How To Evaluate An MLM Company

June 23rd, 2008 | by Chris |

1. The Product

One of the first things someone should look at is the MLM product. Of course I am not talking about whether you like it or use it personally. I am talking about whether it can be marketed to the public. If there is a market willing to buy it at its current price then it’s a go sign. Stay away from companies that only its distributors buy the products and cases where the product it’s only an excuse for money to change hands. Such network marketing opportunities don’t stay for a long time in the market as they run into problems with the authorities. Of course if there is no product at all it’s needless to say that it is outright illegal.

2. The Management Team and its Founders

You don’t need me to tell you how important is with who you go into business. If the management or founders of the network marketing company have a history of failures or even worse any convictions or criminal record it won’t be the best people to tie your future with. In many cases you can’t even find who they are as they keep it secret, and in cases like that you should never join. If someone is hiding it’s probably because he has something to hide or he intents to get the money and run.

3. The Training Program

Good network marketing companies are trying their best to offer good training to their distributors and prepare them for marketing their products using various methods. They know that their success and sales depend on yours so they have a great incentive to help you as much as they can. When you are new and you start it is to your interest to choose a company that can teach you well. Even if you do know how to promote the business those you recruit probably won’t and if there is a good program in place you would need to spend less hours teaching your downline how to prospect.

4. Years of Operation

The general rule is that the older the company the more safe it is for you to join as it chances to close down is small. Of course that doesn’t mean there is no risk involved. In business there is no safe bet and no matter how big, well established, and aged an MLM company is there is always a risk that some time in the future it may fail. However it’s smaller than that of a young company since statistics say that 90% of start ups fail within their first 2 years. For your convenience an unwritten rule indicates that when a company passes the 7 years in operation is considered a mature one.

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5. The Compensation Plan

Or pay plan as its called defines the amount of money you would be making depending on your personal sales volume and that of your downline. There are also various bonuses that the multilevel marketing company may give to its distributors for certain accomplishments. A good compensation plan should be balanced between rewarding personal sales for encouraging retailing, and team sales for encouraging team building and team support.

6. Policies and Procedures

That is a very important and most of the times overlooked part of the evaluation process. Usually they put many clauses to be on the safe side for whatever it may happen, but nevertheless you should examine them as some may be too arbitrary for someone to accept. Also some multi level marketing companies may put restrictions on how you can market their business. Some are for good reasons but some times they may overdo it and severely limit your choices especially when they happen to be your favorite ones.

7. Scam Alert

Go to your favorite search engine and use the company name and the word scam together and see what is coming up. Now most of those accusations you would read you should take them with a grain of salt as almost anyone can say whatever he wants on the Internet. However if they happen to be governmental websites pay serious attention to them. If some of the accusations you read sound plausible come with questions to your potential sponsor to get his opinion and possible facts that may indicate that the accusations was fault and that there is nothing wrong with the company.

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