SIX KEY QUESTIONS TO ASK BEFORE YOU SET UP A NETWORK MARKETING BUSINESS

4. Can You See a Long Term Future?

On the surface this may seem a 'nothing' question, but in reality it is an important one to ask - are you confident that your business has a long term future?

Although it has had some spectacular successes, the Network Marketing industry has also had a large number of spectacular failures. Realistically, of all the many NM-companies operating today, the vast majority probably won't be operating in 10 years' time.

It's important therefore to assess as carefully as possible the future of any company you intend to align with. That company will in effect become your supplier, and any business needs to have reliable suppliers if they want to stay in business.

Why do Network Marketing companies fail? There are a number of reasons, but the most likely causes are:

(a) Lack of market traction. Their products may be insufficiently attractive to the market. They may be too similar to other, already established products. Or they may even have been on the market too long and are losing their appeal (all products go through a cycle of growth, maturity and contraction - some just take longer than others). It is therefore unwise to depend too much on a new and unproven company, and in the case of longer-established companies a close look at the future of their products is in order.

(b) Lack of financial or organisational stability. I've actually seen network marketing companies which were so successful that they couldn't cope with the growth they generated, and went out of business! It's not always easy to get a good picture of the stability of a company, but a very close look at the management of the company is definitely in order and strongly recommended. Do the directors have a good track record? What is their past history?

(c) Lack of integrity. If your supplier ever decides to move away from the network marketing distribution model and transfer its allegiance to retail distribution, you clearly are not going to have a long-term relationship. This has been known to happen in the past, and it will doubtless happen in the future. It's hard to predict, of course, but again a good close look at the track record of the current directors is strongly recommended. Even then, if ownership of the company should ever change hands, problems could emerge over time.


These are just a few of the things you should consider. The future is always difficult to assess, but it's important to do the best you can. Very often as 'distributors' we tend to look upon our supplier company almost as a parent which can do no wrong. We soak up their marketing hype and we put our complete faith in them. This is very unwise. Remember again that your responsibility is to run your own business, not that of your supplier, and act and judge accordingly.

One possible way to ensure that your business stays in business is to work with more than one network marketing company. This may sound like heresy to some, but it makes good sense to hedge your business bets. Not too many shops sell only one product or product range. I would never recommend signing up with multiple companies offering similar products - to me that would be unethical - but offering two or more completely different types of products from different suppliers could be a very attractive option.

It's certainly an option worth considering. After all, you do want a long term future, don't you?