A great compensation plan means nothing without a great company, because if the company fails, you don’t get compensation. So read “Why the Right Company is the Most Important to Your Success and Five Ways to Find It” before you even bother getting out your magnifying glass to go over the compensation plan.
1. Which brings us to our first point: beware of very complicated compensation plans. While compensation plans vary with different levels, make sure that it’s easy to understand for the first few levels.
2. What is the payout rate? The industry average is 38% of profits. You want something considerably better than the average.
3. On how many levels can you receive compensation? Infinite is nice, but if you are restricted to a certain number of levels, you will have to work much harder in building your business. Building a business that will let you retire and pay in your retirement is all about residual income from repeat sales. If you can’t go as long in your downlines, you will have to work harder and go wider.
4. Do you have to be a shark and keep swimming to stay alive? Are there monthly quotas for you to buy and to sell? Do you think they are reasonable? Can you do well as a part-timer, or do you have to go full time to make significant income?
5. Do you need to have a cluttered garage? Unless you love doing inventory and hate empty space, think twice about companies that require you to keep and sell products directly. It takes valuable time away from growing your business and can tie up cash.
6. What are the startup costs? Are there yearly fees? Fees for reports? Do you get a free or low cost website? How reasonable do these seem to you?
7. How often do they send checks? Can you easily access your records?
8. Does the compensation plan reward supporting your downline? The more it does this, the more you can be assured that you’ll get help. People have discarded friendships when they haven’t received the support they needed from their upline former friends.
9. It can be lonely and scary, especially if you are new at a home-based business. What is the training and support system like? Is there a system that looks easy to use? Is there ongoing training and support? Recorded phone calls can be very good and helpful, but it’s nice to be able to ask an expert every so often. Are there live calls or meetings that will allow you do that? You should get the phone numbers of at least two people besides your immediate upline and see how they sound.
10. Call the company a few times. Are the representatives consistently helpful, well trained and pleasant? Apart from helping you in the future, your customers will be happily dealing with or annoyed by those people.
11. Please remember if it sounds too good to be true, it probably is a scam, and there are plenty of scams out there (read “Why the Right Company is the Most Important to Your Success and Five Ways to Find It,” if you haven’t already.) If you don’t have to do anything besides perhaps place an ad, why does the company need you? The whole idea behind network marketing is that the company is using the power of people’s networks instead of advertising and product placement fees in stores.
Network marketing had the undeserved reputation of being a pyramid scheme in the past. There are pyramid schemes out there, just like you find Enron’s among big name conventional marketing companies. If something of value isn’t being delivered consistently, and if there aren’t plenty of customers, not mainly members or distributors, just walk like an Egyptian in the opposite direction.