Is the company properly funded?

This is a big one. It’s been said that 95% of all companies fail in the first 3 to 5 years. Most Network Marketing companies typically fail in this category for one of two reasons.

The first reason is because they don’t have enough money to properly launch the company and handle all the typical problems that plague startup companies.

The second reason is that the company makes it through the tough early years and then they hit what is called the momentum phase.

This is where a company experiences exponential growth – which can be a very exciting time. However, even well financed companies with a strong management team can have difficulty getting through this phase of business. There is a well known figure in the Network Marketing industry who used to offer to help you start your own Network Marketing company for just a $100,000. I don’t know about you, but I would not want anything to do with a company like that.

The bottom line is that if a company has good capitol, a minimum of 3 to 5 million dollars is a good start, combined with an experienced and strong management team, then they can typically weather the storms that come along.

Does the company have a relatively low cost to get started?

This of course is relative to where you are in your own personal and financial life. I would say that you can get started in the majority of Network Marketing companies for about $300 to $500 which makes them affordable to most people.

You just want to make certain that the company is not charging you an over inflated price and then paying commissions to the person who sponsored you into the business. This is extremely important because it is illegal for a company to pay commissions out for just signing someone up in the business, and where no real product is provided in exchange for your investment.

Also make sure that if there is product being exchanged for money that it has a fair value in relation to the cost you will be paying. Most people are pretty smart now days, and they are also very cost conscious. They are not going to pay an over inflated price for a product or service just because it pays out big dollars in commissions.

Is the compensation plan fair and easy to understand?

You want a compensation plan to be fair across the board for anyone who gets involved – from the person with little or no Network Marketing experience to the seasoned veteran.

It should also be fairly easy to understand and explain, as well as simple for the average person to be able to achieve the highest levels within the compensation plan.

It should also pay well enough that the professional or experienced Network Marketer finds the compensation plan rewarding to them as well. I have seen some compensation plans that have so many requirements and difficult language that hardly anyone can explain it except the one math whiz that created the plan. I was working for a company not too long ago as their Director of Global Marketing and they had one of those difficult to understand compensation plans.

They would continually make changes that always made it even more difficult to understand. Plus, every time we made a change, recruiting would substantially drop off. One day, the owners sold the company to this group of investors. One of the investors (who had little Network Marketing experience had this “great idea” about implementing a completely new compensation plan.

After reviewing it I highly recommended they not implement it as it was designed to pay more money to the average person and REALLY hurt the leaders who were making a lot of money (shortly after this conversion I left the company). Of course this person did not listen, and had to have things his way, and went ahead and put his new compensation plan in place.

End result? Every leader’s commission check was instantly cut by about 70%! Long story short, all the leaders took their people, went to another company, and there is little left of the company except for a few thousand customers. 

In closing, do your due diligence when making a decision on what Network Marketing company you are going to invest your hard earned time and money with. There are thousands of them out there with more starting every day. Some of them are started by frustrated former distributors who have no formal education or experience in running a large successful company.

If you can afford it, and have the time to get away from work, I highly recommend you visit the company you plan on joining. Schedule an appointment to visit with the company and meet the CEO, Finance person. Do a little digging on the internet by typing their names in Google with quotes on both sides of their name. If the person you are searching on does not have a common name then you might be able to find a little information about the owners and management team.

You should make your decision on which company you want to join like you were looking to purchase a $500,000 franchise – not $300 to $500 Network Marketing business. If you do this properly, and put in some hard work, you could see your business take off and pay you a substantial income.




By: Blake Warrington