Sales Key to Multilevel Marketing

score Question:
How should I evaluate a multilevel marketing company? Does its profit margin differ from that of other businesses?

Answer:
You're wise to recognize that multilevel marketing [MLM] companies are different beasts. MLMs, such as Amway and Herbalife, let you make money by selling a product or service while earning commissions on the sale of the same product or service made by people you recruited [hence, multilevel]. You need to evaluate four criteria when considering a MLM:

  • The Company: Corey Augenstein, publisher of the MLM Insider, says 85 percent of MLM companies go out of business within the first five years. Most MLMs last less than 18 months. so investigate how many years the company has been in operation and determine its financial stability by checking its creidt rating.

    You can check its litigation history [it'll cost about $25] by calling The United States Corporation Co., [800-221-0770]. In addition, contact the Federal Trade Commission's Bureau of Consumer Protection, [202-326-2222] or the website listed at the end of this article to find out whether the agency has any actions pending against the company.

  • Your commission. To avoid getting ripped off in a pyramid scheme, make sure you won't be making most of your money by signing up other people. A legitimate MLM company distributes products or services that let you earn money by selling.

    To ensure that you;ll be able to make your revenue from selling, the company should offer you a discount of at least 25 percent, preferably more, on retail prices. With a smaller markup, you'll probably have to spend more timem recruiting other people to sell to make enough income.

    Sit down and calculate how many orders you need to reach your desired income goals. If the compensation plan is so complex that you can't make such calculations, you should walk away and look somewhere else.

  • Your skills: Honestly evaluating your interest in selling and your ability to sell. Multilevel marketing is about selling. So don't get taken in by any pitch that claims "This will sell itself." You will only make money if you sell something or sell others on selling the company's offering.
  • the market: Carefully assess if similar products or services exist, how people obtain the, what the competition is charging, whether you would use the product or service, and how many people you knwo who would be interested in it.

Finally, talk with people already participating in the company. Make sure that your contact would not directly profit from your getting involved. Ask for the experience of others through online bulletin boards, news groups and forums to get a range of feedback and opinions.

Federal Trade Commission's Bureau of Consumer Protection

Bill Bryan is a counselor with the Service Corps of Retired Executives. SCORE offers counseling, workshops and seminars on small business operations. You can reach Bryan through SCORE, 515 N Court St. 815-962-0122, for information and appointments.


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