What are some good ways to evaluate a MLM Company, before you join? I’ve found that most people never do their due diligence before they join a network marketing company. In most cases they join on hype or excitement. They haven’t done their research to find out the good and bad about the company, so they can make an informed decision. As a result, they really don’t know what they are getting themselves into.
Let me ask you, if you were going to start a traditional business, or franchise, wouldn’t you do some research before you invested your time and money? Wouldn’t you research the company, the market in your local area, the products, and your competition? And wouldn’t you read all the fine print before you signed your name to any type of contract? I hope you would.
Network marketing is a real business. Unfortunately, most people who get involved don’t treat it that way. My goal today is to educate you about how to evaluate a MLM Company, so you can make an informed decision right from the start. I’m going to teach you several things you should do before you join any MLM Company.
1) Policies and Procedures
In my opinion, this is the most important criteria, when you are evaluating a MLM company. Before you join YOU MUST read the policies and procedures in the distributor agreement to find out what the rules are. For instance, some MLM Companies won’t allow you to use their name in your online marketing campaigns. And other companies don’t want you promoting their business opportunity on the Internet at all.
Other companies have crazy rules such as “high minimum monthly purchases” in order to qualify for your bonus. Or they have minimum customer sales, just to get your bonus check. And other companies have a no compete clause that prevent you from having ANY other income streams while you are a distributor with them.
The rules vary significantly by company so make sure you do your homework first. I’ve always found that it’s better to know what you are getting yourself into BEFORE you get yourself into it. Does that make sense? Do yourself a favor and read the company’s policies and procedures before you join. Make a list of questions. And get answers to your questions before you sign anything. You might just find out the company you like isn’t all that it’s cracked up to be.
2) Track Record
In addition to evaluating the company’s policies and procedures, it’s imperative that you research the company’s reputation and track record. Personally, I believe it’s much wiser to partner up with a company that’s been around at least 5-10 years, than it is to join a start-up company. Obviously, this is a personal decision.
Most companies fail. Few MLM Companies stick around for the long haul. Many go out of business in a year or two. And if you are going to form a long-term commitment to a company, you need to make sure it will be around in another five, ten or twenty years from now. When you join a company that is already established, you improve your chances of that happening.
More importantly, you need a company with a good reputation online. If you do a search for your company online and find thousands of negative pages and websites about it, run the other direction. I understand all companies have some negative stuff online, but if your company has lots more negative stuff than positive stuff, stay away from them. Remember, your prospect will research your company online. If all they can find is negative stuff, they won’t work with you.
There are so many different types of MLM products. My best advice for you is to pick a company with a product that people want and will buy, even at the suggested retail price. In other words, your products and services must have a good perceived value. If it isn’t a good deal for your retail customer, at the suggested retail price, don’t join that company. Remember, all companies need customers. If you can’t sell the product to anyone, you won’t make any money.
Remember, the products must be priced competitively! If your prospect can go to Wal-mart and buy the same product (or very similar) for 90% less, you’re going to have a tough time making sales.
Another great tip is to look for a product line that is unique. I like products that have ‘sizzle” and excite people. Find something other than the vitamins, pills and magic potions. Look for something you can’t get anywhere else, but will still have a high demand.
You should also check to see how many distributors (or former distributors) are trying to sell their products on Amazon, Craigslist or eBay. If everyone is selling their inventory online, this makes competition for you even harder. It’s hard to convince someone to pay full price from you when they can buy it online at one of these websites for a fraction of that cost.
4) Compensation Plan
When it comes to compensation plans, you need to learn everything you can about them. Take some time to calculate how you get paid. Check to see how many customers or how many distributors you need to earn $1,000, $5,000 and $10,000 per month. Find out what percentage of the total sales the company pays pack to the distributors via commissions. This information will be very powerful. By the time you compare two to four different companies you will see some major differences and find something that works for you.
The bottom line is that you want a MLM Company that rewards you fairly for your efforts. Ideally, you want a company that doesn’t require a team of thousands of people just to make a few thousand dollars per month! You also want a balanced compensation plan that rewards the part-timer and the heavy hitter.
5) Number of Countries it Does Business In
To some people, this might not be a big deal, but I believe it is a wise move to join a company that does business in multiple markets. In fact, the more countries it does business in, the better off you will be. Look for a company that is in at least 20 different markets, preferably 50 or more markets. Do some research to see how much the company has expanded during the past five years and what its future growth plans consist of.
You need to realize that there are close to 7 billion people in the world. The US only accounts for about 350 million people, so if your company only does business in America you are missing out on nearly 95% of the world’s population! Remember, we live in a global economy. I truly believe the international market is stronger than the US market.
In conclusion, these are my five most important criterion for evaluating a MLM Company, before you join it. Obviously, there are other important things to, such as training tools, company websites, training systems, etc. Please conduct your research and due diligence before you join a MLM Company. Spend as much time researching the company as you would if you were buying a franchise for $1 million. That way, you know what you are getting yourself into, and you won’t be unpleasantly surprised about an “unknown rule” later on.
What are your thoughts? What do you do to evaluate a MLM Company? Leave a comment below to share your thoughts. I look forward to hearing from you.
Disclaimer: I am not a lawyer and this article is not providing legal advice. The views in this post are simply my opinion from my own personal experience. All businesses come with risk. Please use your own discretion when evaluating a MLM Company.Best Regards,
Charles (Chuck) Holmes
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