Now more than ever, more and more people are considering starting a home-based business. Today's shaky economy, combined with shrinking retirement nest eggs for baby-boomers, and the less than desirable job prospects for high school and college grads has more and more people flocking toward home-based businesses. In fact, a recent Forbes Magazine Article cited the following: With the average 50 year-old estimated to have less than $50,000 in retirement savings, there is an obvious need to find alternative ways to either save more or generate supplemental income starting now, and continuing throughout retirement. Moving beyond just the dollars and cents, boomers are growing tired of feeling guilty or bad about their past savings habits and are interested in moving towards possible solutions.
So how does one choose a "good" network marketing company? Being in this profession for nearly four years, I will admit that there isn't a one-size-fits-all company out there. That would be unfair. However, these ten questions to ask will decrease the likelihood of you being burned later on down the line.
Does it pass the "Documentation Test?"
What happens when you run a simple google search for "(insert your company here) News?" Are there positive news stories? Press releases? Are there any results? Is the company accredited and highly rated in the Better Business Bureau (bbb.org)? Are they listed in the Direct Selling Association Member List, which is an accepted governing body of network marketing companies (at www.dsa.org)? If its publicly-traded, what does its stock trade at and how has the company performed? If it is private-held, is it/has it ever been listed as an INC500/5000 company? Lastly, wherever the company is based, what do the locals say about it? Has it received positive press? Negative press? Or perhaps worse, no press? Much of this might seem like rocket-science, especially if you're new to network marketing. However, if the answer to the majority of these questions is no, this could be a warning sign that the company you're considering may disappoint you in the long run (or not-so long run).
Is the Management Team competent?
Similar to franchises, network marketing companies have a corporate office which is normally headed by the founders and/or a management team. How can you tell if the management team is solid? A good rule of thumb is to 1) see if the people running your company had experience with being distributors themselves, and 2) if they have experience running successful companies. Sadly, many network marketing companies have folded because the management team either didn't understand the profession, had poor or no experience with running a company or both.
Finding the co-founders or management biographies should be easily found by heading to the company website and looking deeper, elsewhere. Perhaps a bigger issue is if you cannot find any information on the individual(s) who run(s) the company.
Do the Products and/or Services give you the "Warm Fuzzies?"
Okay, I was exaggerating about the "warm fuzzies"--yet you should really believe in the product offering of the company you choose to align yourself with. Think about it: would you own a McDonalds if you were against the consumption of meat or run a Starbucks if you hated coffee? It's possible, but the lack of passion for your product can hurt your chances of success.
To be successful, you must be a believer that the products and services address a need or strong desire of some kind. And if you truly believe that, then sharing it with family, friends and associates shouldn't be difficult.
Does it appear to be a pyramid scheme or is there an emphasis on product sales?
I worded the question like this purposely so that it is better understood what a pyramid scheme is. Sadly, most people use the terms "pyramid", "pyramid scheme", and "network marketing" interchangeably and typically dismiss the entire profession as a fraudulent practice. Nothing could be further from the truth. And frankly, most people have no idea what the differences are.
Simply stated a pyramid scheme the practice of profiting solely on recruitment efforts with the absence of any product or service being sold. Decades ago, the U.S. government began cracking down on these companies and most cease to exist in the present day. So why do we bring this up? Because a small fraction of companies--particularly new and underdeveloped network marketing companies--will rarely, if at all mention their products. In fact, the majority of the compensation structure may be based solely on recruiting. And that's not good. The question to ask yourself is, "Am I rewarded for acquiring customers in addition to acquiring business partners?" If the answer is no, that could be a red flag.
Are the products safe?
This might seem obvious but you might be surprised. Just like any traditional company on Wall Street or Main Street, there have been network marketing companies that have released consumable products that have been found to be harmful. Do your due diligence and find out if the products are safe and that third party studies (as well as happy customers) can be readily found. Here's a trick. Perform an internet search and type: "(company product name) dangerous". Of course that is not the ultimate factor, but doing this may help you uncover some interesting information.
Is the company profitable?
How much did the company earn this year? What about last year? How about the year before? Is it borrowing money and operating from a deficit/debt position? These are all important questions. No matter if your company is public or private, getting this information should not be difficult. The financial health of any publicly traded company can be easily researched by just about anyone. A privately held company--especially one that is documented in INC Magazine will list its annual revenue and perhaps much more detailed information including agreements, mergers, and acquisitions. So find out if the company is profitable. If not, or if there is a lot of red tape in attempting to uncover this information, beware. Find a rep and see if him, her or his/her upline can point you to some meaningful documentation.
Do Top Earners have varying experiences?
Here's what I mean. Does income and rank depend more on timing than effort? In other words, does it appear that only those who got in early are the only ones making money? Or are there examples of people who have achieved higher ranks relatively quickly, along with some longer-tenured reps hitting top ranks much slower than normal? Most network marketing professionals will agree that it is best to have a compensation plan that rewards effort over timing.
To give everyone a fair shot, your company should allow its representatives the ability to get to the top in timely proportion to what they've been able to build. As such, a representative should also be able to exceed the rank of their upline and should be able to out earn their upline in many instances.
Are Products unique, special or essential?
This one is tricky but is worth considering. Generally, a solid network marketing company has a unique, special and/or essential (much needed) product or service offering. If you can imagine constantly battling (and losing) against retail competition with a limited product offering, you may want to think twice. A great question to ask your potential sponsor is "What makes these products unique, special or essential?"
Is there a clear path to the top?
Understanding a network marketing compensation plan can be like understanding hieroglyphics. There are a ton of different plan structures. Here's what's important: can your potential sponsor (or their upline) generally explain how to progress through the ranks? Is there a simple "comp plan breakdown" you can access or request? The journey is simplified once one understands how to get to their destination--or at least has an idea.
Do you like the team?
Network Marketing is a team sport. Yes, I know you're in business for yourself. However, the culture in network marketing is built upon teamwork. Trusting your upline and the team you'll be a part of is important to your business and having others trust you is equally important. Are you easily able to obtain access to your upline's upline's upline, etc? How willing is your potential sponsor in introducing you to their leadership? It is important to be confident with your new team and develop a relationship with your sponsor. This could mean all the difference.
Hopefully these ten questions will guide you to choosing a company that will help you achieve your dreams and goals. This could mean all the difference between financial prosperity and time freedom or a not-so-pleasant "learning experience."
If you enjoyed this blog, please quickly do me a favor and share with others and comment below.
Cheers!
Ricardo Suber
Follow me on Facebook!
Follow me on Twitter!
Follow me on Instagram!
Follow me on Google+!
Or Email me!
So how does one choose a "good" network marketing company? Being in this profession for nearly four years, I will admit that there isn't a one-size-fits-all company out there. That would be unfair. However, these ten questions to ask will decrease the likelihood of you being burned later on down the line.
Does it pass the "Documentation Test?"
What happens when you run a simple google search for "(insert your company here) News?" Are there positive news stories? Press releases? Are there any results? Is the company accredited and highly rated in the Better Business Bureau (bbb.org)? Are they listed in the Direct Selling Association Member List, which is an accepted governing body of network marketing companies (at www.dsa.org)? If its publicly-traded, what does its stock trade at and how has the company performed? If it is private-held, is it/has it ever been listed as an INC500/5000 company? Lastly, wherever the company is based, what do the locals say about it? Has it received positive press? Negative press? Or perhaps worse, no press? Much of this might seem like rocket-science, especially if you're new to network marketing. However, if the answer to the majority of these questions is no, this could be a warning sign that the company you're considering may disappoint you in the long run (or not-so long run).
Is the Management Team competent?
Similar to franchises, network marketing companies have a corporate office which is normally headed by the founders and/or a management team. How can you tell if the management team is solid? A good rule of thumb is to 1) see if the people running your company had experience with being distributors themselves, and 2) if they have experience running successful companies. Sadly, many network marketing companies have folded because the management team either didn't understand the profession, had poor or no experience with running a company or both.
Finding the co-founders or management biographies should be easily found by heading to the company website and looking deeper, elsewhere. Perhaps a bigger issue is if you cannot find any information on the individual(s) who run(s) the company.
Do the Products and/or Services give you the "Warm Fuzzies?"
Okay, I was exaggerating about the "warm fuzzies"--yet you should really believe in the product offering of the company you choose to align yourself with. Think about it: would you own a McDonalds if you were against the consumption of meat or run a Starbucks if you hated coffee? It's possible, but the lack of passion for your product can hurt your chances of success.
To be successful, you must be a believer that the products and services address a need or strong desire of some kind. And if you truly believe that, then sharing it with family, friends and associates shouldn't be difficult.
Does it appear to be a pyramid scheme or is there an emphasis on product sales?
I worded the question like this purposely so that it is better understood what a pyramid scheme is. Sadly, most people use the terms "pyramid", "pyramid scheme", and "network marketing" interchangeably and typically dismiss the entire profession as a fraudulent practice. Nothing could be further from the truth. And frankly, most people have no idea what the differences are.
Simply stated a pyramid scheme the practice of profiting solely on recruitment efforts with the absence of any product or service being sold. Decades ago, the U.S. government began cracking down on these companies and most cease to exist in the present day. So why do we bring this up? Because a small fraction of companies--particularly new and underdeveloped network marketing companies--will rarely, if at all mention their products. In fact, the majority of the compensation structure may be based solely on recruiting. And that's not good. The question to ask yourself is, "Am I rewarded for acquiring customers in addition to acquiring business partners?" If the answer is no, that could be a red flag.
Are the products safe?
This might seem obvious but you might be surprised. Just like any traditional company on Wall Street or Main Street, there have been network marketing companies that have released consumable products that have been found to be harmful. Do your due diligence and find out if the products are safe and that third party studies (as well as happy customers) can be readily found. Here's a trick. Perform an internet search and type: "(company product name) dangerous". Of course that is not the ultimate factor, but doing this may help you uncover some interesting information.
Is the company profitable?
How much did the company earn this year? What about last year? How about the year before? Is it borrowing money and operating from a deficit/debt position? These are all important questions. No matter if your company is public or private, getting this information should not be difficult. The financial health of any publicly traded company can be easily researched by just about anyone. A privately held company--especially one that is documented in INC Magazine will list its annual revenue and perhaps much more detailed information including agreements, mergers, and acquisitions. So find out if the company is profitable. If not, or if there is a lot of red tape in attempting to uncover this information, beware. Find a rep and see if him, her or his/her upline can point you to some meaningful documentation.
Do Top Earners have varying experiences?
Here's what I mean. Does income and rank depend more on timing than effort? In other words, does it appear that only those who got in early are the only ones making money? Or are there examples of people who have achieved higher ranks relatively quickly, along with some longer-tenured reps hitting top ranks much slower than normal? Most network marketing professionals will agree that it is best to have a compensation plan that rewards effort over timing.
To give everyone a fair shot, your company should allow its representatives the ability to get to the top in timely proportion to what they've been able to build. As such, a representative should also be able to exceed the rank of their upline and should be able to out earn their upline in many instances.
Are Products unique, special or essential?
This one is tricky but is worth considering. Generally, a solid network marketing company has a unique, special and/or essential (much needed) product or service offering. If you can imagine constantly battling (and losing) against retail competition with a limited product offering, you may want to think twice. A great question to ask your potential sponsor is "What makes these products unique, special or essential?"
Is there a clear path to the top?
Understanding a network marketing compensation plan can be like understanding hieroglyphics. There are a ton of different plan structures. Here's what's important: can your potential sponsor (or their upline) generally explain how to progress through the ranks? Is there a simple "comp plan breakdown" you can access or request? The journey is simplified once one understands how to get to their destination--or at least has an idea.
Do you like the team?
Network Marketing is a team sport. Yes, I know you're in business for yourself. However, the culture in network marketing is built upon teamwork. Trusting your upline and the team you'll be a part of is important to your business and having others trust you is equally important. Are you easily able to obtain access to your upline's upline's upline, etc? How willing is your potential sponsor in introducing you to their leadership? It is important to be confident with your new team and develop a relationship with your sponsor. This could mean all the difference.
Hopefully these ten questions will guide you to choosing a company that will help you achieve your dreams and goals. This could mean all the difference between financial prosperity and time freedom or a not-so-pleasant "learning experience."
If you enjoyed this blog, please quickly do me a favor and share with others and comment below.
Cheers!
Ricardo Suber
Follow me on Facebook!
Follow me on Twitter!
Follow me on Instagram!
Follow me on Google+!
Or Email me!
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