Why Due Diligence is a Must. 5 Critical Questions to Ask.

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Are you considering a network marketing or a direct sales company as a home-based business?

Many people join a network marketing company because of the individual or individuals that introduce them to it.  Friends and family members you trust and have confidence in, give you the impression that it is a good company to join with good products and of course want you to be part of their team.

Yes sometimes gut feelings are good, but before making any business or even product-use decision, you need to do your ‘due diligence’.

Too often we accept peoples’ opinions or marketing ploys without doing our own investigation of the facts.  You must take a step back from the feeling of urgency or even pressure from the sales spiel, and assess a company in a logical, professional way.

When I evaluate real estate investment properties, I do a thorough due diligence process to make sure that I have made the right decision on this high risk investment. The same goes for investing in a business, even if it is a lower risk financially and even if it’s a part time gig to start with, the due diligence process must be done.

Today there is so much information available on-line to help you with conducting your own due diligence.  In addition, the individual introducing you to the company should be able to answer any specific questions you have or at least put you in contact with someone who can.  Remember, you are making a business decision here, so make the effort to remove the emotional factors from it.  You have the right to do so.

According to the Direct Selling Association (DSA) and the World Federation Of Direct Selling Associations, (WFDSA) the market is $183 billion worldwide with 103 million distributors. (Year 2015)

So here are 5 main questions for you to consider in evaluating a network marketing company and what it has to offer.

1.  Does the company have a clear and strong vision and mission? This is very important as it will give you an indication whether the company is in for the long or short term.  You don’t want to join a company that is going to disappear after you get started, and certainly strong vision and mission statements will give you insight on how serious the company is about its business. 

Today many companies are applying the Social Business Model, wherein they give back to humanity (through charities, non-government organizations) in some way to address today’s major social issues (malnutrition, lack of proper clothing, disease research, etc).  This kind of business model indicates that the company is committed to more than just having you sell or promote its products.  This also makes the company reputable.  Check to see if it is a member of various respected industry groups and associations.  Finally, ask yourself is the company a fit for me?

2.  Are the leaders credible and who are they?  Ah yes, take me to your leader!  Knowing  who the top people are, is essential.  Who are the members of the leadership team and what are their credentials?  Have they proven themselves with the company already (in generating growth) and in their previous business adventures?  Are they approachable and do they treat all members of the company in the same way?  Do they make you feel like family or like pawns in a human chess game? 

I guarantee you that while products are important, you join anything because of your passion and because of the people that are part of it.  You would not join a club that is poorly managed, treats you badly, where the members are snobbish or the provision of information is not transparent.  So learning about or even meeting the top people is key to your due diligence.  In the end you join the people, not the company.

3.  Do you believe in the products?  Unless you are an amazing salesperson who could sell anything to anyone, you have to believe in the products, because then you will speak from the heart and with confidence about them.  Trust me, people will see through you if you don’t believe in the products.  Furthermore, you have to use the products on a daily basis.  Why would I buy something from you if you are not using it?  So assess the company’s products closely.  Are they something you would use and you could easily promote?  Do they stand out as unique products from other similar ones? Are they consumable or would they mainly be a one-time buy? 

Personally, I recommend you want to consider consumable products so that there is constant demand by a customer.  Are they available through automatic shipment (autoship) programs that delivers the products directly to the customer’s door, reducing your overall workload and ultimately building ongoing repeat sales.

4.  Is the remuneration package fair and profitable for you?  This will take some review on your part.  A network marketing home business has certain advantages already when it comes to tax and lifestyle benefits, but what does the company actually offer you if you join as a business builder or as a customer? 

For example, can you get your products for free if you recruit so many customers?  Do you get bonus money if you reach certain ranks?  Is it easy or difficult to advance within the company?  Does the company recognize the performance of its business builders through such things as special experience trips.  Does the company offer a car package/plan? 

Is the company transparent with respect to the remuneration package or is it secretive?  These are all questions that you need to address in researching the company to see if it would be worthwhile to join and whether the company really does support its business builders.

5.  Does the company provide the necessary tools and support for you to be successful?  Now this is very critical.  Why, because when you start you need support from both the tools and from your team leader, the people who have recruited you to join. They will introduce you to the business and the steps that need to be followed, in a consistent manner.  They will introduce you to the tools that you will need to use on a regular basis. 

Does the company have an on-line system that is specifically tailored for you and provides you with easy access to the on-line tools and business information?  Does the company set you up with your own personal web-site that makes it easy for you to enroll new customers and business builders?  And finally, what about your up-line?  Are these people you like and can work with on a daily basis?  Are they available for phone calls, in-homes presentations, or group sessions at the beginning to help you get started?  Doing everything by yourself is possible, but certainly having a trainer or mentor to show you the way, will normally result in faster progression within the company.

These are just some of the questions that come to mind to help you do your due diligence in assessing a network marketing company.  You will probably have your own questions as well and I recommend you develop a due diligence form to help you evaluate the company you are considering. 

For more information you can always visit my web-site and get my book Creating FreedomWhat you need to know to be successful in network marketing which provides much more information about the network or multi-level marketing profession.

And remember . . . 

Network marketing gives people the opportunity, with very low risk and very low financial commitment, to build their own income, to generate assets and to acquire great wealth.” Robert Kiyosaki, Author, The Cashflow Quadrant

About the author 

Deborah MacDonald

After almost 25 years as an entrepreneur, I continue to grow my business, my passive income streams and my wealth. And now I mentor others on their wealth journeys by teaching them how to fund their own freedom lifestyle.

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