How to Evaluate a Network Marketing Business

By Calvin Mah

In network marketing, one of the key things that will determine your success is the network marketing company or MLM company you choose to align yourself with and join. Sure there are other factors to consider but you want everything going for you so it makes sense to choose a company that is going to maximize your chance of success. By evaluating your potential business opportunity against the following 5 criteria, you will increase your chance of success and you will find one of the top network marketing companies. These tips are adapted from a book “Success In Ten Steps” by network marketing Michael Dlouhy.
Success In 10 Steps by Michael Dlouhy
Compensation Plan

The best compensation plan works with the numbers. Network marketing industry statistics have shown that the average distributor sponsors 2.7 people into their business in their network marketing career. Therefore, you should look for a business opportunity that doesn’t require you to sponsor more than that number to be successful. That means your magic number in the compensation plan should be 2.

Given that, you should avoid an opportunity that restricts where you can place people in your organization, forces you to build your business wide (i.e. having lots of personally recruited people in your front line), doesn’t reward you for the depth in your business (the people way down in your line of sponsorship), and won’t work for the average person.

Network Marketing Company Life Cycle

Timing can be critical to your success in network marketing. What I am referring to is the timing relative to where your network marketing company is in its life cycle.

If the company is relatively new, you are going to waste a lot of your time, energy and money as a lot of these companies will not last and will go out of business in the first year or two. The percentages are not going to work for you for an early stage company.

If the company has been around and everyone has already heard of them, you are going to have a hard slog of it as you have missed the momentum phase of the company. Again, you can waste a lot of time, energy and money in this situation.

So ideally, you want to get into a company that has already proven its ability to survive (around 3 – 5 years in business) and before it hits the momentum phase (the time between growing from $100 million in revenues per year to $500 million in revenues per year).


Pick a company with a product that customers rave about and buy even without a compensation plan. Find the product with a huge market. You need a product that stands out.

Don’t base your decision on a product that you like. Base your decision on a product that will appeal to a lot of people and has a great market.


Make sure your company has leaders that are mentors who have the desire to serve. Network marketing shouldn’t be treated as a numbers game but as a people business. Leaders who look out for their people are the ones that have long term success. Leaders who focus on the money are who are greedy and succumb to their ego will not last. Try doing a Google search on the names of your leaders. If there is any negative dirt on them, it won’t take you long to find it on the internet.

Training System

In order to be successful in network marketing, you need a proven duplicatable system which can guide the new person step-by-step to get their business started and to help it grow. The system won’t necessarily be provided by the company itself but most likely by the distributor leadership team. Don’t join a network marketing business that doesn’t have a system like this in place.


Make sure you check your prospective network marketing business against the criteria provided above. This will give you a head start and a fighting chance to be successful in network marketing.

The Attraction Marketer’s Manifesto – by Ann Sieg – An Update

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  2. Great article, wish I had read this when I first started. I’ve learned much of this the hard way but I would like to add one thing. You should always read the Policies and Procedures of your potential mlm. It’s not the most exciting reading but it’s where you find out what the refund policy is, when (or if) the Company has a right to change the compensation plan, and other issues that come up when you’re dealing with independent distributors. I’ve found that the simpler the P & P’s, the better.

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