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  1. #1
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    Oct 2005
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    What makes a good company?

    I have been thinking about getting involved with a network marketing company. I have looked at several business plans...and am not sure which way to go.

    I seen bad things about virtually every company on this board. In fact, I do not think I have seen a single thread that has anything good to say about any company. Which leads me to my question...

    What makes a good company? Since I have seen so many bad things about every company I guess what would it take to get some of you interested in a company. Or, since every company is basically a scam in many of your eyes, what numbers and figures would make a company a non-scam? I have some leading questions to consider...if you can think of a few more let me know. Also, this posting is for the intelligent people. If you have nothing smart to say other than "All Net Marketing companies suck" please don't post. I am looking for real answers. I will even answer some to get the juices flowing.


    1. How old does the company have to be?
    I would say 5 years absolute bare minimum. I have 95% of all businesses fail in the first 5-10 years. I would STRONGLY prefer a company 10 years or older. That gives it a track record, and it gives the government enough time to figure the company out.

    2. How much money does the company have to make to be considered a non-scam?
    Depends on age. After 10 years I would say it should be at a minimum 100- 200 Million. That shows me pretty good growth over several years. Obviously the more the better.


    3. How much of that money needs to be paid to the distributorship (not employees)?
    This is a tough number to come up with. I will use a percentage. Depending on the type of the company...A company that manufactures it's products will have lower numbers. The manufacturing process is expensive no matter how you slice it. Some companies do not manufacture any products. I say Mfg must pay a minimum of 30-40% to its distributor base.
    If the company runs as a warehousing facility and no manufacturing I would say that 40-50% is fair. Obviously the company has to make money...it has bills and employees and other business expenses. Like I said, this is a tough number to come up with.

    4. What type of turnover percentages are acceptable?
    Well, someone mentioned NML in a different post. I will use them and prudential as a benchmark. Prudential & Northwestern Mutual both have near an 85% turnover rate in the first few years. I am using them as a comparison for several reasons. We are talking about sales managers, and sales associates in both companies and any network marketing company. Both companies and Network Marketing revolve around sales, and are very difficult. So the comparison for this purpose seems pretty fair.

    As far as turnover, I would think that 80% is fair. It is less than what NML and Prudential have, so that is certainly acceptable. Any kind of sales position tends to have high turnover rates as it is not for many people and they figure it out a little late wether it be a job or MLM, or anything else. And let's face it...in this day of upsizing, downsizing, rightsizing, layoffs, firings, or what else you want to call it...turnover in all areas is at an all time high. Here it is all voluntary, so I don't see a problem with it. (I expect the most discussion on this one)

    5. Is there a type of product or service that would not be a scam?
    Something consumable, otherwise residual income is not technically possible. Other than that it totally depends on the person.

    6. Is there a type of compensation plan that is less of a scam than others?
    I have seen several companies pay plans. Right now I am leaning away from MLM's...and more towards a binary or something similar. The reason for that is simple, it looks easier and more for the average person. Honestly that's it. I have seen 5 or 6 companies. (Please don't spam on how great your company is...just answer the questions if you are going to reply.)

    Like I said, these are just to get you thinking a bit, if you have a few more points, feel free to add them. I don't want company examples, just the basic ideas or points of analysis.

    Also, if you are going to give specific numbers...have a reason or argument. If you think my numbers are bad or invalid, tell me why, specifically. Give numbers to back up your case. (Except 98% fail, I have heard that one).

    That's about it...

    -JJW

  2. #2
    Join Date
    Oct 2005
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    79

    Re: What makes a good company?

    I don't think you are too far off. For any company (traditional or MLM) really.

    5-10 years is pretty solid.
    100-200 million is a solid income statement for that timeframe. Most companies never make it that far, so that's pretty damn good really. In 5-10 years if you think about it, you could go all the way down to $50-100 Million company. That's still pretty darn good. Not fortune 500, but for the time-frame only so much can be expected. (Keep in mind, you asked how much for it to not be a scam) Once you get up to these levels people are watching.

    What a company needs to pay does vary. It's tough to say. But 30-50% seems alright. I don't have enough information to argue the point, that's for sure. It is my understanding that any "distributor base" essentially replaces advertising and a sales staff...so if you look at comparable companies you can probably get a rough number. Perhaps you can dig up those numbers...but you'll have to find a pretty similar company that uses traditional business model to get a truly meaningful number here.

    Turnover. Your number seems reasonable. Look at the big 4 public accounting companies. Nothing more than sweatshops and the average employee makes it a year. That's pretty high turnover...especially since I was "turned over" when I worked there long ago. hahahaha. 80% is a high number, but compare it to like businesses. Sales can really be a b*tch. So I don't have a problem with 80% considering the "job".

    Type of compensation. I honestly don't know. I have seen several. I hear a lot of bad things about traditional MLM. Most people can never make anything in that type of plan. I saw that in PPD when I did that. I don't have any personal experience with a binary. But from what I have heard, they are built more for what normal people can actually do. Weather that is true or not I do not know. And I suspect a large and pointless argument will come about on that topic. You'll get the most spam here I think.

    Product line...find something you enjoy working in. I would agree that if you are looking for residual income, then it does have to be comsumable. Other than that, it needs to be about what you are comfortable with. Some of the insurance companies try to make things consumable, but it never really worked well. Chargebacks and things like that tend to be very common.

    As far as other points, you could consider regulatory complaints, but you talk about that in the age catagory.
    Off the top of my head, thats all I can think of. Those are the major points. I am sure there will be more.

    I hope that helps.

  3. #3
    Join Date
    Oct 2005
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    79

    Re: What makes a good company?

    JJW,

    I just thought of something else. You hit on it, but only a little bit.

    The # of people making money is important, not just the amount of money. Otherwise only one person might make all the money. I think that is the problem with most MLM's. The standard complaint is that the person at the top makes all the money. We all know that is how all business works, but the complaint is still there...and not totally invalid. Especially if your income is capped lower than what your upline can make. To me, that is absolute bullsh*t.

    As far as an answer to the question. This will depend on what the company is about. With some companies, people get involved to only get product for themselves. Right? I do not think they should count against a company.
    In every day life we hear about the 80-20 rule. 20% of the people do 80% of the work. That applies to almost anything. What that means is that some people will naturally make more than others. They are more skilled, work harder...whatever. They just do better.

    Keeping that in mind, I would like to see a good chunk of people making money. I would say at least 40-60% of the people need to be making something. If there were a way to determine who is actively pursuing the business, then that should be taken into account. That would certainly be more fair in my opinion. Of those people, I would expect their income to be significantly higher, and I would expect more of them to be making more money.
    I do not have specific numbers...just a general business sense.

    But lets face facts, some people are more ambitous than others...that is the way of the world.

  4. #4
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    Oct 2005
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    South Bend, Indiana
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    17

    Re: What makes a good company?

    Quote Originally Posted by Stupidity
    JJW,

    I just thought of something else. You hit on it, but only a little bit.

    The # of people making money is important, not just the amount of money. Otherwise only one person might make all the money. I think that is the problem with most MLM's. The standard complaint is that the person at the top makes all the money. We all know that is how all business works, but the complaint is still there...and not totally invalid. Especially if your income is capped lower than what your upline can make. To me, that is absolute bullsh*t.

    As far as an answer to the question. This will depend on what the company is about. With some companies, people get involved to only get product for themselves. Right? I do not think they should count against a company.
    In every day life we hear about the 80-20 rule. 20% of the people do 80% of the work. That applies to almost anything. What that means is that some people will naturally make more than others. They are more skilled, work harder...whatever. They just do better.

    Keeping that in mind, I would like to see a good chunk of people making money. I would say at least 40-60% of the people need to be making something. If there were a way to determine who is actively pursuing the business, then that should be taken into account. That would certainly be more fair in my opinion. Of those people, I would expect their income to be significantly higher, and I would expect more of them to be making more money.
    I do not have specific numbers...just a general business sense.

    But lets face facts, some people are more ambitous than others...that is the way of the world.
    Good points, JJW and Stupidity. (And thank you for raising the level of discussion.) It's always important to go through the process of due diligence before entering any business arrangement.

    The last time I looked, most of the employees of Wal-Mart make significantly less than the Walton family. And I would guess that most of the middle-managers don't make six figures. And that income certainly isn't residual.

    It's amazing how many people blame their own failures in life on others. If you work for IBM and you're not advancing, is that IBM's fault?

    One of the strengths of Network Marketing and MLM companies is also their weakness. The low entry cost does mean low risk. Many who join one of these companies equate that with no effort. In the hands of the right people, the tools will work. In the wrong hands, they won't.

  5. #5
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    Oct 2005
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    29

    Re: What makes a good company?

    Thanks Stupidity?? and Entreneu.
    But I was expecting a lot more than that. Some threads out here have hundreds of responses...this one gets 3 or 4? I thought I would get a lot of useful information out of this.

  6. #6
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    Oct 2005
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    143

    Re: What makes a good company?

    You can do all the dilligence you like but there are three things to consider. Would you or could you retail the product to a mass consumer market WITHOUT purchasing or using the PRODUCT/S that the company are involved with.
    Are you comfortable trying to sell/introduce a service or product to your "warm market"
    Most importantly and this is a given, YOU MUST BE WILLING TO RECRUIT. It can be dressed up as Network Marketing MLM or even Referral Marketing but it involves recruiting new blood. Once you have asked your Auntie Uncle Sister brother-in-law Neighbour Milkman and work colleagues and isolated a few friends YOU WILL have to market or advertise online and offline THIS WILL COST.
    The Industry can be easily summed up into a few simple categories.

    Wellness Industry (too many to mention) Pills/Creams/Diet/Vitamins/Miracle Cures/Wonder drinks and Potions and Patches

    Communications. Alternative Telecomms Suppliers and of late Video Mailing/VOiP

    Travel Industry

    Cash Clubs and Shopping Malls (a dying breed)

    Latest to market (this will be a new trend) Online Gambling sites which will claim (with disclosures) massive incomes for introducing online Poker and Roulette.

    As I said you will in the main have to become a user of the product yourself (so you can show the benefits to your customers/reps) The more you buy the better the discount and the higher up the tree you will climb. If you recruit 5 people most will do nothing so you have wasted time and resource. Also check out the Compensation Plan (why do they call it that?) Why not payment structure. When I said check out the Plan they are normally so complicated you tend to skip to the bottom of the filled Matrix where you see $168,762.00 per month. That's when people join.

  7. #7
    Join Date
    Oct 2005
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    Re: What makes a good company?

    Thanks worn t-shirt.

    I guess I am disappointed though. I thought this would spark some kind of discussion. I see a lot of people bashing each other and saying different companies suck. But no one is really willing to step forward and profile a good company? No one is even willing to add things to what I said.

    Seems kind of strange that everyone wants to talk to the negatives, they'll post hundreds of messages about why all networking companies are bad. But they are not willing to even look from the other perspective.

    Why is that?

  8. #8
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    Oct 2005
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    631

    Re: What makes a good company?

    Quote Originally Posted by JJW
    I guess I am disappointed though. I thought this would spark some kind of discussion. I see a lot of people bashing each other and saying different companies suck. But no one is really willing to step forward and profile a good company? No one is even willing to add things to what I said.
    Seems kind of strange that everyone wants to talk to the negatives, they'll post hundreds of messages about why all networking companies are bad. But they are not willing to even look from the other perspective.
    Why is that?
    Dunno, just asking, but...is it possible that many people here simply believe that the "concept" of network marketing simply cannot work in this day and age regardless of the company or product? If that's the case, they certainly wouldn't be able to add anything positive to your list. Anyone care to comment on that possibilty?

  9. #9
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    Oct 2005
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    Re: What makes a good company?

    So basically what you are telling me is that there is no way to get an impartial look at any company. Everyone out here has an axe to grind and is no longer capable of impartial thought on a business level.

    So what is the point of this website?? There is no debate, no discussion, just people making fun of one another and bashing companies they couldn't make work. How is that of any use to anyone?

  10. #10
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    Oct 2005
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    Re: What makes a good company?

    Yes JJW, that sounds about right from what I have seen.

    You sound like an MLM sheep for even asking such a question. baaaaa baaaa

    Hahahaha...just kidding.

  11. #11
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    Re: What makes a good company?

    Quote Originally Posted by JJW
    So basically what you are telling me is that there is no way to get an impartial look at any company. Everyone out here has an axe to grind and is no longer capable of impartial thought on a business level.

    So what is the point of this website?? There is no debate, no discussion, just people making fun of one another and bashing companies they couldn't make work. How is that of any use to anyone?
    Actually, I've seen plenty of good, solid debate on here about the industry in general...some very well thought out points. Note skyvoyager's reply to my question on the International Galleries thread. He provided a wonderful, succinct analysis of why he believes the entire industry simply cannot work. Whether or not you agree, you have to respect the opinion as well formed and well explained. And yes, that is exactly what this site is about.

  12. #12
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    Re: What makes a good company?

    If it is a health and wellness company, I would research the products and how they are allowed to be marketed. I am in a new company that allows a person to do retail, wholesale, MLM etc many different avenues to do business. I do think there is a limit of course. I wouldn't be approaching Walmart of course. The source of the info backing the products also would have to be a third party, unbiased look at the products and ingredients. With all of these Health and Wellness companies out there now, it would be the same as trying to find the 'true' church with all of them saying they are the right one. And of course they all provide you with why they are the right one.
    I still see mostly half ass health being marketed out there right now

  13. #13
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    Re: What makes a good company?

    Quote Originally Posted by Rawb
    If it is a health and wellness company, I would research the products and how they are allowed to be marketed. I am in a new company that allows a person to do retail, wholesale, MLM etc many different avenues to do business. I do think there is a limit of course. I wouldn't be approaching Walmart of course. The source of the info backing the products also would have to be a third party, unbiased look at the products and ingredients. With all of these Health and Wellness companies out there now, it would be the same as trying to find the 'true' church with all of them saying they are the right one. And of course they all provide you with why they are the right one.
    I still see mostly half ass health being marketed out there right now
    If said this before and I'll say it again: I don't believe you have any business marketing ANY health-related products without a real good knowledge of the company, and the products, and how they might affect the people taking them. And I mean a REAL good knowledge and understanding of it. Rawb, you are one of the people who do seem to have that understanding. But there are many, many others out there marketing in MLM who simply do not. And to me personally, that's a potentially dangerous situation.

  14. #14
    BETTERUNIVERSE Guest

    Re: What makes a good company?

    The owners FIRST,THEN next if IM a member rep of the company.Is that simple or what TO make a good company? bu2u biz

  15. #15
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    Re: What makes a good company?

    If you want to do something for yourself do it by yourself. NM relies on you to build a business based on the efforts (or not as the case may be) of other people. The only people who make serious money are the companies followed by the so called big hitters. Usually all the cash is in front end recruiting bonuses and the myth of residual income is startling. The average earnings of John Doe NM are pitiful. I SAY AVERAGE.

  16. #16
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    Re: What makes a good company?

    Quote Originally Posted by worn T-Shirt
    If you want to do something for yourself do it by yourself. NM relies on you to build a business based on the efforts (or not as the case may be) of other people. The only people who make serious money are the companies followed by the so called big hitters. Usually all the cash is in front end recruiting bonuses and the myth of residual income is startling. The average earnings of John Doe NM are pitiful. I SAY AVERAGE.
    Here's a dumb question: if what you say is true (and I am NOT disputing it), what if one of the so-called heavy hitters decided to take you under his/her wing and bring you into a company "early" and make you good money. Would that be an ethical/moral thing for you to do? For him/her? Or is that simply "wrong" because the design of the industry means (by definition) that the money is going to come from a LOT of "little people" who are NEVER going to make any real money at it? Yeah, long question!

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