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Pros and Cons of Joining a Beginning MLM Company

July 11, 2015

Joining a beginning MLM company can be both exciting and scary.  It is already difficult to join the MLM Business as it is but joining a beginning MLM company or a startup company makes it even more difficult.  Here are several pros and cons you should know before you join a beginning MLM company.  I have also included several tips that you may follow at the end of this blog post. 

PROS

1. “Positioning is the key.”

Experienced network marketers know that your position in your network organization will play a very important role in your success.  It is comparable to having a higher position in a corporate company.  The higher your position, the higher your income.  CEO’s and Presidents of companies earn a lot more than the regular employees. Those who are in the top ranking position probably have been in the company longer.  Hence, they are well compensated.

Similarly in Network Marketing, those who are able to get a higher position in the network marketing structure will have a higher income potential.  The beauty of network marketing is that you may start at the bottom position and work your way up to the top position by working smart and working hard to have more people under your organization or team.   In just a few years, you may be able to reach a top position in your network organization regardless of your educational background.

In comparison to a Corporate Structure, a regular employee will never be able to reach the top level position if he or she does not acquire more education or experience.  He may be able to get a promotion to a higher position in a few years, but he will never reach the top position.  The top positions are usually reserved for those who have a lot of experience and education and there are only a few top level positions available. 

If you join a beginning MLM company, you increase your chances of being at the top level position in the future as more and more people join the company.  There are still no guarantees that you will reach the top position, but if you work hard and work smart, you’ll get there sooner rather than later.

2. Mystery leads to Curiosity

Have you heard of the expression “Alam Ko na ‘yan!” (“I know that already!”)?  Just by mentioning the company’s name, you may already get this expression.  If you join a new MLM Company, you are given the benefit of creating curiosity with your prospects when you mention the name of the company.  Most of them may not have heard of the New MLM Company, thus creating the sense of mystery that leads to curiosity.  As you know, when people are curious, they are easier to invite for a business meeting or presentation.

3. Learn from Veteran Network Marketers

A new MLM Company usually comes with a lot of veteran network marketers.  These marketers are the ones who get the news early that a new company is being built.  Sometimes, they are called to join the new company in order to ensure the companies success.  How?  Veteran network marketers already have a team in place wherein one leader or upline transfers to the new company and most of his downlines follow.

Your advantage as a new network marketer is that you will be able to see and learn from these veteran marketers as they start from the beginning.  You may be able to learn certain key strategies, prospecting and invitation techniques etc. from them.

4. Attract Other Network Marketers from another Company

Another advantage of joining a beginning MLM company is that many people from other companies transfer to the new company.  Some unsuccessful network marketers transfer to the new company to start fresh hoping their luck would change in the new company.

You, as a new member of the new company, can attract these people to come and join you.  This becomes easier if the new company’s products and marketing plan are superior to that of the existing companies.

5. Get a Fresh Start

Lastly, if you are also an unsuccessful marketer coming from a different company and wanted to get a fresh start, this is your chance to do so.  You may create a new name for yourself, create your brand with the new company.  Those people who didn’t join you in the previous company may actually join you this time in the new company.  There will be new sets of products, new compensation plan, new office building, new culture and many more.  This is the most exciting part of joining a new MLM company!

CONS:

Of course, there are several risks  and disadvantages in joining a beginning MLM Company. 

1. Undetermined Stability and Future of the Company

The company’s future has not yet been proven.  Beginning MLM companies have a higher risk of failing compared to a company that has existed for 3 years or even more than 10 years.  However, this does not mean that an existing company for several years has no more risk of running out of business.  The risk is just higher for a beginning MLM company since there is uncertainty on whether people will buy the products or join the company.

2. Limited Product Testimonials

One of the main reasons people buy products sold by an MLM company is through product testimonials.   Usually these companies don’t pay for advertisements on television.  They use word-of-mouth marketing as their form of advertisement.  When people see their friends use the product and get amazing results, they go and buy the products.  However, a beginning MLM company, of course, will have fewer product testimonials since the products have not been in the consumers’ hands long enough to have results.

3. Back-to-Zero

For experienced marketers who are already earning a 6-figure income in their previous company, transferring to a new company may be very difficult.  This entails giving up your current income that you have worked hard for so many years.   You have to start again from the beginning and try to earn your first million in the new company.  As you know, earning your first million is the hardest to do in the MLM industry.  There is also the risk of failing and risk of not being able to reach that same level of income as before. 

Tips on Joining a Beginning MLM Company

Don’t get too excited in joining the new MLM company without first doing your homework and research.  Here are a few tips before you join.

1. Know the Management and their History

It is very important to know the background of the key persons in the new company.  Knowing the owner and the president, their background in business in general and in the MLM business is very crucial.  Their experience will play a vital role in the future of the new company.  Make sure to check their history and their track record.

2. Know the Vision and Mission of the Company

Some people may forget to check this part of the company when they are blinded by the new product line and amazing compensation plan.  Always remember to check if the new company’s vision and mission is in line with yours.  Check to see if their plans in the future coincide with their vision and mission.  Those companies who follow their vision and mission usually have a higher success rate and stability in the future.

3. Examine the products carefully

When the new products come out, always check if the products have their proper permits and license numbers from the FDA or BFAD.  If they do, make sure to do a comparison between existing products in the market and in other companies.  Check if the prices are reasonable and practical.  Check if you, yourself, are willing to use the products.  Check if the products can easily be sold to people you know.  The effectiveness will be seen later on after you have tried them so be sure to take note of the results. Also, see if there are varieties in the product lines.  Having several options to choose from are always great for customers.

4. Compare their Proposed Compensation Plan with Existing Compensation Plans

One of the main reasons you joined an MLM Company is for the compensation.  In joining a new MLM company, make sure that it is comparable to existing plans from other companies.  A superior marketing plan should always be considered since it is a new company. 

How can you tell if the compensation plan is good or not?

  • There should be no limit on the amount of accounts that you can have, but there should be an existing safety net to prevent the company from losses.   Having an unlimited amount of accounts means a higher income potential in the future. 
  • You should have the freedom to choose the products if the company is selling packages.  Do away from buying preset packages as this means you are being forced to buy certain products that are difficult to sell.
  • The price of the products that you receive should always be more than the price you paid for the products.  This means that you will earn when you have sold all the products.
  • There should be no membership fee.  Membership should be free when you buy the products.
  • The commission should be higher than the other existing companies.  You are already going to give your effort, you might as well get paid the most for it. 

5. Know their plans for the future and their timetable

Joining an MLM company is like starting a relationship, you have to know if the person you are in a relationship with has a plan for the future.  Ask the company’s representatives if there is already a time-table for opening of the company’s office, buildings, local and international branches, delivery system, internet tracking centre, products to be released etc.  It is also much better if the new company has a plan to release their documents (income taxes, government registrations etc) for public viewing.  Make sure to also check if the company is able to release withholding taxes or Form 2307 (Philippines) for filing of your income taxes in the Bureau of Internal Revenue (BIR). 

6. Pick an already strong Team of Network Marketers with Duplicable Strategies

This is one of the most important things to consider in joining a new MLM company.  Make sure that the person who invited you to join is a member of a team with duplicable and effective strategies.  It is very difficult to start in an MLM business when you have no mentor, no team, no strategy.  However, it becomes very easy to get massive results when you have joined a team who are willing to mentor you and teach you.  Of course, you must be willing to learn and apply what you have learned.   

Some common strategies that you should look for are:  Prospecting and Inviting, Internet Marketing, Social Media Marketing using Facebook, Twitter, Instagram and Pinterest.

If you think I missed some other pros and cons, feel free to leave a comment and I’ll try include it in this blog post.  

 

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Lloyd Labso, MD


Lloyd Labso is the founder of Digital Start-Up Toolkit. He is a general physician by profession. He is an author, blogger, internet and network marketer. He has built several online websites for other entrepreneurs that have gone to generate massive income.

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