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A Quick Summary of Things to Look For in an MLM
or Direct Sales Opportunity
Products Company
Compensation Plan Upline
Support Summary
Before getting into the details and specifics of choosing which
Multi-Level Marketing (MLM), Network Marketing, or Direct Sales
business you should consider, it's important to understand the
reality of succeeding in any business opportunity. Sure, financial
independence is possible with your own home-based business,
but the reality of it is that it may take several years to build
it to that point. Since we know it may take several years, then
your program should still be a great opportunity in 3-5 years
for your new people who are just getting started 5 years in
the future. You want continued income from your business after
this time as well, so you must choose your company carefully.
You can also completely ignore the cries of many would-be sponsors
who say, "Get in NOW - it's the GROUND FLOOR!" If
you try building your business with "ground floor"
companies, you will be starting from scratch many times by trying
to profit from "flash-in-the-pan" opportunities. (see
"The Company" below) And again, what about those who
join your group months and years from now when it's no longer
"ground floor?"
If you want to build a stable business that you will still
be profiting from many years from now, evaluate your potential
companies carefully. There are four things to consider when
evaluating a home-based business - the Product Line, the Company,
the Marketing Plan, and the Upline support - in that order.
If you aren't personally sold on the products, the rest doesn't
matter. And if you like the products, but the company is in
trouble, then the marketing plan or upline support doesn't matter.
The Products
The product line is, by far, the most important aspect of any
home business opportunity. First, you need to look at it from
a consumer standpoint. Are the products high in quality and
is the price competitive with similar products on the market?
If you were not earning anything from your downline distributor's
sales, would you still purchase the company's products at the
retail price? If not, then forget it. While some people are
successful at building a downline organization, most people
who get involved will never sponsor anyone. Will they continue
to earn you money by purchasing and selling the products month
after month if they aren't receiving any bonus from their downline?
If they won't, even if you are able to sponsor lots of people,
many of them will quit and it will eventually destroy your network
of representatives.
Now look at the product line from the representative's viewpoint.
Are the products consumable? If not, you will have to constantly
work to find more and more customers. If they are consumable,
you can continue to sell these products month after month to
the same loyal customers. Additionally, you will want to consider
what the true market of the product line is. If the products
are very high quality with an associated high price, how big
is the market for this level of quality? The same goes for unique,
one-of-a-kind products. How many people would actually buy the
product? Always keep in mind that if the product line is unique
to the company, it won't be unique for long if it really is
successful. If there truly is demand for the product, then copy-cat
products will hit the traditional stores and what was once a
unique niche in the marketplace will become a highly competitive
market where your products are likely very over-priced.
The last thing to consider regarding the product line is how
you are able to sell them. Are they presented in a catalog or
brochure? Can it be mailed? How much do the catalogs or other
sales aids cost? Some companies have overpriced catalogs and
sales material. Will the company ship directly to your customers?
Do you have to handle inventory? Can the products be sold at
fairs, flea markets, or through fundraising, party plan, or
to commercial accounts? Make sure you weigh your retailing options
here. If the company is weak in support in this area, you must
seriously question their commitment to their products and their
salability.
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The Company
Probably most important is the philosophy of the company. Is
the company risking their and your livelihood by allowing unsubstantiated
product claims or "get rich quick" testimonials? Does
the marketing plan encourage the illegal practice of "buying
in" at higher levels to build higher sales? A company must
be completely on top of all advertising being done in the field
as well as all claims being used. The Attorney Generals in various
states are cracking down hard on many companies who "look
the other way" when their representatives are violating
the law by making ridiculous income and product claims.
Once you are comfortable with representing the product line,
the next step is to take a close look at the company, its management,
and their philosophy. Like any other industry, the failure rate
for new MLM/direct sales companies is very high. Probably 90%
or more of the new start-up companies don't make it past 18
months. They may be severely underfinanced or over-financed
or have poor management who can't handle the sporadic growth
of a new opportunity. If you have committed to a new company
and they fail after 18 months, that means that you have wasted
all of your effort and commitment, and must now start over again
with another company.
Find out how long the company has been in business and if it
is currently growing. If it is less than 3 years old, it is
considered very risky to join. Check the financial status of
the company and find out who the principles are behind it. Are
bonus checks being sent out on time and is product being delivered
in an efficient manner? Although you are an independent representative,
you are still at the mercy of the company when it comes to getting
products and getting paid.
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The Compensation Plan
Finally, it's time to look at the marketing plan. Percentages
and payouts are meaningless unless the products and the company
are sound. Always remember this! Many plans differ on the monthly
requirements to stay "active". There should preferably
be no monthly requirements to remain active because if the products
are good, then the representatives should want to buy them for
themselves, and you need the part-timers in your group who may
not buy regularly enough to fulfill a required purchase. Nearly
all MLM/direct sales opportunities today do not require you
to stock any products or pay out any bonuses to your downline
group. You and all of your downline should be able to buy directly
from the company and the company should pay you and all of your
group's bonuses and commissions directly.
In comparing retail commissions and bonuses, you must keep
several things in mind. First, some companies quote their retail
percentages as a mark up, while others use a discount percentage
or commission. A 50% mark up is equivalent to a 33% discount.
Second, many companies pay out based on a bonus or point value
(BV or PV) while others pay out on the retail price. If a bottle
of shampoo sells for $10 and has a BV of $8, a 10% bonus would
be 80 cents. Another company may pay out only 8%, but on the
full retail amount, so in this case, 8% of the same $10 is still
80 cents. You want to make sure you are comparing apples to
apples. Also, some companies have benefits in their marketing
plans that allow you to completely "walk away" from
your business and continue to be paid. At least one company
also pays bonuses on all sales aids, catalogs, and other literature.
Overall, most marketing plans are designed to make a few people
fabulously rich, while the average person makes nothing. Some
are designed to allow the average person to earn a decent income,
while making it difficult to make the fabulously large incomes.
The best programs provide a balance between these two. After
all, for anyone to get wealthy in Network Marketing, it will
take a lot of part-timers in their group to get there. It's
important that the new and part-time people can make some money
too.
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The Upline Support
Once you've settled on a company with products you believe in
and can stand behind, and it is a sound company that you trust
is working for the long-term, and it has a marketing plan that
is fair to all types of representatives, then it is time to
find a sponsor. Although it isn't necessary to have a helpful
sponsor and upline to succeed in Network Marketing or Direct
Sales, it can help tremendously. When considering a particular
sponsor, ask yourself this question: Does my future sponsor
show a genuine personal interest in my success, or do they treat
me like just another number to make them money? It is not necessary
that your sponsor be full-time, or even successful with Network
Marketing yet. What you need is someone who cares about you,
is actively building their own group and will help you build
yours. It is also helpful if you and your sponsor are compatible
in a personal sense. Somewhere upline to your sponsor there
should be at least one very successful person who is involved
in helping everyone in their downline.
The next thing to consider is what your upline can supply that
will assist you in building and training your network. What
kind of welcome or training package will you and your downline
receive? Does your potential upline provide a newsletter, advertising
help, training and promotional materials, or advertising? Do
they have a proven system that you can follow? There is no reason
to reinvent the wheel if someone upline from you has already
created material you need. If you have done a good job of evaluating
products, companies and marketing plans, you will have a very
long relationship with those in your upline. Why not spend a
little time before making this type of long term commitment?
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Summary
In summary, if you are personally sold on the products, feel
comfortable relying on the company and management to be around
for 5 to 10 more years, feel the marketing plan is fair, and
you've found a successful and competent upline with a sponsor
who cares about you, then you probably have the right fit for
you. My suggestion is to try some of the products, and then
present the catalog or product brochure to a couple dozen friends
and acquaintances and see what they think about the whole thing.
This will give you a good idea of what you will be dealing with
as you start your business. Doing this kind of work prior to
getting involved should lead to a long and successful career
in Network Marketing or Direct Sales!
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