Analyze the Companies in Network Marketing

If you have read my post about why the principles that govern Network Marketing are superior to those that govern traditional business then this post is the next logical step in understanding the industry. If you haven’t yet read it I would encourage you to do so at this link.

Now, I’m assuming that you have read my article about Principles of the Network Marketing model and that you are across that bridge. I am assuming that you have reached that logical conclusion that the network marketing business model is indeed superior. The next step then is the ability to analyze the companies and opportunities within the industry and determine what factors make some better than others. The logical conclusion is that if some companies are better than others at any given moment there must be consistent factors that we could recognize that determine which are the better companies and opportunities. This article’s purpose is to find those factors and without applying them to any specific company or opportunity.

If you truly understand the business model than you can agree with me that the number one factor that separates the true “opportunity” that exists in a company is it’s timing in the marketplace. It is the Golden Law of this industry and it lays the foundation for the rest of this article. 70% of the fortunes created in this industry are generated by people who get involved in the foundation of a company. What is the foundation? All business go through three standard cycles of business. Foundation, Hyper-Growth, & Maturity. Big money can be made in the Hyper-Growth stage and even perhaps in the Maturity, but History and logic tell us that the big financial opportunities exist for people that get into the foundation of a company.

Ok, that’s the first law of the industry. Get into the beginning of a company. How do you know if it’s the beginning? Generally if a company hasn’t hit hyper-growth by its 8th or 9th year it isn’t going to happen. When the business has a stronger focus on finding new team members you might be in the foundation. Generally as a company begins to hit hyper-growth the products become popularized and a larger portion of the volume of sales come from customers and return customers instead of new team members.

If we accept that the best thing you can do is get into the beginning than we also have to understand the number one risk involved is that your company being so young could tank, fail, and crash. Most businesses do in our industry just like every other industry. How do you manage that risk and at the same time find a company that has the potential to become a huge giant.

Lets start by talking about the history of the industry and what we can learn from companies that have already come along and become substantial players. To the best of my knowledge there have only ever been 7 companies in the history of this industry to achieve what we call Billion Dollar status. Billion dollar status means they have reached a point in which they are doing over one billion dollars or more in sales within one year and have sustained it. Seven isn’t many for a 60 year old industry. In fact history has shown that a new Billion Dollar company only comes around every 6 to 10 years or so.

So, lets dive into the meat. What are those factors that minimize the risk of failure and maximize the potential of hitting Billion Dollar status? These are the factors that create the “perfect storm” in this industry once the timing requirement of being in the foundation is met.

1.    Experienced Management
2.    Financial Backing
3.    Global Vision
4.    Product Line
5.    Compensation Plan
6.    Training/Coaching –Duplication

1. Experienced Management. It takes more than a couple of rookies to really have huge success in this industry. You have to have a team of executives that have massive experience and success in the industry. They have to know how to ship product on time, pay on time, open international markets, and create a profitable pay-plan.
2. Financial Backing. Companies fail most of the time because they are under managed and under capitalized. In our industry the under capitalized is the bigger killer. It takes big money to create product line, open markets, and attract the big leaders that we talked about in number one. Some companies may have enough money to survive those first few years until they are profitable but you are looking for a company that has the big money necessary to go global, attract leadership, and launch products.
3. Global Vision. If you really want to have massive financial success logic dictates that you need to go international. More market share means more money and the earlier in the company that international markets open the better. This can create an international frenzy when other markets also have a ground floor international opportunity. This is so super rare that I have only seen it happen once or twice.
4. Product Line. For most people they think this is the only factor. While it is super important it isn’t alone. There are many “sub-factors” to the product line that determine it’s long term success.
1. First to Market. Copy-Cat products will never make Billion Status. Pepsi will never be bigger than Coke, Wendy’s will never surpass McDonalds and the Microsoft Zune will never beat out the IPod. First to Market worldwide products are a must.
2. Universal Appeal. This is about Target Market. Can children & seniors use the product? Is it limited to one per household? Will it sell in every international market?
3. Consumable. Repeat Business is important so the product has to be consumable.
4. Marketability. Can you give out samples, show results? Is the product tangible to the person looking at the business? Can they understand it inside of a 5 minute presentation?
5. Comp. Plan. Can you be profitable quickly? Do you have strong incentive to help others be successful? Is there a such thing as a bad position?
6. Training/Coaching & Duplication. You can have all the perfect factors in place but if you don’t have training and support than what difference does it make? It is necessary for a company to attract BIG Field Leadership from other companies. These big leaders who have a track record of success not only have to be a part of the organization but they need to create simple systems of duplication. The success in this industry is in duplication. How easy is it for anyone to do it? Big leaders create training and action programs that are duplicable and follow-able for anyone.

I hope that this has been helpful. These are the factors that you can use to look at the companies that exist in this industry. Choosing the best company for you is the number one decision you can make if you want to have huge financial success. By taking the “Outside In” look at the industry you are doing what most don’t. Most people learn about the industry via a company that gets them involved. They then have the unfortunate “Inside Out” look at the industry and don’t understand why they aren’t having the success they want and why one company might be better than others.

Jacob Paulsen