Approaching a Network Marketing Opportunity With Caution Will Help to Ensure Your Long Term Success

In my previous article, we took a close examination of the network marketing industry as a viable option for home based business entrepreneurs. It is my firm belief that the current economic catastrophe we’re going through today will spawn thousands of new, home based businesses. People today are disenfranchised with corporate America. No longer is a company able to, or willing to, take care of an employee for life. The person who puts their future into the hands of an employer is living on very thin ice. On the other hand, pursuit of a home based business is rapidly becoming the best option available for anyone to take control of their own financial future. And, no question about it, a network marketing business provides the best path anyone can take toward home based business success.

Building any business – whether it’s an online business, a home based network marketing business or a bricks and mortar business – presents a big challenge not to be taken lightly. Those who take the challenge seriously give themselves a great chance of success. Building a business of any type is an endeavor that must be broken down into manageable steps. The first step to take is due diligence; taking a close examination of a business opportunity. Due diligence is a voluntary step so the initial inclination may be to take this step lightly. But please don’t. Close examination of a business opportunity may very well be the most important step you can take.

Because this series of articles is geared towards network marketing – frequently referred to as multi level marketing, MLM or social marketing – we’ll look at the due diligence steps for this specific industry. This article is meant to take a bird’s eye view of the due diligence you’d want to conduct. If you have any specific questions about the topics discussed in this article, please feel free to contact me and I’d be happy to help.

When evaluating a network marketing opportunity, it’s important their business fit into one of the following markets: growth, niche, emerging or proven. Here is a quick explanation of each – a growth market is young and showing a strong future. A niche market may not have mass appeal but there are enough loyal users out there to justify the product. An emerging market is one just starting out with a promise, but no guarantee, of growth. A proven market is one with a product that’s been around for some length of time and the consumer will always purchase this type of product.

Timing is crucial in a growth or emerging market. For example, when first introduced, long distance calling cards experienced explosive popularity. Early involvement in the industry meant almost certain success. But today, that ship has sailed; the market – as a network marketing opportunity – has all but dried up.

Involvement in a niche market is tricky. Users of niche products tend to be fickle. Their tastes can change rapidly and they wouldn’t think twice about jumping off to the next new, shiny product for that specific niche. Products in niche markets are few and far between and thrive or die on user loyalty.

And then there’s the proven market – the least exciting of the four. Products in proven markets are omnipresent and are consumed in mass quantities by the public. There can be many manufacturers and suppliers of products in the proven market, each of which has their own, specific space. Vitamins and cleaning products are great examples of what can be found in a proven market. The challenge in the proven market is to have some specific characteristic of the product that differentiates itself from the rest of the pack.

It’s critically important during your due diligence that you determine conclusively, up front, what market you’d be most comfortable operating in. Do you have the propensity for risk inherent in an emerging or growth market? Do you have the patience required to build a business in a niche market? Or, perhaps, do you have the fortitude needed to stake out your space in a proven market? You may get more excited over the prospect of operating in one market over the other, and that’s great. Just also make sure that the actual product you’ll be representing garners the same level of enthusiasm. You will never be able to build a truly successful business unless you absolutely love, and believe in, the product you’re representing.

When evaluating a network marketing company there are many important factors to consider. Does the company have a strong balance sheet; do they have no or very low debt? Do they have an attractive compensation plan and an impeccable track record of timely commission payments to their affiliates? Does the company have a strong leadership team? Are their products innovative, proven and in demand? And, do they offer big potential for success because they’re doing business in multiple countries?

Of course, there’s the risk factor involved in representing a company in a proven market versus a niche, emerging or growth market. Many of these questions cannot be answered if the company falls into one of the latter three markets. But, your potential for rapid success is greatly improved as is your risk. There are many network marketing companies who have latched onto current trends and on the surface appeared to have ahd nothing but upside potential. But, in the end, they went belly up and left all of their affiliates out of business. One such company that comes to mind is one I was involved with many years ago. The name of the company was FutureNet who hit the market at a time when the internet was going though an explosive growth phase. They offered internet access through a television set top box. Things looked very promising until the electronics giant, Philips, introduced a superior product called Web TV and FutureNet was crushed and out of business shortly thereafter.

One additional, very important consideration to examine is the network marketing company’s support structure. Namely, ensure for yourself that the person sponsoring you into the business is knowledgeable, competent and can provide you the support you’ll need to grow a substantial business. Because, in network marketing, being part of a good team can often mean the difference between success and mediocrity. And, more specifically about the company itself, make sure their marketing materials and affiliate support is top notch.

This is the second in a series of articles on the MLM / social marketing / network marketing industry. In the next article we’ll go through some self examination steps to go through to determine if multi level marketing is right for you. If you’d like to ensure that you don’t miss out on any installments in this series, I’d be happy to send past and future articles directly to you. Just shoot me an email and I’d be happy to include you on my direct distribution list.