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Independent Watkins Associate 122236

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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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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The statements made and opinions expressed on this page are those of the Independent Watkins Associate who is the publisher of this document, and are not to be construed as the statements or opinions of Watkins Incorporated.

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