On The Level

Perfect Match?

Even if the network marketing company you're considering proves to be legitimate, your work isn't done. You still need to do some research to make sure you're choosing the best company for you. Here's what you need to know about a company to make an informed decision:

1. Will it last? Many network marketing companies go out of business soon after start-up. Look for a company that has been around for at least two years and is debt-free. To verify the company's financial status, ask to see a financial statement.

"Be sure the company has sufficient capital to adequately cover expenses," says Doris Wood, an executive consultant with The Wood International Group, a management consulting firm in Irvine, California, specializing in network marketing. "Can [the company] meet its obligations for rent, products, phone and data processing to ensure distributors are paid when promised? Can it cover the cost of possible legal fees and day-to-day business operations?"

2. Are you sold on the product? "You must believe in the product or it's doubtful you'll ever be able to sell it," Wood says, "let alone recruit others to do so."

3. Is the venture committed to training its distributors for success? Many network marketers quit because no one has trained them to run an MLM business. Because they don't know how to sell, they don't get paychecks, quickly become frustrated and close up shop or look for another opportunity.

Ask what kind of training programs or tools are offered. "Look for evidence that the company pays existing distributors to conduct workshops for its newly acquired affiliates," says Bonnie Ross-Parker, a senior executive with The Peoples Network, an Atlanta-based MLM company that markets a TV network, available via satellite dish, showing motivational programming 24 hours a day. "A solid network marketing company places a high premium on training and support."

4. How and when will you get paid? "Beware of companies whose compensation package requires a Ph.D. in economics to unravel," Ross-Parker warns. "Representatives may say, `You'll figure it out when you get paid.' That's a risk not worth taking."

5. Does management have the necessary leadership to take the company into the 21st century? "When researching an opportunity, make sure the company is planning ahead to deal with exponential growth," Smith says. Ask for background information on the company's executives. What experience do they have in business as it pertains to MLM? What's their track record? Also find out what their vision is for the company. Do they have what it takes to reach these goals?

When you're choosing a network marketing company, ignorance is not bliss. Evaluate whether or not MLM is for you, make sure the opportunity is legitimate, and determine whether this company will best help you achieve your financial goals. If the opportunity passes these three tests and sounds exciting and challenging, then go for it!

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Sean Lyden is the CEO of Prestige Positioning (a service of The Professional Writing Firm Inc.), an Atlanta-based firm that "positions" clients as leading experts in their field-through ghost-written articles and books for publication. Clients include Morgan Stanley, IFG Securities, SunTrust Service Corp. and several professional advisory and management consulting firms nationwide.

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This article was originally published in the July 1998 print edition of Entrepreneur with the headline: On The Level.

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