Every MLM company that's starting doing business these days begins with what is called a pre-launch. A short time-period before the full scale launch of the new company. During that phase usually new distributors can join for free and many marketers take advantage of it to bring their teams in or do prospecting under favorable terms for people wanting to star their own home based business.

Why the companies do it?

To begin with, the more distributors a company has the more sales it makes. There is a term in business called the break even point when in general the revenue from sales equals the total expenses and costs of running the business. In other words up from a certain number of sales the company makes a profit while under that is suffering a loss.

Anyone who gets into business wants to make a profit. Actually that's why they get in in the first place. A Network Marketing company likewise wants to be profitable, so it makes sense to reach and pass the break even point we mentioned as soon as possible. If its start up capital evaporates prior to reaching that point there's a good chance that it would go out of business unless it founds new sources of capital. The prelaunch phase comes handy in here in the company's quest to turn profitable as quickly as possible. Since more distributors equals more sales the company wants to sign up a number of them that it deems as adequate in order to become profitable.

The free sign up phase is a great incentive for people to join and start building their organization before the company gets operational. During that phase the business keeps the expenses very low, since there is no distribution and product sales yet, before a wanted number of distributors join. A number that the company believes would help it pass the break even point. More than that the buzz that creates help in advertising and boosts recruiting.

Does it make sense to join at this stage?

Statistics tell us that 50% of all start ups fail in their first year of operation and the 90% in their first two. As you understand there is a great risk here. If the company goes belly up all the work and capital you have put to grow your organization there is gone for nothing. On the other hand in the first stages the competition is small and so you can make money faster and build a strong organization more easily reaping great rewards if the company succeeds in the long run.

If you are a seasoned marketer most probably you do have the skills to analyze and evaluate the company and the risk that you are undertaking properly. If you are not and you just begin with Network Marketing it's certain that you lack the necessary experience and skills to make a proper evaluation so you actually rely on your sponsor's ability to do that.

If you are not certain about what you are doing is better to join an established company than being in doubt. If you are not a 100% sure for the future of the business you join, experience has teach me that you won't give you're best self in it and you will under-perform making it harder for success to reach you.

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