Network Marketing, or Multi-Level Marketing (MLM), can be a viable tool to help you reach your financial goals. There are now thousands of companies that use network marketing as one of their channels of distribution, or even as their sole channel. To employ Network Marketing is to use "word-of-mouth" advertising through individual business owners or distributors who market a product or service. These individuals make a profit on their sales as well as on the sales of others with whom they share the opportunity, creating a distribution network. Quixtar, Shaklee, and 5-Links are examples of companies who use this method of marketing.
As you explore this type of business for yourself, there are a few things you should consider. For as many good, honest, and legitimate organizations as there are in the world, there are nearly as many unscrupulous ones. As with any business or investment opportunity, do your homework.
- What is the product or service that you will be representing? If the company manufactures, distributes, or represents something that you believe in, you will have a much better chance of success. If not, you will find it difficult to convince others to believe in it, and buy it. Since product flow is the essence of any business, you will need to be able to show others the benefits of yours.
- Is the product consumable? In other words, will the customer use it up and then need more on a regular basis? Consumables create repeat business (if your product and your methods are quality), which is important to creating a long-term, stable income. Nutritional supplements are a good example of a consumable; automobiles are a poor example.
- How many products or services does your company represent? Some people prefer to work with a networking company that represents one product - a vitamin line, for example - while others prefer a wide and diverse product line. The advantage of a single product is that you can become an "expert" in that product, which can improve your ability to sell it. The advantage of a diverse line is that you have "something for everyone," which can improve your ability to reach more customers.
- What type of training is offered? You should not be left to fend for yourself. Any reputable networking company offers training, either through the company itself, or through the business owner or distributor team. Since the people who work as sales people, distributors, or representatives are all independent business owners, they may offer you training as part of joining their team. You thereby enjoy the advantage of being trained by people who have already done what they are teaching you to do. If they haven't done what they are teaching you to do, be wary. Also, investigate whether the training comes with a personal mentor - a human being that can interact with you - or whether it is done online or through audio and video presentations. Audio/video can provide excellent training, but should be supplemental to personal attention from some person to whom you can be accountable and to whom you can approach for guidance.
- How many "levels" down does the compensation plan pay? There should not be a cut-off point beyond which bonuses are not paid. If this is the case, then there is a point where your efforts are not rewarded, and there is no incentive to help your team. Since network marketing relies on sales through creating a network of people, you need to know that, as the newest person on the team, your success matters to someone "at the top." Hopefully those people care because it is the right thing to do, but knowing that your success affects their bottom line gives them an additional reason to care.
- What does it cost? Any business costs money to start. While buying a franchise or other traditional business can cost thousands or even millions of dollars, starting a networking business is relatively inexpensive - usually in the hundreds of dollars. However, you need to assess what you can afford to invest. Do need to purchase a "starter kit" of products? What do the training materials cost? What does the ongoing training (seminars, conferences) cost? Do you need an office (i.e. computer, Internet, telephone, voice mail, fax machine)? Businesses cost money, period. You must decide how much you are willing to invest.
- Is this company reputable? It's a good idea to check into the background of the company. As with any company, you can check the Better Business Bureau to see if there are any complaints against them. But remember that in most cases you were introduced to this company by an individual or team of people, not by the parent company itself. Therefore, the parent company could have a spotless record, but those with whom you would work may be "less than honest." There may also be complaints against the company that are unfounded, made by someone who had a problem with his particular team but took it out on the parent company.
- Your best background check is almost always your "gut" feeling. You should "interview" the person or team you are about to join, and feel comfortable with what you hear. If the person introducing the business plan to you makes you uncomfortable, don't do business with her. The parent company - should you like what they offer - can usually give you the name of another person or team in your area that you can interview if you are not happy with this one.
- You can also check with the Direct Selling Association (DSA), an organization that monitors and regulates (to some extent) any company that sells directly to the consumer - whether through Network Marketing, mail-order or Internet.
- Doing a Google search (or using another search engine) is the worst way to get information on this type of business, as any malicious individual, person with an axe to grind, or even the company's competitors, can post in a forum or create a "negative spin" website. Always consider your source of information.
Once you have assessed all of this information, you are now in a position to make an educated and informed decision.