Business Opportunity Selection Criteria

The problem is most people simply don't have the time or the resources to effectively evaluate and compare many programs. So they accept and follow the advice of an inexperienced friend of family member, or they follow the first charismatic MLM leader they meet.

It is very important to take time and do your own research to determine the best opportunity available for you. Doing so will help you avoid spending a great deal of time, effort and money pursuing the wrong opportunity.

When evaluating network marketing companies the key criteria for comparison are:

• The Company and Management Team
• The Companies Policies and Procedures
• The Industry
• The Products or Services
• The Timing
• The Compensation Plan

The Company & Management Team

• Does the management team have high integrity and honesty?
• Does the company have a mission statement along with ethics standards and values?
• Does the company have reasonable overhead cost?
• Is the company financially sound, and solidly capitalized?
• A fair compensation plan that is rewarding to both the full time and the part time distributor?
• A simple and duplicable system that any and all types of people can successfully follow?
• Outstanding support in the way of marketing and training materials?
• Cutting edge technology that makes it easy for independent distributors to recruit, train, and sell products or services.
• No FTC investigations.

The Companies Policies & Procedures

It really angers me that some MLM companies have their entire legal ground covered without giving an inch to you, the hard working distributor who builds the company. There are very few companies that have policies that both protect the company are fair to the distributor.

The policies and procedures manual will tell you everything you need to know about the integrity of your company's management team and just how important YOU really are to them. Unfortunately, allot of us skip this crucial step when we sign up to become distributors.

We skip it because our sign up was based on the trust and relationship we already have with an existing distributor. Or We skip it because we're blinded by the excitement of being able to start our own business. Or We skip it because we're not really expecting to be successful. Whatever the reason, this is a crucial step that has major consequences down the road.

First and foremost, the written policies and procedures are your contract. They define the relationship between you and the company. They are written by lawyers hired by the company. They are written in the company's interests, not yours. They are written to protect the company from you.

Here are the items that will need to be clearly addressed by all prospecitve companies:

• Under what circumstances can/will a distributor be terminated?
• In the termination section, are there clauses like "sole discretion", "final decision", "no appeal" especially in regards to unethical behavior?
• Are there any ongoing committments required by the distributor?
• Are there any annual renewal fees required to maintain your position?
• Does the word "ongoing" appear anywhere, especially with regards to ongoing communication with your entire downline, ongoing training of your entire downline, or ongoing selling or recruiting?
• Does the company allow positions to be sold?

Bottom Line: The policies and procedures of ALL prospecitve companies will be thoroughly vetted.

The Industry

• Nutritional Supplements - 71%
• Personal Care/Skin Care - 14%
• Household Products - 6%
• Telecommunications - 5%
• Other - 4%

The nutritional supplements and personal care/skin care have been proven to offer the greatest chance for long-term success.

• Over 85% of the network marketing companies are nutritional supplement or personal care companies. Why? With the baby boomers entering their 50s, this industry will continue to explode for the next 20 years. Baby boomers have a strong interest in the preventive health benefits of nutritional supplements and personal care products that will protect these markets from a serious downturn even in a negative economic climate.


• Industry experts predict that overall nutritional supplement market growth will continue trending upward, reaching 8 percent in 2011 and 2012, when sales are expected to reach $8.5bn.

The Products

• Traditional: The products can not be too uncommon. It must be similar to other products on the market. The products must have a good track record in the marketplace. Traditional products have mass appeal over a substantial period of time.
• Unique: Although traditional, the products must have a unique twist - something that the competition doesn't have or can't get. A special formulator, an exclusive ingredient, a twist in the formulation, or creative processing can make a products unique. A service, on the other hand, must offer something the competition does not. Services are more difficult to customize. The products must also be exclusive to one company only. It can not be purchased in stores or through other suppliers.
• Consumable: The products must be regularly used up and replaced on a monthly basis (at least). This is one of the most important criteria on the list! Without monthly consumption, it is much more difficult to establish residual income. Distributors are constantly looking for new customers.
• Emotional: The products must induce a positive mental or physical change. Products that help people look and feel better can create an emotional bond between the customer and a specific name-brand products.
• Valuable: The products must be worth the price ... and maybe more! Prices must not be set too high or too low for the perceived value of the products. Also, healthy profit margins are essential in order to finance the company and give incentives to distributors.
• Timely: The products must be in high demand RIGHT NOW. The products must appeal to the masses, especially the baby boomer generation. The baby boomer group consists of 76 million Americans born between 1946 and 1964. They are the largest buying force in the history of North America and have the discretionary income to purchase these products.
• Stable: The products must be in high demand LATER. Take a look twenty years into the future. Will the products still be in high demand? If the answer is yes, you have a winner. If demand on the products increases with time, that's even better.

The Timing

One of the most important keys to exponential profits in network marketing is timing! And there are two elements of timing that will be considered in my business opportunity evaluation; industry timing (see: The Industry section above) and company growth phase timing.

Perhaps the best time to join a business opportunity is in the pre-launch (ground floor) phase, provided all of the above mention criteria are sufficiently satisfied. And for more established companies, best time to join is at the very beginning of the momentum phase. During this momentum growth, if the foundation work has been good, a company can go from obscurity to becoming a household word within 4-10 years.

Both pre-launch and established opportunities have their advantages and disadvantages, and making the right choice comes down to doing thorough research to ensure the long-term viability of the opportunity.

The Compensation Plan

The most commonly used compensation plans in the network marketing industry are the Unilevel, the Matrix, the Stairstep Breakaway, the Binary, and various Hybrid or Combination plans.

Each plan has it's pros and cons however, the binary and unilevel plans are the most widely used.

The Binary Plan

The binary plan is based on a structure of two legs, a right leg and a left leg. Since one-leg downlines are considered illegal by government regulators, two legs are the industry minimum. Distributors can only sponsor two on their first level and everyone else spills down below those two. Maximum commissions are earned by balancing the left and right side of the binary. By the way, over 20% of the programs I've studied are binary plans. The number of companies using the binary plan is increasing dramatically every year.

Most binaries pay weekly. In addition, new distributors can earn their first check their first week and receive that check in the mail within 10 days. This helps with distributor motivation and retention. Also, the binary plan is designed without levels, only volume counts. Levels can restrict distributors from earning commissions on their entire downline. There are no group volume requirements nor group quotas. With a modest personal product volume requirement each month, you remain active to receive commissions on unlimited levels.

The Unilevel Plan

In this plan an independent distributors make money network marketing by recruiting people into his or her downline just as in the binary plan, but the difference is the distributor is paid a set commission percentage for each level of his or her down line.

For instance, if you recruited 10 people they would all be positioned on your first level and if your company states that you make 20% form them then that is how much you earn from them.

You will be paid for multiple levels, so if the people that you recruit start to recruit others they'll be on your second level. If your organizations compensation plan mandates that you will be paid 10% for your second level then that is how much you will make off of these people.

The process continues down a set number of levels determined by your network marketing company's compensation plan.

Separate Fact from Fiction - The truth is in the numbers!

It is also important to separate the hype associated with the the company's marketing plan from the products and services themselves. The key is to analyze the actual numbers. Here are just a few additional criteria you should consider when evaluating compensation plans:

• What percentage of company revenues are paid out in commissions.
• What percentage of sales are purchased by non-distributors (consumers that do not profit from purchase).
• What is the mean average income of the top 1% of distributors.
• What is the mean average income of the bottom 95% of distributors.
• The least amount of people (in your downline) required to generate a 'residual' income of $10,000 per month?
• Initial financial requirements for startup.
• Ongoing financial requirements for distributor to remain active and qualified.

Special Note:

The process of selecting a network marketing company SHOULD NOT depend solely on its pay plan! There are many other essential criteria for selecting a company, and placing too much weight on the compensation plan can be a costly mistake. However, you definitely want to consider DISQUALIFYING companies for their pay plans.

Taking all evaluation criteria into account, my goal is to recommend to our Team Building Project members (for voting) the most realistic, lucrative and legal compensation plan available today.

For your own research purposes you can find detailed descriptions of various network marketing pay plan structures here.

A Word About My Objectivity

Please note that I have no connection or relationship with any network marketing or MLM company. I had previously been involved with two network marketing programs as an independent distributor however; these distributorships were dissolved well before my conceiving and developing the Team Building Project.

Presentation | The Concept | The Process | Selection Criteria | The Founder | Testimonials

David Speake
Olive Branch, MS - United States

Kathy Fann
Rancho Cordova, California - United States

James Rich
Culver City, CA - United States

Antonio Grace
Williamsburg, VA - United States

Roger Foulks
Bradenton, FL - United States

Sharon Grossking
Baltimore, MD - United States

Geoff Willison
Burnett Heads, Queensland - Australia

Lanordo Conn
Carson, CA - United States

Lamar Boone
Sneads, FL - United States

Paul Roberts
St. Albans, WV - United States