Q: I'm looking for a homebased business opportunity or a network marketing company to represent. What questions should I ask the company before I make a decision?

A: Whether you are looking for a part-time opportunity or a full-time career change, selecting the right business venture is clearly a major part of your formula for success. Thousands of potential homebased independent distributorships, franchises and network marketing opportunities are being offered in newsstand opportunity magazines, on those spam e-mails you receive regularly, or from friends and relatives who are convinced they've found the holy grail to make you both wealthy.

Unfortunately, many people jump at opportunities based on advertising hype or unsubstantiated promises and are quickly disappointed. There's nothing wrong with a company promoting its opportunity in the best light, or with your friends focusing on the potential benefits available in their own ventures. It's just that you need to separate facts from illusions, reality from fantasy and true potential from the enthusiastic sales pitch of the people who stand to profit from your involvement. They may have taken a leap of faith themselves without having done their own due diligence. There are many good opportunities for those willing to work and work hard. Any business that offers real opportunity requires real effort. Just remember, if it sounds too good to be true, it probably is.

Here are the six questions you should ask to help you make educated decisions about your time and money investment.

1. How long has the company been in business? If they've been around for several years, they'll have network marketing operators who have already paved the way. Ask for references. And if they won't give you any, dig deeper to find out why.

If this is a start-up venture, look for signs of financial stability. Are they properly funded to deliver on the promises they promote?

2. Who are the people behind the company? Do they have proven business expertise? Have they had other successes prior to this business that assure you they understand what it takes to succeed? Do they have a successful network marketing background? If not, is a member of their executive team or a consulting organization guiding them?

3. Are the products or services of personal interest to you? You usually won't do well in a business when you can't personally relate to the products. Would you buy this product yourself? Would you recommend it to friends even if you weren't paid to do so? Have you actually tried the product?

4. What type of training is offered in the beginning? You can't do what you don't know, so make sure you have access to beginning and ongoing training support.

5. Does the company offer great support tools? Do they provide a time-tested and proven marketing and sales system, as well as tools to help you? Video and audio training or sales presentations, printed literature, catalogs and a strong Web site linked to an online e-commerce catalog are all considered standard sales support. Linking your personal Web site to the company site is a must when marketing branded consumer products--you need this to ensure sales credit for your customers' online purchases.

Also, what's the product warranty? Will your customers be on your doorstep if there's a problem, or will the company stand behind the product . and behind you?

6. How do you earn your money? If you're buying products or services at wholesale and marking them up for your profit, the company should have a suggested formula for profitability. Is it rich enough to return your investment quickly? Is the compensation plan easy to understand? Find out whether the profit percentages are paid on retail sales, wholesale after retail commissions are deducted, or on an amount selected by the company based on product profitability. Don't judge the plan solely on the promotional copy. Ask questions and make sure you understand when you'll receive your profits. Also, ask someone you trust who has network marketing experience to evaluate how the money will flow. The company should have a detailed explanation of their plan to help the novice work though the complexities. Good compensation plans can be complex. Don't let this scare you. Just take the time to understand the reward for your investment.

You can't afford to make hasty decisions in choosing a network marketing business. Your time is your life. Waste your time, and you waste your life. Making good decisions means seeking out the facts. It's well worth the effort--it saves you time and money by eliminating the bad choices and finding winners.

One other thing: Sometimes you'll make your decision based on pure emotion and gut feeling. If the opportunity is recommended by a friend, as is the case with most network marketing programs, look upline several levels from your sponsor to determine the type of support you'll receive in building your business. You rarely succeed alone. It takes a team effort matched to a good product and support system. But in the end, the dollar bill won't sprout wings and fly into your mailbox. You have to make it happen.

Michael L. Sheffield is the CEO of Sheffield Resource Network, a full-service direct sales and network marketing consulting firm. He is also the co-founder and chairman of the Multi Level Marketing International Association (MLMIA). He can be contacted through http://www.sheffieldnet.com .


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.