintained our good credit rating and our good standing in the business community. I had many “dark nights of the soul” when I had to borrow money to pay our bills. I struggled with the feeling that we were going one step forward, and two steps back, but I did what I had to do anyway. I just kept taking the action steps that moved us forward

7. Be grateful for all of your successes, and you will be paving the way for even more to appear. If I had moaned and groaned and complained about our business not looking like I thought it should, there would have been no room left in my mind for the wonderful ideas that came my way. I had to stay open to the possibility that even though I couldn’t see the progress at the time, it was percolating beneath the surface of my awareness. With an open mind ideas came that helped us stay on track to creating the million dollar business we have today.

If you’ve chosen the right business, it will be more than a road to making money. It will express who you are and what you value. In reality you are not your career or your business. You’re a unique and valuable person with much to offer the world. Ideally your business will be a way for you to express this value and uniqueness in the world. In my case, I was pursuing a business that expressed my husband’s unique gifts, not necessarily my own. At that point in our lives, it was necessary for both of us to focus on this business to pay the bills. My dream business came later…

Most of all, remember when you’re experiencing the growing pains of building your business, in the end people won’t remember what you do for them as much as they’ll remember how you were with them.