10 tough questions to ask before starting any Network Marketing business
A big mistake I made when I started our doTERRA business was not looking properly at the business model or compensation plan. I simply fell in love with the products and what they could do and I thought it was a bonus that I got paid money to tell my friends about them. I quickly learned that not all work-from-home opportunities are created equal. Far, far from it.
Did you know that over $200 million dollars is paid out in commissions PER DAY in the network marketing industry?? Right now with so much job insecurity, I’m so incredibly grateful, to the pit of my soul, that we have an income that is passive, that allows us to travel and that aligns with our values.
But many people do FAIL in this industry. In fact, MOST people fail! People who are used to being an employee are “turning entrepreneurial” without stopping to look at what that really means and without asking the tough questions first. It’s not a shiny new toy that promises cocktails on the beach – it’s a business model. Don’t fall for someone selling the “dream” without taking a hard look at the reality first.
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The opportunity is there, and it’s more powerful than ever before. But there are some key things I now understand to be critical in running a successful MLM business. If you’re looking at setting up an additional income stream or launching into a business full time, here are my top 10 things I would ask before starting any Network Marketing Business:
#1 Are you truly invested?
Network Marketing is ridiculously easy to start up. It can be cheaper than filling up a tank of petrol. In our company it’s $35! And the running expenses aren’t there – no rent to pay, no staff to pay, no suppliers to pay…. And sure, that’s appealing for someone considering starting a business from home! But sadly, it’s also a huge problem with the business and a big contributing factor in over 50% of distributors in the industry quitting within the first year and giving the industry a bad name.
The reality is that setting up a facebook page, designing a logo and a business card has zero relation to what it actually takes to run a business from home. Running a business requires continual investment – investment of time, energy, focus, investment in your own personal development. When there is next to no financial investment required, it can give a false sense that no other investment is required. So before starting, ask yourself, would you take out a business loan of $100K (conservative small business set up cost) to start a business right now? If so, what action would you take to make sure you could repay that? What business plan would you have in place? How would you show up in that business in a non-negotiable way each day? How are you getting ready to be the CEO of a multi-million dollar business? Just because the financial investment is minimal, it’s so important that you’re ready to show up as if you’ve invested your life-savings into it – because it’s THAT energy that will bring success.
#2 Is it possible to buy a similar quality product in the shop?
If so, relying on your friends to buy and host for you to support you is going to run thin pretty quickly. Do you want people purchasing from you to do you a favour, to help you with your goals, or does your product genuinely add value to their life? What support do you give after they have bought your product? What is it you’re offering that a shop can’t? And is it what your customer really wants?
#3 Is it truly residual income?
The idea of working from home sounds great, but without residual income, it’s just another job, you just have to be surrounded by piles of washing while you do it! The magic of network marketing is the income that keeps coming in once your business is established or when you have time off. And in return knowing that your customers are receiving a long term impact from your product, not just a one hit wonder. So what is the retention rate of customers in your business?
Normal network marketing is around 6-12% of customers reordering within a year. That means for every 100 people who buy a product, 6-12 of them will buy again within a year. What does that look like as an income structure for you? How long will it take to build a fully residual business income? I personally recommend looking for a business with at least a 60+% retention rate. This is a far stronger business model for you and your family and also demonstrates that the product is making a genuine impact for your customers and gives your business meaning.
#4 Replacement or Luxury?
When there’s a vet bill or the car wheels need replacing… is your product going to be the first thing to fall down your customers’ priority list? Or has your product now replaced many of their normal shopping items? Are your products actually saving them money by purchasing what they used to buy? If your product gives good health to a family, this is going to continue to be a priority for the family regardless of what other priorities they have. Luxury items are nice, but consider a product that meets fundamental ongoing needs for your customer.
Whether they align with your own values or not, the stats show us that the four major categories people invest money in are:
- Making more money / investments
- Weight Loss
Combine any one of these categories with products that serve ongoing, functional needs in the home and you’ll be onto a winner!
#5 Is the focus on recruiting or on serving?
Many multi-level-marketing businesses are focused on recruiting other people to recruit other people. Another annoying industry trait IMO that doesn’t have long term stability as a business when the next shiny thing comes along. I spend the majority of my time in my business working out how to best serve our customers. Our customers make up 85-90% of our business. I design educational programs and resources to inspire and educate whilst helping the minority of my team to build their own businesses – mostly supporting their own customers – just like any other service providing business but with ongoing life-time support! Maybe you love solely recruiting, but if you love creating and educating and making an impact on the health and well-being of families, make sure you choose a product that has a life-long-loving customer base!
#6 Is it a willable business?
Sad but true, one day we’re all gonna die!! What happens to your business then? A bricks & mortar business you can leave to your family. Can you do the same with your network marketing business? Ask before you get started! If you genuinely build a solid a residual income, it would be very very sad to see that die with you and not leave a legacy!!
#7 Will you lose your team?
I was astounded when I heard that in other MLM companies, as soon as you hit a certain level, you are moved to a new team – WT? I LOVE my community, like actual love. These people are the people I love and nurture into the world of well-being, I want to look after them forever! I don’t want to abandon them for a payrise or leave them without continuity of support and community, EVER! Check how the structure works and make sure you won’t be removed from the team and culture you’ve established.
#8 Do you have to carry stock?
I watched a really sad documentary (sent to me by a skeptical friend of course) about how people were being screwed over by network marketing companies – having to buy stock to stay with the company then having to move on that stock. This is NOT a model that screams freedom to me. Our business requires us to carry or invest in ZERO stock (other than my own personal use which I choose to use). Our customers order online through their own account and the company handle all stock, all returns, all logistics, shipping, all problems! And because they are within my team (introduced by me or by someone else within my team), doTERRA pay me commission every time they order – for life! This means we are free to travel around Australia and never have to ship out anything, never have to carry stock or have any input other than continuing to inspire and educate on how to detox the home with all the natural products.
#9 Do you have to lug much around?
When running a workshop or showing people how to use the product, I’ve seen a car-full of products having to be ported around by other distributors. I’d much rather keep the family car as our family car and take in my box of a few oils and not break my back thanks! Check out what I take to a class and how simple it is here: HOW TO RUN A DOTERRA CLASS here.
#10 How much will you actually get paid?
MLM compensation plans can be complex. Some are complex because they offer a varied ways of accessing bonuses to suit your business style – others are complex to confuse you. Some are simple but may not be so generous. It’s like mortgages, loans, mobile phone plans – it’s hard to understand what you’ll actually GET at the end of the day. I’ve broken the doTERRA compensation plan down so you can fully understand it HERE. I feel so lucky that I came across the doTERRA compensation plan. Every plan I’ve looked at since is either heavily focused on recruiting or has other factors that limit earning or require continued sales and targets each and every month. Take a look at the videos to understand how to work out exactly (to the cent!) how much you’ll get paid with doTERRA.
Before you join with the next person offering you an opportunity that seems too good to be true, THESE are the questions to ask to get a clearer picture of what life will really look like starting your own business.
Book a business brainstorm consult HERE and ask me some real questions. Looking forward to talking real with you, Alison x
Alison and Anthony Bartolo – doTERRA Diamond Leaders – currently travelling Australia, living a life of freedom! Check out instagram.com/ordinary_fam or www.facebook.com/ordinaryfamily to check where we’re at right now!