As the reputed author Robert T. Kiyosaki (“Rich Dad Poor Dad” fame) mentions in his book “CASHFLOW Quadrant”, one of the avenues to accumulate wealth and become rich, (particularly meant for the middle-class people), is to join a good MLM / Network Marketing Company.
There are thousands of MLM / Network Marketing (NWM) Companies, operating in many countries. Hundreds of such companies came and vanished. If you are a newcomer, without prior experience in NWM industry, it is difficult to know which company you should be associated with.
Here are the 20 aspects you should look into, before joining a NWM Company:
1. Industry Growth Prospects:
You should know in what industry the NWM Company is operating. If the Company is operating in brick & mortar industry, the growth prospects may be limited, say less than 15% per annum. But if the Company operates on Internet Ecommerce, then the growth will be faster, as Internet growth is over 30% per annum worldwide. That is, any business done through internet has got the potential to grow twice or three times faster than the business done through brick & mortar industry. In fact, a majority of NWM companies are operating in the slow growth brick & mortar industry.
2. Promoters – Experience in NWM industry:
Find out about the main background of the Promoters of the NWM Company. NWM industry is a unique industry, where there are no well documented management literature are readily available for the Promoters. If the Promoters are well experienced in NWM industry, then the chances are that they may know the nitty-gritty of successfully managing and operating the Company in NWM industry. If the Promoters have come from the traditional manufacturing or other services industry and have no substantial experience in NWM industry, then the chances are that they may be going through a learning curve and may not have gained proficiency in successfully managing and operating their NWM Company.
3. Whether the NWM Coy is Debt-Free?:
If the Company is debt-free, the chances are that it may stay longer in the business. Most of the companies have accumulated debt while going in for expansion and if there is a slowdown in the business growth, many of such companies may not survive.
4. Physical vs. Virtual Products:
Find out if the products being promoted by the NWM Company are physical products or virtual products. The selling of physical products encounters additional problems of logistics and delivery. Many people do not want to carry the physical products for door to door selling. Further, the NWM Company also may face problems in logistics and timely delivery of the products in new markets / geographies. These logistics problems may slow down the growth rate and expansion plans of the Company. But if they are virtual products, say internet products or services, then there are neither logistics nor delivery problems. As internet e-commerce is growing faster, there are better chances of higher growth for virtual products or services, provided they are need based and reasonably priced.
5. Value for Money Products / Services:
The price of the products offered to the networkers by the NWM Company should be far less than the normal market price. Suppose, the price offered through NWM is higher than the market price. (This is the case with majority of NWM companies, as they have to factor in the large amount of compensation payable to all the eligible uplines and downlines). If this being the case, then how you can persuade a new prospect to buy your Company’s product? Your prospect may prefer to buy the product in the open market that through NWM. The critical aspect for the success of NWM is the product pricing – it should be the value for money product.
6. Monthly Purchases vs. One-Time Purchase:
Many of the NWM companies make it mandatory for its distributors (networkers) to buy their products every month (particularly FMCG products). In some companies, a new member can join by purchasing the products / services only once in their lifetime (and pay a nominal renewal fee at the end of every year). You have to calculate the total cost of membership on per annum basis. It is always preferable to pay one-time cost, rather than paying every month.
7. Geographical Limitations vs. Global Markets:
Most of the NWM companies operate in the brick & mortar industry, dealing in physical products. Because of the logistics and delivery problems, there are geographical limitations by which you will be required to promote the products only in certain areas / states. As these are physical products, you can not seek prospects outside your country, as any sales outside your country are subject to your Government laws and regulations and on many occasions, you may be required to obtain a regular Export – Import Code from Govt. agencies. But if they are virtual products or services, they can be sold through Internet ecommerce, where most of such Govt. controls are relaxed. So, the entire world would become your market, instead of confining yourself within your local area / state.
8. Timing – Momentum vs. Stability Stage:
Every industry / Company goes through at least 4 Stages – Formulation, Concentration, Momentum and Stability. Anybody entering the industry / Company, before the onset of Momentum, stands to gain a huge advantage. Once the company gets into Momentum, the growth becomes exponential. However, once the company reaches the Stability stage, then the growth rate tapers down.
9. Future Trends – Saturated or Emerging Markets?:
If the NWM Company is operating in the traditional brick & mortar industry and where the market is already saturated, then the growth prospects may not be attractive. But if the Company is operating in an Emerging market, where say, the market penetration is less than 5% and if it is a mass consumption based market, then the future growth prospects will be phenomenal. For example, when mobile phones were introduced in India about 12 years ago, only a few people could afford them, due to steep tariffs (say at Rs. 16 / minute for outgoing calls and Rs. 8 / minute for incoming calls). But with the market opening up to competition, the tariffs fell drastically and millions of people started using the mobile phones. Currently, India is ranked 2nd in the world (after China), in terms of number of mobile phones. Those who entered the mobile phone industry about ten years ago have largely benefited and amassed huge income and wealth. But now there is intense competition, and it is difficult to make huge money in this industry now. Hence, any communication product or service, which has future potential for mass consumption, will have exponential growth.
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