Network Marketing Companies: Top 5 Things to Watch Out For!

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There are over 5000 network marketing companies currently around, therefore it can be tough to choose which ones are the best and which ones to stay away from. Today in this blog I am going to break down exactly what you should be looking for (if you haven’t already found a company) or what you should think about now (if you’re currently with a company) that will help you understand why some companies last for decades, and why many are doomed to fail in their first couple years.

DISCLAIMER: EVERYTHING I’m writing about today is based on facts, not opinions. I may offend some of you who are in certain companies, but know that this has nothing to do with me or my company, I am simply trying to warn network marketers so they don’t lose reputation/money/time/etc.

Let me also say that network marketing is the lowest risk, best way to become wealthy and sustain that wealth over time for any type of person. So if you find a company that passes this 5 rule test and resonates with you, work as hard as you can with that company for a couple of years and you will be a very happy, rich person who made a TON of great relationships along the way!

Here are the Top 5 things to watch out for with different network marketing companies:

#1. Network Marketing Companies with Founders Who Have Little/No Experience in MLM!

Notice I didn’t say little to no experience in BUSINESS,  but little to no experience in MLM or direct sales. Many businessmen who have been in corporate America all of their lives or have owned their own companies before (not mlm or direct sales) begin to notice the potential and major cash flow of network marketing so decide they want to jump into it and own their own networking company.

A lot of start up network marketing companies have this problem. Unfortunately, network marketing as a whole, is an entirely different animal than regular business. There are completely different legal issues, different pay out system, different culture you have to create, etc. In order to create a billion dollar, healthy company that lasts for decades, there are a LOT of details that go into the company and a lot of experience is needed to fully understand these aspects. Always make sure you understand who the founders are and what they have accomplished in their lives so you don’t promote a company that eventually goes out of business and as a result you lose your reputation.

#2. Network Marketing Companies’ Comp Plans!

This is a simple topic to comprehend. There are 2 major problems to look out for when it comes to comp plans in network marketing companies:

1. What happens in a lot of newer network marketing companies is that they pay out A LOT in the beginning in hopes to create a lot of buzz and excitement with the company. Eventually they realize that they can’t sustain the payout (RED FLAG) and they pull back on the comp plan, changing it to be less profitable for the reps and more profitable for the company. From here, everything falls apart. If a company has a 75% payout or more, beware!

2. There are certain compensation plans that have withheld the test of time and are fair to both the reps/company, and there are some that are not. Remember how I just said if they do a 75% payout or above beware? Sounds kind of funny right? Wouldn’t you WANT your company to pay out more? Not necessarily, and here’s why… The more they pay out past 50%, the more likely the company will go under. You want to find a solid company that pays out about 50% to ensure that it will withstand the test of time. One major comp plan to watch out for are matrices, if someone approaches you and tells you it’s a forced matrix or some kind of other matrix, make SURE you research those network marketing companies extremely well before jumping in. I’m not saying they’re ALL flawed, just most of them don’t last.

#3. Network Marketing Companies Who Pay Leaders to Come Over!

Unlike the other two mentioned above, this one is less “set in stone” to fail if they do this, and let me preface by saying there have been companies that have succeeded by doing this, but mostly if the company pays a big leader to come over there are serious problems. This is a very common problem and causes a lot of issues between the reps and the company.

The reps of the company begin to question the ethics of the company, and in turn lose their momentum and drive to succeed. In addition many of the leaders who were paid lose their drive as well because they’re getting a check anyways. If everyone comes in at the same level and earns their way to the top rather than being bought into it, it creates a much more stable environment for everyone.

Many network marketing companies that do this don’t see the problems until years down the road, but eventually this issue surfaces and afterwords it’s a very hard problem to correct. Company culture is one of the most important things in network marketing companies, when that is jeopardized there’s little anyone can do.

#4. Companies That Really ARE Pyramid Schemes!

Despite what all of the ignorant people have told you (who most likely did a network marketing company then quit because they didn’t have discipline/focus and wanted to blame the company) network marketing is NOT a pyramid scheme! Network marketing companies are legitimate businesses that sell products/services through representatives, however there are some companies out there that call themselves “network marketing” and are absolutely illegal!

Network Marketing as a whole is not illegal, in fact it’s the only model that allows someone to make huge amounts of money for very low risk and fulfill all of their dreams in a very legitimate and legal fashion. There are companies out there ruining the industry reputation because of their scandals and most of them are known as “cash gifting.” I won’t go into huge details about this, but if you hear this term, or don’t know where a companies headquarters are, etc. (use common sense) run the other direction! Cash gifting is not legitimate and has been abused for a while now.

#5. Network Marketing Companies That Are “Past Their Prime”!

Every other topic I’ve given you was about sustainability, this topic is more to protect you from having a hard time building your business. Network marketing companies that are older and already have hundreds of thousands/millions of reps are much harder to build than companies just starting out or a couple of years old. Companies that have been around and “passed their prime” are definitely sustainable, solid companies, but as far as building them it’s much harder because they are saturated in the market.

I’ve given you some great “tests” to throw at the companies you’re looking into or even your current company. My suggestion would be to find one that is newer but passes these tests because that is where the largest opportunity is. Can you make money in a company that is older and more saturated? Absolutely! But is that where the big money is made and is it easier to build that way? Not at all! If you want the ideal situation, pick a newer company that passes this test, has a solid product, solid culture and solid leaders.

If you find a company that passes this test and one that truly resonates with you then you’ve got a solid business that can most likely sustain itself. There are other things to consider such as culture/ethics/legal team, etc. but these three are the biggest ones that influence longevity. Network marketing is an amazing industry that has made more millionaires than any other, I truly encourage you to take advantage of the huge trend going on right now in home business and use this information to get you to the very top :).

To Your Success!

If you’re looking for a solid company with all the criteria I just mentioned, click HERE

Jessica Perretti


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