In recent years, with the failures of a lot of network marketing and multilevel marketing systems, a lot of people say that is just a pyramid scheme, a type of scam most commonly known as “Ponzi Scheme”.
When it comes to the nature of business, network marketing, multi level marketing or a distributorship, if you may call it, is very similar to a franchise. Explore carefully the particular network marketing business before you plunge in. Some require you to carry inventory and incur expenses that could be beyond your initial expectations.
Most Multi Level Marketing (MLM) or direct selling businesses can be operated on a part time basis by the distributor-member. Some groups will just pay you a straight commission on products that you sell. Others will also provide you additional sales incentive, like commissions for volumes sold by your recruits, and their recruits and so on. Some MLMs also provide goal-oriented incentives like gifts, laptops, cars, and travels abroad for certain sales level achieved.
Before putting your hard earned money and join a network marketing system, you may want to ask your sponsor this set of 25 questions in order to lessen the risk of a pyramid scheme.
1. Do you personally like their products? You, of course, as a member must also like their products. You cannot endorse or promote a product that you do not like or enjoy using. You must be a user of the products yourself.
2. Do you enjoy savings from using their products? It should be. Savings may take the form of less time, less money and convenience.
3. How widespread is their distribution or warehouse centers for you and your customers to gain easy access in purchasing merchandise? If it is widespread, you may not have to stock up or carry their inventory. This will make it easier for you to buy.
4. Do they offer free home delivery? Is there a minimum purchase required for home delivery? How much? It’s much too hassle if you need to pick the products yourself and deliver them personally to the members of your group.
5. Do they have a wide variety of merchandise available? What kind and how many kinds of merchandise do they carry? Do they carry exclusive items? The more variety of products, the better for you. You want a wide variety of selection so that you and your members have a chance to buy at least one thing from among the wide selection of merchandise.
6. Do they manufacture their own products or merely buy them from someone else? (so that quality is controllable)
7. Do they have an unconditional full-satisfaction, money-back guarantee on their products? You would want the MLM company to guarantee the products you promote to your friends and relatives.
8. How long have they been in the MLM business? Are they only operating here or abroad too? If so, how many countries? The experience in MLM company counts a lot in making sure that the company has a good reputation worldwide.
9. How much is the joining fee? What do you get in return? Are there any product samples in the business or joining kit? The joining fee must not be expensive and there should not be too many product samples in the kit thereby making the joining fee exorbitant.
10. Is there an annual renewal fee to maintain your MLM membership or business license? If so, how much?
11. Can you get your money back for the joining fee just in case you change your mind later? A 90-day buyer’s remorse clause is preferred. Where and how can you get the refund?
12. Does the joining fee allow the participant to operate the business abroad or within just the Philippines? Definitely, it would be better if you can also operate abroad with a single license or membership.
13. What is their marketing plan for the business? How many people do you have to “recruit” before you start making money?
14. What’s the commission paid to the person who recruits or sponsors you? It is to your advantage if there is no commission paid directly to your sponsor as this gives you a hint that you sponsor has to help you develop a group or help you distribute products before he or she makes money. Otherwise, your sponsor might jut abandon you as soon as he or she gets the money for your joining fee.
15. How is the commission scheme structured? At what levels of performance do you get commissions?
16. Can you make more money than your sponsor or anyone who joined ahead of you? How so? If you will always make less than people who were ahead of you, then the commission structure is disadvantageous to you or that profits are not distributed equally.
17. How will you get paid for your commissions? How often will you get paid? How is the commission tracked or computed? Do they have computers to track down commissions? Is it big enough to track down commissions and sales worldwide (if it’s a multinational MLM)?
18. How many levels underneath you will earn override commissions from? The deeper the level, the better for you, more so if it’s unlimited.
19. Is there a sales performance quota or targets that you must meet to maintain your active MLM membership? What are the penalties if you do not meet the quota?
20. What time commitment are they asking from you? Will you be forced to attend meetings and functions to maintain your MLM membership?
21. How many members have succeeded in their MLM business? Who are they? Can you speak with them?
22. What kind of marketing or merchandising support are you going to get? Do they have brochures or product catalogues? Do they advertise in mass media? It is advantageous to you if the MLM group does not advertise. In this way, you can corner down your own market share without too much competition generated by advertising.
23. What kind of training and support are you getting and what other activities do they conduct to stimulate sales or the building of your MLM group?
24. How committed is your sponsor to the MLM business and who are the leaders of the group? Are they committed to succeed in the MLM business?
25. How do you feel about the people and the group? Are they likable bunch?
I attended quite a lot of MLM companies’ seminars. There are inspiring speakers who talks a lot about their success stories. There are students who make it big. Some say that even though they did not finish schools, they are richer than those who are educated. Others claim that they’ve traveled abroad and visited a lot of countries because of their MLM business.
Well, I do believe these people. I’ve seen their expensive cars. I’ve seen the copy of their checks. I even had the chance to interview one of their top earners. A lot of times you will be encouraged to join because of these things but my advice is before you join, ask your sponsor the following set of 25 questions above. In this way, you would be able to choose the right MLM company that suits you.
For those interested to explore network marketing, I am happy to present you the opportunity that I saw. Text me at 0917-5227088 or email me at [email protected] for international inquiries. I’ll be your personal guide in this business. As your leader, I will also be your personal finance coach on savings and investments to be sure that your earnings are not only spent on doodads and other liabilities. 🙂