Posts Tagged ‘Business model’

5 ways to identify a stable network marketing opportunity

June 3rd, 2009

Let me start with a disclaimer here. This topic can be controversial. And I am no expert. The world of network marketing is evolving and booming before our eyes like the world of Internet itself. Today a technology can come which can wipe out all known paradigms of yesterday. Google did that. Not that Alta Vista was not a great search engine… but well, google’s algorithms were worth billions more. Tomorrow there may be another. Same about network marketing.

So, as a student of this fine discipline of network marketing, I attempt to put here 5 things that you might think of as ‘baseline requirements’ to check of any network marketing company that you evaluate:

1. How old is it?

Whatever might be said about technology and methodologies, the saying "old is gold" is sound. If you have been hearing of the Amway name since 50 years, it is also the largest holder of product patents, has the most companies tied up to its distribution network, and is the most respected direct sales corporation by United Nations and Governments worldwide. An older organization has "roots", which are ‘built to last’ as per the principles of any corporate business.

2. Who are the leaders?

Network marketing is a leveraged people’s business. Consequently, if a company’s founding leadership is strong, it will duplicate well. There will be values, integrity and commitment. So who are the leaders? What has motivated them to pick their opportunities? What are the stated values? Are they living up to them? Do they have a stated vision? Is it real or fluff? For instance, Amway expressed its ‘commitment to the environment’ as a founding principle… and all product and packaging innovation has been abiding by this standard well before ‘eco-friendly’ became fashionable.

3. How widespread are they?

If you are getting into a business of your own piggybacking on the franchise of a known brand, you may as well pick the brand that is spread all over the world. I assume here that your goal is not to make small change… it is to build a legacy… because that’s what this business model is capable of… for those who are willing to learn it . An international company also means it is one that has seen numerous cultures, legalities, psychographics and prepared itself for succeeding through them all. Amway, for instance, is in 90+ territories and has never pulled out of even one!

4. How are they funded?

The good thing about network marketing is cash. It is a cash business – no credit. No debt. No liabilities. And that’s the mindset its partners also eventually get into… So you would like to check if this is true of your opportunity. If not, why not? Is it a justifiable loan they’ve taken? When partners (associates / distributors / members) join on cash, will the company repay or can they possibly pocket the money and fly away into the night? Again, ‘how old it is’ helps. Plus there are published facts. This is not something you learn by hearsay… find out from Euromonitor or some large data house.

5. Do they have training support?

Without training your business is like a vehicle you don’t know how to drive… Just a shiny object in the garage. I have a bias to companies that have product training but also have separate Training and Support Systems which have been set up by successful affiliates of the company. These systems are good because they are practical. For example, a guy who works at the Ferrari factory would not be able to teach you how to drive a Ferrari as well as a race car driver would. So the System set up by race car drivers using Ferrari is better than Ferrari’s own training. That’s why it makes sense to look for a ‘combination’ to make the infrastructure work harder for your success!

Before I conclude, allow me to mention that the fact that "Product" and "Compensation plan" do not figure on this list deliberately… not oversight. The reason is, they really don’t matter. Why? Every network marketing company will have a product that is amenable to large numbers of people (since they are planning to survive). And they will price it and distribute the monies in such a way that many people are happy, whether new or old in their association. So if either of these things do not agree with you, that’s just a symptom of the fact that you’ve either not understood the opportunity or the network marketing model itself. Live and learn!

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