The Right Choice, Part 3: Due Diligence

In this segment, I am going to talk about “doing your due diligence”. This is a very interesting segment because I know unequivocally that MOST PEOPLE DO NOT DO THIS! Most people make an emotional choice and quite frequently, their choice has almost nothing to do with the company but has more to do with the person bringing it to them! Unfortunately, most people are introduced through a friend. And I say unfortunately not because I don’t believe in telling your friends about what you do – I definitely think that’s a fine way to market, but because depending on the friend who is doing the telling this may literally be a great example of the blind leading the blind.   That can turn out ok, if the person bringing you a particular company is a valued financial advisor, and an experienced, SUCCESSFUL NETWORK professional. But, I want to go into the many other ways that anyone can do successful due diligence and what  you can find out is truly valuable, in fact, critical information to help formulate your decision

Although most people DO NOT DO DUE DILIGENCE and frankly make some very bad choices, it can (and should) be done. Doing your due diligence is not as difficult as it may seem, and let me assure you it is entirely worth it! Where to go? First, let’s start with the obvious sources.  Since most of these companies are national (if not global) you can try the United States Better Business Bureau. I would also try the Better Business Bureau in the State where the company is headquartered. Where they are physically located. And here is a key ingredient in your search. Does this company have a PHYSICAL PLANT? An address where interested distributors are invited to tour, to meet owners/representatives of the company and see first hand the width and scope of the company’s physical presence. Quite frequently all operations won’t be collocated, for instance manufacturing, but you should be able to get a tour of the home office – your contact should be proud to set that up. REQUEST IT!  Be very wary of the virtual company with a post office box address, they can also “virtually” disappear over night.

If you want to do your due diligence by phone, here is what I would pursue. Ask the person introducing you to get you on the phone with two separate individuals who are in the top ten money earners of the company.  Your friend does not have to be at that level but should be able to connect upline to that level of support. When you are on the phone with these individuals, the questions you need to have answered are: 

How long have you been in said Company? How many distributors do you have in your downline? What is the monthly volume done in your organization? Don’t ask them how much they make monthly; that’s not exactly kosher (the regulators ask companies not to “check flash”) but you can do the math. If you have looked at that compensation plan, and you understand roughly what the average commission percentage is (remember to watch for payouts not based on 100% of wholesale!), then take that times the volume and Voila, as the French say, you’ve got a fairly rough, no-hype estimate. The reason for knowing the time in the company and the number of distributors is so you can make another estimate. A top networker (and remember you’re asking to talk to one of the top in the company) should be able to see a 10,000 distributor growth for each year in the company. That is a very solid figure. If they are in the ballpark, they probably are pretty good at what they do. The other clue this may give  you if their number is low is that this may indeed be a good, top networker, but the company is just a very slow-grower. It happens!

Much is made of picking a company “in momentum” and believe me, this is not an easy thing to do. For one thing, it precludes a new company that has not yet gone through all the ups and downs of getting started.  Generally speaking, choosing a new company is fraught with peril; the statistics for new startups are abysmal. Network marketing “junkies” are often drawn to one ill-fated prelaunch after another, never learning the lesson that success leaves clues and a good stable growth record means a lot more than being first in something that is bound to crash and burn. However, on the other end of the spectrum, there are simply some companies that have good product lines, good compensation plans but they are just too old.  The “zing” has gone out of the name. Use a little judgment and pick a company with high goals and vision, but one that is debt-free and expanding rapidly. You can find them! 

Another important part of due diligence – the people behind the company – the owners and the executives.  This is something that most just don’t think about, but take it from a network marketing professional, there are names in this industry that those of us that have been around for awhile simply AVOID:

• Owners that have taken company after company up and down into bankruptcy.
• Owners that have a history of leaving distributors high and dry.
• Owners that make a practice of changing compensation plans frequently and not to the distributor’s advantage!
• Owners who have spent time in some of our more dubious centers of higher learning (and I don’t mean universities). This is the negative part of the industry and yet, I know that we have certainly seen these aspects of business in virtually every industry segment in the US – from Enron to Arthur Anderson, on and on. 

So, what to do? First of all, if you have a trusted acquaintance in the industry (not someone who is trying to talk you into that company) ask them. Also, google the names of the owners and see what you get.  There are also some watch-dog websites that have sprung up to try to highlight the bad guys, but a little word of caution here. These sites are sometimes like the National Enquirer, but overall some valuable information, so check it out certainly, but use it as just one indicator.  Go to http://www.mlmwatchdog.com. This particular site has normally had the right scoop.

The track record of the company and the owners of the company are key components in doing your due diligence, but also, of HUGE importance is the track record of the individual(s) who are going to be giving you direct support. This is critical. And in the next segment we will be going into what precisely you should expect in terms of training and support.

Giving you this depth of information is actually very important to me – I have an ulterior motive! I believe if people interested in the industry used these segments as a guide to make their choice, they would have a much improved chance of being successful. And successful people are good for this industry. What isn’t good for the industry is the person who gets in, gets their expectations dashed, and then says – “Oh that was a rip off, it doesn’t work.”

And the truth is they made their choice with about as much thought as buying a pair of shoes – probably less! So, good information is always a good thing. Knowing more is always a good thing.  Informed choices are the best choices! And relying on a friend with no experience is probably the very worst choice. And as a professional networker who has made millions in the industry and plans on continuing that pattern – it is definitely in my best interest to have people pleased with their choices, pleased with the progression of their business!  So, I have an ulterior motive!  I want to enable successful networkers whatever their choice of company – it’s simply good for the industry.

In the next segment as we continue looking at aspects of making the right choice, I plan to get into some detail about what good training and support  look like from your upline mentor.  Then, as we  continue with the column, I will move logically into the next phase. You’ve chosen your company, done your due diligence, now – What are the Right First Steps. As always, HAVE FUN, it’s a great industry with many rewards, and I remain your Network Marketing Mentor.
 

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Contact Candy at 916 408-3637 or CandyW@TheNationalNetWorker.com or via TNNW Blog.