------------------ Death, Taxes and... ------------------ by Michael Gifford THE BIG THREE In case you haven't noticed, there are now three certainties in life: Death, taxes, and someone asking you to take a look at their multi-level marketing opportunity. A discussion of death is certainly worthwhile but is more suitable in a religious forum. As far as addressing the issue of taxes is concerned, I'd rather not, thank you. But what about those multi-level marketing pitches? Which ones are legitimate? Which ones are out and out scams? How can you tell the difference? This is worthy of our consideration here. MULTI-LEVEL MARKETING IS LEGITIMATE First let's note that there are good, solid, completely legal multi-level marketing companies out there. Granted, they are few and far between but, nonetheless, they do exist. Certainly there is no business organization more respected than the Better Business Bureau. One of its official publications says regarding multi-level marketing: "Multi-level marketing, a direct sales system, is a well-established, legitimate form of business." (http://www.bbb.org/library/workat.asp). The Federal Trade Commission, a U.S. government agency, perhaps unwittingly validated MLM when it contrasted it with illegal pyramid schemes. In an article entitled, "Profits In Pyramid Schemes? Don't Bank On It!", the FTC wrote, "Multi-level marketing plans are a way to sell goods or services through distributors. Pyramid schemes have a similar structure, but a completely different focus. They concentrate on the commissions you could earn just for recruiting new distributors, and generally ignore the marketing and selling of products or services." (http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.htm) That a government agency recognizes the distinction between MLM and an illegal pyramid should be enough to answer those who automatically lump all MLM programs in with these lawless scams. MLM is inherently legal and a viable business model. It is the abuses that have led to the contempt in which it is held in the minds of some. THE CRITERIA I know I'm not the first to tackle the issue of what constitutes a credible multi-level marketing opportunity. If you want to do more research, simply go on-line to Yahoo or Alta Vista and do a search using the words, "multi level marketing." Alta Vista cited 58,833 web pages containing these words. My point of reference in this discussion is rooted in the research I began conducting on the subject in 1995. I had been approached several times over the years by friends and family members with this opportunity or that and had rejected each. However, in 1995 I decided to see what this industry was all about. I thoroughly familiarized myself with the legalities of network marketing in general and the practicalities of various companies in particular. Following are just a few of the basic questions I believe a person should ask before getting involved in any multi-level marketing opportunity. IS THERE A VIABLE PRODUCT OR SERVICE? If there's not, it is indeed an illegal pyramid. By law the company must be offering something of value separate and apart from an opportunity to earn money. The product line or services being offered should be clearly presented in the company's presentations and literature. DOES IT COST MONEY TO BECOME A REPRESENTATIVE? This ties in closely with the previous point. It is illegal to charge someone to become a distributor. For example, if a company says you have to pay $100.00 in order to sell their product and earn commissions, you'd better run the other way. This is not to say you won't have to spend money in order to earn money. You will undoubtedly need to attend trainings, purchase sales materials, make long distance phone calls, etc. But there is a difference between these expenditures and a requirement to pay in order to get paid. IS THE COMPENSATION PLAN REASONABLE? I remember one audio presentation to which I listened. After about twenty minutes the gentleman was saying, "Now on level such and such you'll have 40,000 distributors in your organization and you'll be earning one half of one cent per distributor and...." (Click!) I shut him off there. Frankly, if it was going to take me 40,000 people to earn even a decent part-time income, it just wasn't worth it. Go over the company's compensation plan carefully. Ask as many questions as you need to ask to make sure you understand it. HOW LONG HAS THE COMPANY BEEN IN BUSINESS? Most will advise that you not join a company that is less than five years old. The reason is because so many multi-level marketing companies have come and gone within that five year period. I'll express slight disagreement with this wisdom. After all, how would any business ever get past that five year threshold if everyone refused to do business with them in their first five years? I believe that by conducting careful research into a company, you can find strong, legitimate opportunities even in companies that are just starting up. This leads to the next topic. HOW DO I RESEARCH A COMPANY? First remember that knowledge is power. The more you know about a company, the better prepared you will be in making a decision regarding your involvement with it. Granted, some will chastise you for your skepticism. Some will even write you off because they only want to sign up people who can make quick decisions. Hopefully I'm not overworking the clichés here but another good one that applies is, "Better safe than sorry." If someone tells you not to bother checking out their company, that's reason enough to pass on to the next one on your list. Get as much of the company's literature as you can and familiarize yourself with it. Sit down with a respected friend or even legal advisor and ask them to examine it with you. Visit the corporate headquarters if you can. Meet with the president of the company. Of course, don't expect anyone in the corporate office to just open the books to you. Be reasonable and go with the simple intention of getting to know the leadership of the company better. Contact the local BBB or Attorney General of the state in which the company is headquartered. Keep in mind that just because there is a complaint filed against a company does not necessarily mean the company is bad. It could just mean that there was a disgruntled distributor who was not satisfied with how the company handled their disagreement. On the other hand, if there is an injunction against the company or a "cease and desist" order, a red flag should go up and you should conduct further investigation. Listen to the distributors. How have they used the products or services? How have they benefited from them? Why did they get involved with the company? Have they been paid what is due them? (Please notice the way I phrased that last question. To me, the fact that the company pays what it owes is significantly more important than what a distributor earns. It disgusts me to see people flashing around copies of their checks. I really couldn't care less how much a person has made in an opportunity because his skills are probably much different than mine and his ability to earn will not come close to reflecting my potential. I just want to make sure that the company consistently pays what it has promised to pay.) How long should all of this research take? Of course, you're the final judge of that, but in most cases it won't take more than 10 hours to view the literature, talk to distributors and check a company's reputation with various organizations and offices such as those mentioned. WHAT DO I WANT? When I decided to take a serious look at MLM, I went through 65 different companies. It took me about three weeks. I was able to rule out some of these companies solely on the basis of their literature. Others I discarded after I called the BBB or an Attorney General. Still others I tossed aside because their product, service or compensation plan just didn't appeal to me. I sincerely believe I was as open-minded as any person could ever be as I analyzed each opportunity. You'll find that this is another quality that will help you make the right choice. FOR EVERYONE? No, multi-level marketing is not for everyone. But if you're looking for a way to go into business from home, don't rule it out. Approach it as you would any business. Don't get caught up in the hype because there is plenty of it out there. Do your research and get the facts. Then, if you decide to get involved in MLM, give it 110% and you may find it to be a most rewarding means of making a living from home. ------------------------------------------------ Michael Gifford is the author of "There's No Business Like Home Business." He is also the editor of the free e-zine, "Home Biz Journal." Visit http://www.nobizlikehomebiz.com to learn more. He can be reached at expectgreatness@nobizlikehomebiz.com or by calling 800-528-1251. ------------------------------------------------