Shocking MLM Compaines

Today I want to talk about another craze that is becoming quite popular in the MLM industry. Almost daily I am approached with another MLM company selling electric power. Most focus entirely on this as a company, and fall into the category of a One Trick Pony (link to my post from yesterday), which has its own set of issues. Others are existing companies who have jumped on the electrical power bandwagon. Either way, if you play with electricity, and you do not know what you are doing, you are eventually going to get a shock.

Let’s have a brief history lesson. This sort of explosion in the MLM world has happened before following the deregulation of long distance telephone service. There are some similarities here, and some big differences. Understanding these will help us get a better handle on this sort of company.

For starters, let’s look at how these MLM Companies did when telephones were deregulated. Much like today, with electric power, MLM Companies were springing up by the dozens, if not hundreds, trying to capitalize on this phenomenon. The biggest issue with this type of company, as well as the electric companies of today, is that they are only a reseller. Most successful MLM Companies have their own products, but this type of company, being a reseller, is at the mercy of the actual service provider. When that service provider changes prices, or other regulations are imposed, it can be disastrous. Such was the case for the long distance MLM Companies. In that case, competition drove the prices so low that there were no longer enough margins to pay commissions, and most went out of business. The few that survived were the ones who were ahead of the curve and jumped into other areas. 

Now, these two examples differ in one major way. In the 80’s, when long distance was deregulated, the laws of supply and demand took control. As competition increased, prices went down, and demand started to rise. With phone service, people were able to adjust usage as prices changed. With electric power, this is not such an issue. It’s not as if people will decide to leave their lights on longer just because prices go down a bit. Plus, prices for long distance were not tied to so many other factors. Even with electric service providers being deregulated, there are still many pieces of legislation on the books, as well as in the works, that can drastically affect the prices of energy. 

All the complex elements aside, the likelihood of electric prices ever dropping to almost nothing, as in the example of long distance service, is slim to none. The bottom line is, demand will not see the sort of increase with electric service, so prices will surely not drop. On the other hand, there are many other factors at work that cause some serious volatility. Between so much of the energy industry being traded on the Commodities market and the move toward sustainable energy solutions, not to mention politics, this is yet another type of MLM company that has a lot of potential both for fast income, and for disaster. If history tells us anything, it is that such companies can produce large income potential for short periods of time, but are not safe bets for the long term.

Have you ever made the wrong selection when choosing a company?  How did you come to the realization that you had made a mistake? Would it not be easier if you knew how to evaluate a company ahead of time? It really is, and I can help you. Start educating yourself today by reading "Success in 10 Steps". After you read this, I will send you some recorded training calls that will teach you how to analyze every aspect of an MLM Company, including one on the 5 Pillars to Success in Network Marketing. This is all free of charge, and you cannot get a better education in this industry anywhere, at any price. Trust me, I have looked.

Big MLM Tip - One Trick Pony

The MLM world is full of companies that fall into the "One Trick Pony" category. As a matter of fact, I would say that this accounts for a large percentage of MLM Companies. What is a One Trick Pony? It is a company that offers only one product or service.  You could widen this definition to include companies with a single product line. A single product might be okay to start, but more should be added soon. 

So, what's wrong with a single product company? We all have our niche, but a single product company creates a very narrow niche. This can put a serious dent in your number of prospective partners. 

For example, if your only product is a weight control product, you have cut your prospect pool down to only people who need to lose weight. While that is still a large number, it would be easier if you had a larger number of potential prospects to start with. Also, what happens when people use the product? In the weight loss example, either the product dose not work as promised, in which case people quit buying, or it does work, and people lose weight, and eventually quit buying the product. For MLM to work, it requires ongoing sales. If people stop using the products, for whatever reason, residual income is going to be non-existent. 

Now, there are companies out there who have several products listed on their website, but they would still fall in the category of a single product company. MLM Companies often times take a single product, then create a few different flavors and tell the world they have multiple products. The other way a company could fall into this category is by creating such a narrow variety of products they are virtually all the same. 5 or 6 products, all revolving around a particular ingredient, or all intended to have a similar affect, are the equivalent of a single product. 

The problem is, with a single product, or narrow niche, MLM Company is the field of prospective business partners. Face it; there are more prospective partners for a general nutritional company than for a company who focuses only on weight loss or some other narrow niche. Does this mean you cannot make it work with a Single Product MLM Company? Not at all. 

As with the most of this series, my intent is not to be overly critical, but to let you know what you have to work with. It is up to you to decide how wide a net you care to cast out.

Now, with that being said, this is where we enter the really critical part of this post. There is one other thing to consider when looking at a single product company. You have got to look at the company ownership, and where they got their start. Many of the single product MLM Companies out there are nothing more than an off shoot of a larger, outdated, flat-lined MLM Company. The original company starts seeing a lack of growth, so they find some new product, and launch a new company. Then, they pick the most active people from the original company and convince them to jump over to this new company. Sadly, the people in the original company just lost large portions of their business because their company stole them away. So, if they did it once, do you think they may do it again? Do you want your business stolen from you?

MLM Tip - Best MLM Opportunities - MLM Company Research

Okay, you have found a company that appears to be one of the Best MLM Opportunities today. Now it is time to do a little MLM Company Research. 

Yesterday we talked about the MLM Comp Plan. Today we want to go a little deeper into researching the company and its leadership. Google is your friend when performing MLM Company Research.  If you dig enough, you can find anything about anyone or any company. 

I usually start by finding out how long the company has been in business. Anything under two years is a red flag since the odds are it will not be around that long. 

Next, check out the company leadership. Are they from the MLM world or fortune 500? This makes a Big difference. The corporate guys have a hard time spelling MLM. 

We talked last week about analyzing MLM Compensation Plans. That would be the next thing to look at. 

After these, you will want to take a look at the company’s position in the market, and what the market is doing in that niche. This will be our topic for tomorrow.

Big MLM Tip of the Day: The 5 Pillars of Success in Network Marketing #2 Timing in the Company, and Timing in the Industry

First let's look at timing in the company. You never want to be in a start-up company. 

When over 90% of new companies fail in a year, it is best to wait and see how it plays out. If it's a good deal now, it will be even better in two years after it has stood the test of time. 

On the same token, you may not want to get involved with a really old company that has flat lined and is experiencing very little growth. It is really hard to build in some of these. 

Timing in the industry is important too. For example, let's look at technology: 

Most tech stuff that costs money today will be free in less than two years. How will you be able to compete if others are offering the same service for free? 

Telephone service is another good example: 

After long distance was deregulated in the 80's, companies sprang up overnight to take advantage of that. The selling was easy because people could save a lot of money. 

Today, with most people having unlimted long distance for a flat rate, such a business would be hard to build. 

Be sure the timing is right. 

Tomorrow we will discuss Pillar #3: Products.

Big MLM Tip of the Day: MLM Companies: Publicly Traded vs Privately Held

When looking for a network marketing company, should you pay attention to whether the company is publicly traded? 

Absolutely, there are some issues with publicly traded companies in MLM. Mostly, they have investors to keep happy, and usually have a great deal more overhead. More overhead means less money to pay distributors. 

Therefore, you will need more people to make the same amount of money compared to a similar privately held company. We will cover more on this at a later date. Just keep this in mind when researching a company.

Big MLM Tip of the Day: Build It Once, Build It for Life

That is the promise of MLM. 

You are told that you can built it and retire and the checks will keep rolling in. 

As long as you are with a reputable company, this is the case. Sadly, there are a lot of MLM companies out there that sneak things into their policies and procedures that allow them to confiscate your check, and there is nothing you can do about it. 

It is in the contract you agreed to. Read your contract carefully. 

There are many stories of people who built huge organizations only to lose it all. Don't let this happen to you.

Big MLM Tip of the Day Do Your Homework

You should research any company before you consider joining. Most MLM failure can be tracked back to a poorly run company.

Do a Google search on the company and put the word "scam" after the company name. 

Do searches on the company owners and the person trying to recruit you. If the website does not list an owner's name or some sort of contact info, RUN. See what kind of experience these people have. 

From there you can make a more informed decision.

If you would like to know more about how to select a company, I suggest downloading the following MP3 file and giving it a listen. 

5 Pillars to Success

Big MLM Tip of the Day: Read Your Contract

Do you know what is in your contract? Do you even know where it is? 

Most people would answer no to both questions. Would you be surprised to know that most MLM companies include clauses such as being able to cancel your contract in 30 days with a written notice with or without cause? 

Some even have sponsoring requirements or minimum sales to maintain. If you do not meet the requirements, they can shut you down. 

This actually happens quite frequently. 

Once you know what these requirements are you can make a decision as to whether this is good for you. 

When reading the policies and procedures, I would suggest starting at the last section. They always save the bad stuff for the end. Bottom line, read your contract. 

I hate hearing about people who built a business only to have it ripped away from them.