Evaluating MLM opportunities can be a daunting task, especially if you don't know where to start or what to do. But it's an important exercise to engage in if you want to select the best opportunity for you.

Unfortunately, most prospective multi level marketers don’t do a very thorough job of checking out the MLM opportunity they're considering joining. This is partly because they've allowed themselves to get too emotionally wrapped up in the idea of making a ton of money.

Another reason people fail to adequately evaluate an MLM opportunity is they just don’t know how to do it. Let's solve that problem now.

Below are some areas you should check out when evaluating an MLM opportunity. Ideally you would do this before joining a company. However, if you've already signed up, I encourage you to go through the process anyway just to validate your decision. It will also enable you to help your prospective recruits when they go through the process of checking out your MLM opportunity.

Evaluate the Product

Is the product or service you'd be selling unique? If you'd be selling a product that's readily available elsewhere, you’re not likely to do all that well with it.

On the other hand, if the company you're looking into has exclusive marketing rights to a breakthrough product, you'd probably have to struggle to not do well. Most MLM opportunities probably fall somewhere in between, so you’ll need to consider this issue carefully.

Is the product consumable? Consumable products or services are far and away better in multi level marketing because they ensurerepeat sales, which is what you want.

Is the product high in quality? Unless a product is of high quality it's not a good value for the consumer. With low quality products you'll have a difficult time generating the repeat sales that are vital to the long term success of yourbusiness. People may purchase it once just to try it, or to do you a favor because you're a friend. But once they realize that it has low quality, they'll not only stop using it, they'll probably avoid you like the plague for fear you'll try to sell them more.

Finally, can you be enthusiastic about the product? In multi level marketing enthusiasm sells. I'm not talking about enthusiasm for the business opportunity here. That's a separate issue, and important in its own right. I'm just talking about theproduct.

Unless the product is something you'd avidly recommend to people, even if there was no potential for monetary gain, you probably shouldn't try to sell it. People will see right through you if you try to sell them a product or service you don’t believe in yourself.

Evaluate the Company Leadership

A good company should make some background information on their key executives available for review. Of primary interest is what kind of experience these individuals have in the direct sales and multi level marketing industries.

Consult Impartial Industry Experts

As in all areas of business, there are some good companies and some not so good. That's why it’s important to find out what industry experts have to say about the MLM opportunity you're considering.

You can go online and find industry experts and watchdog sites. However, there are some so called "industry watchdog" sites out there that are nothing more than anti-MLM sites. These sites are recognizable by their content which is mostly, if not all, negative.

You should also beware of bogus "review" sites that do nothing more than promote some other business opportunity by bad- mouthing yours. They're also pretty obvious by their content.

For a watchdog organization to be credible, they should provide objective information about good MLM opportunities as well as the not so good ones. There are plenty of both.

If you find something that causes you concern, by all means ask your prospective sponsor about it. If he or she doesn't know the background, call the company direct and ask to speak to someone about it. Don't be afraid to do this. If they're a reputable company, they'll be happy to answer your questions.

Check Publicity

You can do a search for articles online. If you find articles about the company you're evaluating, don't necessarily accept them as gospel. Journalists can make mistakes, and in rare instances may even just make stuff up. As I said before, if you find something that causes you concern, ask your prospective sponsor about it. If he or she doesn't know, call the company direct.

Review Company History

The company should have a three to five year track record, belong to the Direct Selling Association, and be free of government regulatory problems. If a company is fairly new, they won't have much of a track record, But they should at least belong to some industry associations.

Check Financial Soundness

The best case scenario is a company that's well capitalized and debt free. At the very least the company should be financially stable and operating "in the black".

Evaluate the Compensation Plan

This is obviously very important because the compensation plan determines how you'll be paid for your efforts.

If you only plan to do retail sales, is the difference between the wholesale price and the retail price enough for you to achieve whatever level of income you desire?

If you're going to be a business builder, study the compensation plan carefully. Do the commissions, overrides and bonuses seem fair? Do the qualifications to receive them seem reasonable? If you have questions, ask your prospective sponsor.

Evaluate Support Systems

Does the company provide adequate support to its distributors in these areas?

• Internet presence - company and distributor web sites.
• Telecommunications - business opportunity and training conference calls. Also recorded messages containing product information.
• Printed materials - catalogs, flyers, brochures, training materials, etc.
• Recorded media such as audio and video sales, recruiting and training materials.
• Product ordering - toll free order lines, fax ordering, online ordering, automatic shipping option.
• Administrative functions - collecting customer payments, tracking sales volumes and commissions, issuing commission checks in a timely manner.

Consider the Company's Growth Stage

In multi level marketing there are four stages of growth that companies go through. They are:

• Formulation
• Concentration
• Momentum
• Stability

Which stage is the most desirable from the perspective of a new distributor? Well, that really depends on your risk tolerance. There's more risk with a company in the formulation stage than the stability stage. The level of risk decreases the further along a company is on the growth continuum.

Most multi level marketing professionals will tell you that it's best to join a company at the beginning of the momentum stage. This is because of the exponential growth experienced during this stage. If you get involved with an MLM opportunity at this point of its growth, you can potentially make a lot of money very quickly. But that doesn’t mean you should avoid a company that is in one of the other three stages.

The truth is, if you're a serious business builder, you can potentially make a lot of money very quickly regardless of what stage of growth the company is in as long as the company remains viable.

In Conclusion

After reading all this you're probably thinking this is a lot of tedious work. You're right. It is a tedious, painstaking process. But it’s well worth the effort.

If you can satisfy yourself that the company you join represents a solid opportunity for you, it’ll be time very well spent. If you determine that the company is not all your prospective sponsor says it is, you’ll save yourself a lot of potential heartache, and money, down the road. Plus, the next time you evaluate an MLM opportunity, the process will be much easier for you.

If you do find that the company you're considering is not a good fit for you for whatever reason, don’t give up on the entire industry. There are many great companies out there. If you keep looking and evaluating, you'll find the MLM opportunity that's right for you.

---

Return from Evaluating MLM Opportunities to Multi Level Marketing.

Return to Home Based Business School home.