MLM Due Diligence 102 – Looking Deep Inside An MLM Company…

In part 1 of MLM Due Diligence, we set the criteria for assessing a company from the outside. If a company fails on any of those tests, it’s best to leave it and move on. Now we really get into the meat and potatoes…

First of all, why is it so important to pick a good company to build with?

Simple. The reason why Warren Buffett is so wealthy is because he is very, very careful with his investment decisions.

Only when he is absolutely confident that a company will continue to grow and be profitable long into the future, will he put his money into it.

I heard that of the thousands of potential investments he studies every year, he is happy to make just ONE good investment decision. That’s just amazing!

For you to build a legacy in this industry that you can pass onto the next generation, you must choose wisely. Choose one company and MARRY that company!

There are heavy hitters who will hop from company to company because they are offered a better deal. They leave in their wake many shattered dreams.

Professional network marketers, once they find the right opportunity, build it once, build it right and build it big to a pay a life time of residual income.

So now let’s look at…

Part 2: What to look at on the inside of an MLM Company…

Again, what I’ve written here is based on Rod Cook’s excellent checklist.

1. Company management. At least one of the members of the company management must have successfully built a network marketing downline.

Only experienced distributors can empathize with what it takes to build a network marketing organisation, and therefore treat them with respect. Check the owners out thoroughly on the internet – their background, financial history, etc.

For goodness sake, read the company’s Policies and Procedures BEFORE signing up. This is your long term agreement (i.e. contract) between you and the company. Make sure it’s fair and you’re happy with it first!

According to the Association of Network Marketing Professionals (formerly the Distributor Rights Association) a fair contract should not be more than 15 pages long. Many companies have policies that are 50+ pages long, written in legal-ese, not plain English.

2. How old is the company? Or do you prefer to gamble with that shiny new start-up?

Companies less than one year old have survival rate of 10%. Companies less than two years old have a 30% survival rate.

Companies less than 3 years old have a 50% survival rate.

But companies over 3 years old have a survival rate of 70%. If a company can survival in the first 4 years, then it’s a sure bet.

3. The Product or Service. Would you (or a logical thinking person) buy the product or service, if there wasn’t an income opportunity attached to it? This is a very simple legitimacy test.

More specifically, are the products competitively priced? If NOT, then you’re playing a losing game.

Will people be using them for a long time to come and will prices remain stable? Technologies become obsolete and cheap very quickly, while consumer products last generations and steadily increase in price with inflation.

4. The Compensation Plan. Knowing this is vital to your long term success. Learn to crunch the numbers.

How many recruits/customers do you need to make the recurring income you want? Just by doing this, you’ll realize there are many opportunities that are not worth building.

Remember, the vast majority of people you sponsor will be part time network marketers. A compensation plan must reward these people for their recruiting efforts, get them in earning money in a reasonable period of time, or you won’t retain them.

5. Support and training system. As my mentor says, this is the glue that holds everything together. First, does the company or distributor organisation teach you SKILLS on how to MARKET the products and the opportunity? (And I don’t mean making a list of friends and family)

Do you have a coach, a mentor, and an upline team that will work with you and take you step by step through the training and help you make your first call, presentation, etc? Or will you have to fend for yourself as soon as they get you in?

And importantly, are the training materials easily available for free or low cost? Or are a small club of king pins making a fortune off the backs of their distributors?

Hopefully this gives you a good guide on how to do your own due diligence of any MLM Company that you’re considering.

Let me know your thoughts…

To your MLM success,

Wayne Wu

 

P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.

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Related posts:

1. MLM Due Diligence 101 – What You MUST DO Before Joining ANY MLM Company…
2. The Warren Buffett Way to Choosing a Network Marketing Company
3. Are You Risking Your Future With A Short Sighted MLM Company?

Tagged as: Due Diligence, Mlm Company, Policies And Procedures, Professional Network Marketers, Rod Cook, Warren Buffett