Before You Open the Doors for Business

Step 1 - Evaluate the Product or Service*

• Must have a salable product or service that people want
• Must be competitively priced
• Must be hard to obtain from non-MLM companies
• Ask yourself, "Would I buy this product at this price if someone offered it to me"?
• The product should be consumable or a service with ongoing fees; insurance, etc.

Step 2 - Check the Industry Grapevine*

• Online message boards are a rich source
• Postings on the internet: www.groups.google.com
• www.MLM.com
• Consider the source! Some people run down the competition to drive you to their company

Step 3 - Consult Industry Watchdogs*

• The MLM Watchdog - www.mlminsider.com
• Market Wave Alert Letter, published by Leonard W. Clements, author of Inside Network marketing, email: mwame@aol.com
• Network Marketing Today, published by Corey Rubenstein, www.mlinsider.com publishes the top ten MLM companies annually
(305) 946-5600

Step 4 - Do a Media Search*

• What do the media say about the company?
• Search Lexis-Nexis database, Free at the library, $24 on the Internet at www.nexis.com, by phone for an hourly fee using
Lexis-Nexis Express
• Online and Published Business Journals, the Wall Street Journal www.wsj.com, MSNBC www.msnbc.com, Forbes, Money,
Your Business At Home, etc.

Step 5 - Check for Complaints*

• State Attorney General's office
• State Department of Consumer Affairs
• Better Business Bureau
• Federal Trade Commissions
• Securities and Exchange Commission
• Direct Selling Association in Washington

Step 6 - Check the Financials*

Public companies financials

• Request an annual report directly
• Securities and Exchange Commission, www.sec.gov
• Dunn & Bradstreet (877) 753-1444

Private companies - good luck!

• Call and ask for P&L - most will refuse
• Call the company"s banker and ask if they are a borrowing company, timely in its payments, applied for credit, and was
credit granted?
• Check credit worthiness at Experian, Trans Union, Equifax

Step 7 - Check for Litigation History*

• What legal actions a company and its principal officers have been involved in?
• What were the amounts of the judgments?
• Have there been state or federal tax liens?
• Legal information can be retrieved from Lexis-Nexis or CSC Networks/Prentice Hall Legal and Finance Services at
(800) 221-0770

Step 8 - The Company's Growth Phase*

• How old is the company? Only a small fraction survive the first two years
• Fast growing companies draw a lot of government and media attention (the scrutiny phase)
• The lucky ones escape; others go belly up!
• In short, joining start-ups is a bit of a crapshoot. There is slower but safer money in the larger established companies.

Step 9 - Look for Legal Red Flags*

• Asses the risk of government intervention
• Legal information can be retrieved from Lexis-Nexis or CSC Networks/Prentice Hall Legal Finance Services at (800) 221-0770
• Claims of a quick and easy path to riches or "front-loading" distributors with products
• Beware of companies that claim outlandish miracle cures for their products
• Distributors that boast too much about their earnings, misleading others that they will make equally large amounts of income

Step 10 - Do a "Wave 4" Checklist*

• Is the company wired?
• What turnkey systems does it offer?
• Is there a High Touch component to the opportunity?
• Is there a long term growth strategy?
• Is there a Wave 4 compensation plan?

* Wave4, author Richard Poe.

Definitions

• Direct Marketing -Commissions are earned by independent distributors for selling one-on-one, bypassing the retail outlet
• Network Marketing -Any form of selling that allows independent distributors to recruit other independent distributors and
   receive commissions overrides from those recruits sales
• MLM/Multi Level Marketing -Network marketing on multiple levels
• Level -A term describing how far removed vertically a distributor is from another distributor
• Sponsor -A distributor that recruits, trains, and helps a new recruit start their new business. Look for a sponsor that says
   "Let’s go do it", not "you go do it."
• Recruit -An independent distributor that made the decision to become CEO of their own business. They are on their sponsor's
   team. A recruit does not work for their sponsor. The sponsor works with a willing recruit.
• Upline -the upward vertical linage of distributors and/or sponsors relative to a given sponsor for an unlimited number of levels
• Leg -All consecutive sponsors and/or distributors in a downward vertical direction in relation to a given distributors first
   level distributor (recruit)