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…

If you want to build a solid network marketing business that will pay you a lifetime of income and that you can pass on to the next generation, you must choose a good network marketing company.

In my opinion, the company you choose to build with will account for as much as 40% of your long term success. The other 60% comes from YOU.

There are big, brash leaders in network marketing who will tell you that your success is all up to you. It’s all your fault if you’re not successful. “If it is to be, it is up to me!”

That’s a half-truth.

Sure, you can become the most highly developed individual, have a super positive mental attitude, have a magnetic personality and still end up in an illegal pyramid scheme that gets shut down by the Federal Government, and gets you sent to jail.

The company you choose WILL have a major bearing on your long term success. You must choose wisely.

Let me give you a word picture…

Whenever a new skyscraper is built, the very first thing they do is dig a giant hole in the ground, up to several hundred feet deep. They build the foundations of the building in this huge pit.

What if they just built from the ground level up? Well, the building is not going to have much structural integrity. It will topple down with the slightest of disturbances.

Your network marketing company is the foundation upon which you build your future. It has to be strong, or your business will come tumbling down, and you’ll have to rebuild it again, and again.

Rod Cook, editor of MLM Watchdog has an excellent checklist for evaluating a company from the outside and from the inside.

This is Part 1 of a two part series, and I’ve based much of what I’ve written here from Rod Cook’s website.

Part 1: What to look for from the outside…

1. Company headquarters address. First and foremost, check this out on the company’s website. If they don’t have a street address, run far and run wide.

If they have a picture of their office, verify it on Google Streetview, or drive past it, to make sure the photo matches what you see. If you see a trailer instead of an office building, run.

2. Payment options. If a company does not accept credit cards as a payment option, run, run, run.

Credit cards mean the company has a merchant account, which means they have a good credit rating. With credit cards, you can get your money back.

If you can only send money by electronic transfer, money order, check, or Fedex, you may as well kiss it goodbye. Scam artists will take it and run.

3. Website traffic. Check the company’s traffic stats using alexa.com. This is a tip that very few people know about. Basically, if a company’s traffic is headed downwards, what does that mean? You guessed it, it’s shrinking (…or dying…).

4. Starting/buy in price. A good network marketing company will allow you to start a business for less than $500.

State Attorney Generals DO NOT like heavy front end loading business opportunities that cost $1,500 to $3,000. If someone is pressuring you to join for $1,000 or more, it’s a sign that a company is recruitment driven (a pyramid scheme), not retail driven.

5. Exaggerated product and/or income claims. Avoid companies where distributors make outrageous medical claims like curing cancer (an illegal claim) or unbelievable income claims.

Any income claim without the hard evidence to back it up is illegal. Here’s a good rule of thumb: the bigger the income claim, the more likely you’ll lose money in that deal!

Some food for thought…

Stay tuned for Part 2: What to look for on the inside…

I was really good at goal setting in my early days of network marketing. Being young and naive, they were mighty impressive and awe inspiring. Boy, was I fired up!

Well, I quickly learned that setting goals was easy, achieving them was quite a bit harder. The expectations were great and so were the disappointments.

I’m not knocking goal setting here. I still have my goals. Goals are important, but I’ve learned to not be so emotionally attached to them. Instead I focus on the day-to-day process. There are no unrealistic goals, only unrealistic time frames.

So having said that, the first goal for any new network marketer, before setting any lofty goals, should be to break even on their monthly business expenses! (i.e. autoship, advertising, etc.)

Why?

Think of it This Way…

How long can you stay in business if it’s not costing you anything to build it? Answer: Forever!

In my last post I wrote about the implications of building your business under heavy financial pressure. If you desperately need the money, you have an agenda to try to recruit as many people as you can into the deal.

This behaviour only attracts the wrong people for starters, and may very well put you in a place of social isolation, making life pretty miserable indeed.

On the other hand, if the business is not costing you much to build, if you’re not under financial pressure, then TIME will work in your favour and you will have a much greater chance of long term success.

Get Down Into The Nitty Gritty…

It’s time to whip out that calculator and do some math!

I know it’s boring, confusing, even intimidating to do this, but it’s imperative to your long term success.

In fact you should do this BEFORE signing on the dotted line to join ANY network marketing company. I didn’t do this, like most people. But if I had been better educated, I would have.

Start by working how many product sales, customers, distributors, reps, etc, you would need to cover the costs of your monthly autoship.

Just by doing this activity, you’ll realise that some businesses are just not worth building. It will give you a great insight into the amount of work that’s required to reach your goals.

Retailing vs. Recruiting…

Some companies have overpriced products that are simply unsalable at the recommended retail price. In such companies, the emphasis is always on recruiting. Get ‘em into the deal so they can buy at wholesale!

Here’s the problem with that business model. When you have distributors buying at wholesale, you’re only going to get a small percentage in commissions based on the wholesale price.

If a company pays out an average of 5%, which is pretty common, that means you need to sponsor 20 (!!) people just to break even on your own autoship.

What’s the likelihood of the part-time networker being able to do that in a reasonable amount of time? Not very! This is why recruitment driven companies have high attrition rates.

But conversely, what if a company emphasizes retailing first, recruiting second, and has competitive retail prices for their products?

This makes a HUGE difference, because you can sell products to customers and get a 20% to 50% commission on the retail price of the product. Therefore to break even, you only need 2 to 5 customers.

And customers who love the product will always come back to you for more.

If you are serious about long term MLM success…

…please do this little exercise of calculating how many customers/distributors you need in order to break even.

It will give you the power to see beyond the hype, a clear picture of the work required, and the ability to stay in business forever without having to stand in front of the mirror every morning chanting…

“I’m good enough, I’m smart enough, and doggone it, people like me!”

The term “Best MLM Company” is searched in Google about 4,400 times per month globally, which indicates there are about that many people all over the world looking for information, opinions and reviews on just which one of the many thousands of MLM companies in world is the best.

I’d guess that significant portion of these people are looking for an opportunity to join. Perhaps they are brand new to the network marketing industry and are looking for the best possible chance of success. Or perhaps they have come to the realisation that their current company isn’t going to take them where they want to go.

But here are the 2 major problems with trying to find the needle in they haystack, the holy grail… 1) it can’t make you successful and 2) just how do you define the best MLM company?

Let’s address major problem number 2 first.

Say that your definition of “the best” is based on the product. We have a lot of companies in this industry that sell health and wellness products. So you look for a company with a product with more vitamins and minerals than any other on the market. You finally find one and start building.

After several weeks you have small team going and you have a handful of customers who love your product because it’s the best. All is going well.

Out of the blue, a new company launches with an even better product. It’s got more vitamins, it’s got more minerals, it’s in a funkier bottle with better labeling. It tastes better too and it also comes in a powder or a gel for those who can’t swallow pills. Everything is better.

So what do you do now?

You’d have to quit and join the new company because it is now the best. You’d have to apologise to your distributors and customers for your oversight and try to take as many of them with you to the new company. You build and build and all swell.

Then all of a sudden, another new company launches with a product that is even more potent than what you have now. It’s got even more vitamins and minerals plus it comes with an antioxidant and an enzyme to help your body better absorb the all the good stuff.

The packaging is even better. And they have awesome tools to help you promote it too, including a phenomenal testimonial from a superstar celebrity figure on DVD.

So what do you do now?

Quit and join the brand new company. Again, you apologise to your distributors and customers for your oversight and you start all over again.

It might sound funny to you, but a lot of people do this in network marketing, constantly following the white rabbit. How can you possibly build long term residual income changing companies every 3 months?

Product is only one of the factors. People will chop and change constantly for more lucrative compensation plans too, which brings me to addressing major problem number 1.

Your success comes from within YOU. A great company with a great product will make it much easier for you to be successful, but it’s YOU who has to make it work. People join YOU, not companies.

At the end of the day, there really is no such thing as “the best mlm company” or a perfect opportunity when all things are considered. Your best bet to finding a company where you can build a long term future is to use The 5 Pillars as your yardstick.

Find a company that has…

1. Good people at the helm who have experience as distributors
2. Been in business for 4 years or more as they will be around for the long term
3. A desirable product at a value price
4. A compensation plan that rewards part time builders
5. A proven duplicatable system to guarantee you success

Find a company that has these qualities and then focus on developing yourself into a person that others want to join.

Thanks to Tom “Big Al” Schreiter for inspiring me to write this post.

What does it mean when a company does away with its play plan? It’s an absolute kick in the guts to the hard working reps who built the company from the ground up. All that hard work inviting people, talking to them on the phone, meeting people in cafes, restaurants and homes, doing presentations, the “no shows”, follow ups and coaching calls all of a sudden means nothing – a complete waste!

That’s what happened to the distributors of XELR8, makers of the Bazi nutrition beverage. Their company, a publicly traded company, just did away with their compensation plan. The three top distributors who had all reached the 250K Diamond level literally lost their livelihood over night and now they have to rebuild it all over again.

On January 19 2010, the chairman of XELR8, sent a letter all distributors telling them they are getting rid of their Multi-Level Marketing pay plan by the end of February 2010. Replacing the MLM compensation plan is a direct sales model where distributors earn a commission only from the retail sales of the product.

This is why Pillar Number One of the The 5 Pillars of Network Marketing is so important. Pillar Number One is “Company Management Experience With Integrity.” None of the executives of XELR8 had any experience as a network marketing distributor.

They don’t know what it’s like to drive 3 hours one way to do a meeting for only 5 people, and then on the drive home pull up by the side of the road for 3 hours sleep before heading to work in the morning. They don’t know what it’s like persisting with a business opportunity that produces negative 10 bucks a hour for the first 3 years. They don’t know what it’s like to get all of those “No’s”

A true network marketing company understands the difficulties distributors face in building their own business and they never forget that it’s the distributors who build the company. Without the distributors, there IS NO network marketing company.

My mentors always warn people about building a home business with a publicly traded company – because in a publicly traded company, who comes first? It’s NOT the distributors. It’s the stock holders – the people who put money into the company. The company must pay them first. The company executives come second. The distributors come third.

Here’s a statement from the letter that was sent out by the chairman of XELR8.

In closing, I want to thank ALL of our Independent Distributors for their support of XELR8. While the decision to terminate our multilevel marketing program was not a decision that any of us at the Company wanted to make, ultimately it was deemed necessary to insure that our products remain available to support the health and vitality of our customers. We are extremely grateful for your efforts to spread the word about XELR8 products and wish you success in your future endeavors.

From this statement, who was priority number one for this company? “…it was deemed necessary to insure that our products remain available to support the health and vitality of our customers.” But who are the company’s real customers? It’s the people who would buy the company’s products no matter what – it’s the distributors.

Before you marry an MLM company because you’ve fallen in love with the product, because they’ve got the most lucrative compensation plan you’ve ever seen, please take the time to do your due diligence. Make sure the company managers have built a network marketing business and understand it’s business philosophy.

Not only have the top leaders in this company lost their livelihood, but they bare the huge emotional burden of responsibility for their downline – the people who trusted those leaders to bring them into the company for a better way of life.

Here’s a quote from Rod Cook of MLM Watchdog that says it all…

“…It’s not the money to them, that they can do anywhere. Let’s put it this way – it is like having your children murdered while you watch. I have been there…….. Rod”

A network marketing company is your vehicle to financial independence – the thing that takes you from where you are now, to where you want to be. Even if you are a good driver, you need to have a safe, reliable and efficient vehicle to get you to your destination.

So how do you know if your vehicle is capable of taking you to where you want to go? How do you know that you have the right vehicle? And what do you do when you find out that you’re in the wrong vehicle?

That’s where the 5 pillars can help you to assess whether the MLM company you’re representing is the right vehicle for you. The 5 Pillars are what you need to be successful in a company in the long term.

My mentor Michael Dlouhy came up with “The 5 Pillars” after joining over 100 MLM Companies between 1992 and 1994 to find out as much as he could about how this business works. Since then, he has helped thousands of networker figure this game out.

Unfortunately, the network marketing industry does have a weird reputation. That’s partly due to people’s ignorance, lack of understanding and also in a big way due to the fact that there are too many network marketing companies out there that are just no good. People are not succeeding because they just don’t know any better.

For instance, there many scams disguised as MLM companies that are taking advantage of their distributors. There are many companies that come and go very quickly because they have incompetent management or they don’t have the right product at the right time. There are many companies that have products that are just too expensive. There are many companies whose compensation plans totally suck. There are many companies that don’t train their distributors properly.

The 5 Pillars that a network marketing company must have for you to be successful in the long term are:

1. Company Management Experience With Integrity – If you don’t have this one, you can forget about all the rest. How can you ever be successful without good people at the helm? It’s imperative that the company manage understands what it is like to be a distributor. Do a Google search on company executives to find out who they really are.
2. Timing in the company and Timing in the industry – Has the company shown consistent profits for at least two years? More importantly, will the industry that it services stand the test of time? It’s no good trying to sell long distance phone calls when you can do them now for free.
3. A great product at a value price – All legal MLM companies have amazing products. That’s a given. But are they value priced compared to the rest of the market? Sure it maybe better than a non-MLM product but can you readily retail the products based on their added benefits?
4. A compensation plan that rewards part timers – 96% of all network marketers are building their business part time and a good compensation plan should reward them accordingly. Why should they continue to build the business if they are getting virtually nothing for their efforts?
5. A proven duplicatable system – This does NOT entail writing a list of family, friends and past contacts. This has everything to do with a training program that teaches people how to market and how to be leaders. A duplicatable system gives people the necessary skills and tools to make the business work.

If your company doesn’t have these 5 pillars then RUN. Due your due diligence and find a company that does, it will be worth it in the long term.

When you joined your first network marketing company, did your sponsoring upline tell your that they have a system? What was that system? What did they tell you to do? Make a list of friends and family? Was that their system?

Did they tell you to buy leads from a particular lead broker at some ridiculous price per month? Did you find out that 99% of the leads that you bought didn’t want to hear from you? Hmmm… (they didn’t tell you they were making money from selling you those leads?)

If you are in a good company, which has stood the test of time, has great products that people are buying and a great compensation plan, you still CANNOT be successful unless you also have a proven duplicate-able system.

If your upline tells you they have a system, and then they tell you to write a list of every single person you’ve known since child birth, then run away. They have NOT got a system. If your upline tells you to buy leads, run. They have NOT got a system.

Buying leads and making nameslists does not duplicate. Ninety six percent (96%) people will never be successful doing business this way. That’s because 96% of the world’s population hate to be sold. They hate to be pitched, they hate pushy people. So telling them to become pushy salespeople simply doesn’t work.

You can’t duplicate people. But you can duplicate systems. A system will continue to work with or without your direct input.

To have success, you need a proven system that duplicates itself when you step aside from your own business building activities. This was an invaluable lesson that my mentor learned.

My mentor Michael Dlouhy was great at doing business presentations. He was very polished, very slick. Many years ago, he would do about 5 presentations per week. Most of the guests that were invited to his business presentations joined.

While he was able to do these 5 presentations per week, his business grew. But when he decided to go on a holiday, his business stalled. When he built it, it grew, when he stopped building it, the business flatlined.

He just couldn’t figure out what was going on until one of his team members came up to him and said “That was the most amazing presentation I’ve ever seen…” And then he heard the words that gave him a total sense of awareness of the whole situation “…but, I could never do that.” He realised that he was not duplicate-able. He was great, but not duplicate-able.

Heavy Hitters, those who can just about sign up anybody that comes within 3 feet of them, will tell you’ve got to make better presentations, you’ve got to do more meetings, you’ve got to behave more like them and have their charisma.

No, you don’t. If you weren’t born with that sort of personality, you will fail miserably trying to do business like them. You need a system that trains you in the necessary skills required to be successful in this business.

A good system should teach you multiple marketing methods so you can market yourself in the way that’s most suited to you. A good duplicate-able system should allow you to produce leaders in your team so that when you decide to take a long holiday, they can take over the training duties for you.

So what is a duplicate-able system? A system is where you have a coach, a mentor and team that can help you achieve your goals. You cannot succeed in this business by yourself. You need a team that’s focused on one common goal, a team that works with you.

If you are coachable, a proven duplicate-able MLM training system will guarantee you success.

In choosing the right MLM company to build your long term executive level residual income you must look closely at the company management, the companies timing and its products. Another very important aspect that is crucial to your long term success is the company’s compensation plan. In fact, it is imperative that you understand your compensation plan.

People often ask “What is the best compensation plan?”

The best compensation plan allows average people to get above average results. The best compensation plan requires the least amount of people to make the most amount of money. It should allow the average person to become profitable in the shortest amount of time. It has to be a fair plan, otherwise the business is not sustainable.

Let’s say that all companies pay out 50 cents to the distributors for every dollar of volume that they generate. How would most companies distribute that payout?

Most companies would pay 5 out of the 50 cents to the lowest ranked distributors. That is, the distributors who are producing the lowest volume, which by the way, are the vast majority. They are ninety-six percent (96%) who are “part timers”.

They would pay out 15 of the 50 cents to the middle ranked distributors. These would be people on a full time “middle class” income. But, they are a very small percentage compared to the low volume distributors. Then the final 30 cents would be paid to the small handful of top ranked distributors.

Is that a fair compensation plan to you? Hardly.

This sort of plan would make the people who are working hard to build their business in their spare time feel like complete failures.

These plans are designed to produce a few MLM megastars who rake in millions off the back of the rest who get virtually nothing. This is so that at company conventions, the company executives can hand the megastar a big fat check and tout to their audience “You can achieve this lifestyle too, if your dream is big enough!”

But guess what, showing big checks and making big claims is illegal. There are MLM companies that do this. But it’s against the law. It’s called enticement, often used by unruly scam artists to get people into their deal.

I once heard a story about some guy who made a presentation to a group of people about a travel deal. All he did for his presentation was open up his laptop computer and log into to his backoffice to show them how much he had earned for the month.

Everyone joined, because they obviously thought he was for real and they could achieve the same result. That’s why it is against the law, because anybody can wave a false check for any amount of money to entice gullible people into a deal.

Now a fair compensation plan should pay the lowest ranked distributors, the vast majority who are actually working hard to build the business, the most amount of money. A fair compensation plan would be exactly the other way around.

It would pay the lowest ranked distributors 30 out of the 50 cents, the middle ranked distributors 15, and the top king pin distributors 5 cents.

Over the long term, even the best “sponsor monsters” who can create huge organizations in a matter of months, can’t be successful unless their downline are getting rewarded fairly for their efforts. People will vote with their feet and the business will fall apart.

It’s not that hard to figure out your pay plan. All you have to do is dig out a calculator and see how many people you need on regular autoship to make $10,000 a month. The less the number distributors, the fairer the pay plan.

Every legitimate business, no matter what industry, sells a product or service to a consumer or a client. Product is a very important part of your network marketing business and should never be overlooked.

However, it is easy for people with less experience to get caught up in the emotion of products. Some people will jump straight on to a “trendy” product. Some people will go out of their way to justify why their product is better than anybody elses even though it’s three times more expensive.

Here are three criteria you can use to determine whether you will have success with a product:

1. First and foremost, is there a tangible product?
2. Can you make recurring sales with the product?
3. Is the product value priced?

First, do you get any product? What do you get for your sign up fee? If you don’t receive any tangible product for your sign up fee, then it is an illegal pyramid scheme.

There are plenty of illegal pyramid schemes disguised as legitimate network marketing business opportunities. One of those was BurnLounge who was shut down by the FTC in June 2007. BurnLounge sold MP3 music downloads through an MLM pay plan. What BurnLounge promoted was actually quite innovative – it allowed individuals to construct their own digital music stores on the internet.

However, it was revealed that the top income earners in BurnLounge were not making their money from the sales of music downloads, but rather, from signups of new “store operators” at up to $430 per year! That fee would be okay if the new store operators received $430 worth of music when they signed up. But they didn’t get anything, but access to a website.

Some reports say that BurnLounge only compensated their resellers 5 cents for every 99 cent music download. That kind of makes it hard to earn a living and its little wonder why the BurnLounge business model drove the behaviour of recruiting.

There are many deals (scams) where you pay $500 for the privilege of being an agent. Be warned. If you do not get any form of tangible product for your sign up fee and your sponsor is compensated for your signup, then it is an illegal pyramid scheme.

The second criteria that’s essential to achieving residual income is recurring sales. Network marketing is not an easy game. It may takes years of dedicated work to build an organization that provides you with a decent level of residual income. The basis for that residual income is the continuous sale of product to the end consumer.

There is virtually no possibility of recurring income if the product you’re selling is a “one-time-sale”. You sell a product to a customer once, and that’s it, you seldom see him/her again. Therefore, to make money you have to find new customers and recruit new distributors all the time. If these activities stop, then your income stops.

If your company’s product line only consists of one-time-sale products like jewelry, high end information products, water and air filters, cookware or biomagnetics, you would be better off selling these through direct sales. It will be virtually impossible to develop a steady, residual income stream with a network marketing distribution model.

Finally, is the product value priced? All legal network marketing companies have great products. However, some network marketing products are rip offs, no matter how good they are. Why should a customer buy a product that’s twice or three times more expensive then he can get at the local health store? A product must be competitive in the market place for it to be saleable.

Here’s a question that you can used to judge the value of a product. Would you have bought the product if there was no business opportunity attached to it?

Some network marketing companies are so inefficiently run and have such high overhead, that they literally price themselves out of the market. And the only way to get a good discount is to signup as a distributor. If you can’t retail product to a customer because its overpriced, you will struggle to build to build residual income. Endless recruiting IS NOT a sustainable business model.

It’s very well known in the home based business and network marketing industries that over ninety-nine percent (99%) of new business opportunties do not last more than two years.

Unfortunately, this fact is not well known enough, especially to people who have less experience in the home based business arena. Too many people are attracted to the glitz and the glamour and are caught up in the emotion of new products, explosive income and make big gambles and lose.

New home based business opportunities pre-launch or launch just about everyday. In October 2009 alone, over twenty-five (25) new home business opportunities were listed by the website Npros.com – a home business resource. The vast majority of them will close their doors before they are even two years old.

Some startups are designed to fail. They are scams, designed to make the founder a quick buck before he disappears off the face of the planet, only to start another one under a different alias. But many opportunities who startup with a bunch of “me-too” products don’t stand the test of time because the founders do not have a clue of what they’re doing.

Residual income can only be built in a company that can last for the long term. There are two indicators that you can use to see if a company will be around for the long term.

1. How long has the company been operating for? More specifically, has it been operating profitably for more than two years?
2. Is there consistent and increasing demand for its products and services?

Ninety-nine percent of startups will fail in the first two years. So if a new company can last that long and show a profit, it has a good chance of surviving for the long term.

If you’re planning to make some money for the long term with network marketing, do not join startup companies. Make sure they have stood the test of time, otherwise you’ll have to build it over and over again. Ninety-nine percent of new startups fail in the first two years! The cards are stacked against you, its simply not worth the risk.

If a great opportunity is launched, it should be a much better opportunity after two years, after it has stood the test of time and the company has streamlined all of its processes. It’s pure logic. Don’t fall for the trap of get in on the ground floor and “now is your only chance”. If people say the startup phase of a new company is the best time to get in, doesn’t that mean it won’t be as good when it is established?

Make sure that the products that the company sells has relevancy in the marketplace. Make sure the products have long term residual value. Household products, cosmeticsskin care, health and wellness products have stood the test of time because need these items.

A good example of what to avoid is Excel Communications, who filed for bankruptcy in 2004. Excel sold discount long distance phone calls through an MLM pay plan. Today, you can’t make a business selling long distance because it’s free. Technology has made long distance communication free for everyone.

Another example was the craze about video email a few years ago. Thanks to Google and Yahoo, this is now free and higher quality. If really want a business opportunity centered around technology, make sure the company providing the opportunity is always ahead of the curve. Technology becomes cheap and obsoletely very quickly.