Do you have a Gym Membership?

When you join the local gym, you pay your membership fee, you sign a document stating that you are responsible for yourself while using the equipment, and you get a plastic card which identifies you as a member. Through a very simple set of steps, the benefits of regular exercise are available to you.

A lot of people seem to join MLM companies in the same fashion. They pay a membership fee, sign some document with standard legal jargon in it, and receive a certificate of some sort which allows them to act as an independent distributor for the given MLM company. A few simple steps open the door to financial independence, or that is at least what they were told by the person who urged them to join.

The process is duplicable in the sense that these people then recruit members in the same way, resulting in a large amount of distributors who are wishing for financial independence, but without a firm grasp on exactly what they are doing. Some of these people will undoubtedly make a bit of money, but it is unlikely to be enough to replace their main job, or to secure their future.

When you join an MLM company as an independent distributor, you are in fact starting your own business!

When you start your own business – it doesn’t matter whether it is a traditional business, a franchise, or an MLM distributorship – you have to go through a due diligence process. If you want your business to be successful, you need to ensure that there is a solid foundation supporting you and your business. The start-up cost for a business varies, but this is technically irrelevant if you are serious about being successful. Although, having said that, it is a lot easier to be serious about a venture that requires millions of dollars in start-up capital, as opposed to an MLM distributorship, which may require $100 or less.

The due diligence process for joining an MLM company is not difficult, so why don’t more people follow through with it before joining? I think the main reason is because of ignorance – distributors simply don’t know (or don’t want to know) the real facts about their company. The second reason is because of greed – the potential income from the company (as presented by an existing distributor) overrides any thoughts of due diligence.

Make every decision as if you owned the whole company. – Robert Townsend

One thing you want to do before getting involved in any MLM company is to get hold of (and read) their “Policies & Procedures” document. The simple fact is that once you provide your signature, to become a distributor, you are legally bound by everything in this document. By not reading the rules, but still agreeing to them (by signing the distributor agreement) you have placed the future success of your business squarely in the hands of the company and your sponsor. Are you prepared to entrust your success to another person or entity?

Knowing a bit about the company is also important, and I am not talking about the information that you are given in the opportunity presentations. The following five points encompass a due diligence test developed by Michael Dlouhy based on his experience with over 100 different MLM companies. If your potential sponsor can’t help you find this information, then Google can be an invaluable tool.

1. Company Management Experience with Integrity
   Find out who runs the company – do they have experience in MLM companies, or is their experience purely corporate? Have they been involved in any ventures that have turned sour in the past?
2. Timing in the Company / Timing in the Industry
   Is the company brand new, or have they been established for a longer time? Is there an existing market for their products? Will the products still be sustainable in a few years time?
3. A Product Line that is Remarkable
   All MLM companies have great products. You are not necessarily looking for a product that you personally are enamoured with (or even one that you would use) – you are looking for a product that a majority of people need or want.
4. A Compensation Plan that pays even Part-time Members
   A good measure of compensation plans is to calculate how many people you need to have in your down-line to make $10,000 per month (or, any given amount that you are aiming for). Obviously, a smaller amount of people is better.
5. A Proven System that Duplicates even if you quit
   Can you duplicate what your sponsor is doing? Is there a system in place for training and support? If you leave the company, will the system provide for those you have sponsored?

The above is essentially the recommended research before you commit your signature to a distributor agreement. If you are already acting as an independent distributor for an MLM company, then I would suggest that you at the very least make sure that you have read the “Policies & Procedures” document. If you have any questions, please don’t hesitate to contact me. More information can also be found in Michael Dlouhy’s book: Success in 10 Steps.