Wednesday, March 31, 2010

2010: The Year of Oz

Having been in the network marketing industry since 1979, I've seen thousands of companies come and go. Some of them hit it big and others fizzle after just a few months to a few years. During that time I've learned some red flags to watch out for and also some keys to look for in a company that is going to succeed and I'll cover those a little later in this article.

Unfortunately the industry is filled with what I call Wizard of Oz companies and I believe 2010 will be a year when we will see even more of these OZ companies. If you remember in the movie, Dorothy, Toto and the crew arrive at the Emerald Palace and they are going to finally get in to see the Wizard. However, they are met with fire, smoke, and a big scarey face with a booming voice. That is until little Toto pulls the curtain away from the man running the machine. The voice says, "don't mind that man behind the curtain" and that's the way so many network marketing companies are. They are exciting looking on the outside, but don't want you pulling the curtain to see what's really going on.

You can quickly recognize these Wizard of Oz companies as they've got big name business people (from other industries) or athletes out front, there's lot's of hype about making big money without having to work very hard, there's glitz and glitter and smoke and mirrors, but if you invest the time to check out the company from the inside out, you'll find there isn't any substance. There's nothing but a little bitty man behind the curtain.

The difficult part for me is watching so many people get sucked into these companies only to be disappointed and then conclude that network marketing doesn't work. I've done this for 30 years and I've seen tens of thousands of people, from all walks of life, succeed in network marketing. It works and it can work for you. The first and possibly most important key is to find the right company for YOU.

Here are some red flags to watch out for and some keys to identifying a solid company that has long-term potential:

Red Flag #1: Big Name People

If the company is flaunting big name business people, millionaires/billionaires, TV pitchmen, or top athletes, then beware. It's okay to have these people giving testimonials (if they are involved with the company or using the product/service), however many of them are paid spokespeople who couldn't care less about the company, product, or your success, as long as they get paid. I've seen many a network marketing that was using the familiarity of a big name to bring people to their company and it works. The problem is that they typically don't have anything of substance to deliver or they wouldn't have to resort to the big name person.

Key #1: Management Team

One of the biggest keys I've found to identifying a solid company is a solid management team. Forget about the big name people; instead look for management that has successful experience running big companies - managing offices and employees, handling payroll, accounting, etc. Also, look for the team that has network marketing experience, preferably as a successful distributor. That way they will understand what we distributors go through to build a business and will make decisions that help us. Make sure the President or CEO is a dynamic leader that people are going to follow and who also has his/her ego in check. Finally, the management team should have a solid money guy; someone who has vast experience handling financial decisions and systems. It's a big plus if the management team or founders have self-funded the company. That means they are fully committed and are not going to give up easily.

Red Flag #2: Big Money Focus

If a company is only talking about making big money, run away as fast as you can. If you ask people involved with the company about their products or service and they quickly change the subject back to money, run, run away. They are using big money claims to lure you into a business that has no substance and won't last. It might even be a pyramid scheme or at least construed as such by the government regulators. The owners of these companies are just hoping to hang on long enough to make a bunch of money and then get out of Dodge. It's sad, but true; there are many wolves in the network marketing industry who are just waiting to devoir your hard earned money. So be wise when choosing a network marketing company. Don't believe everything you see, hear, or read, check it out. Do your due diligence and make an informed decision.

Key #2: Solid Product or Service

It's okay to share the possibility of making big money, but if a network marketing company is going to last long-term, it must market a solid product or service - something that people would readily buy without being involved with the business. For best results this should either be a consumable product or a renewable service. This will require less selling and since about 98% of the people out there hate to sell, you want a product or a service that people want to buy automatically every month, which brings me to autoship. If the company doesn't offer an autohip program for their product or an automatic subscription to their service, it won't work and you won't make money. Next, the product should be in high demand both now and far into the future. Who in their right mind would market buggy whips in the automobile era and yet many network marketing companies are offering old, obsolete products and services. Finally, the product or service should be something you enjoy, would buy even if you weren't in the business, and can get excited enough about to tell other people. It's a big bonus if the product is unique, patented, or exclusive to that company.

Red Flag #3: We Will Build it For You

I'm appalled at the number of internet and magazine ads I see that claim all you have to do is join and they will build the business for you. No recruiting. No presentations. No talking with your friends or family. No calling leads. No home meetings. Just join and use their proven system and you're going to make BIG MONEY! That's a load of garbage and you should run away quickly. Anything that sounds to good to be true usually is. Network marketing is a business and businesses require financial and time investments. Contrary to all those ads, you are going to have to talk with people, but the good news is that if you have a good company with a product/service you are excited about, you won't be able to stop talking with people. Also, this is a recruiting business and if someone is saying that you will never have to recruit anyone, they are LYING!!! I've been in this industry for 30 years and if there was a legitimate way to build a business without talking to people and recruiting anyone, I would know about it. Oh, there are the list builders and the programs where people can join for free, but no one makes money in those, so don't waste your time.

Key #3: Find a Good Upline Team

No one is going to build your network marketing business for you. They may be willing to put some people under you (in a binary or matrix plan), but you are still going to have to talk with people and recruit. The key here is to find a good upline team that will train and support you. They should offer internet based training via a team web site, e-mail messages, webinars and teleconferences, and even live meetings. This is something I've done for my teams for years and it works. It provides the training, tools, and resources necessary for anyone to succeed. Now, not everyone will, because some will not be willing to do the work, but they won't be able to say they failed due to poor training and support. You should also have upline leaders who are willing to send e-mail messages to or do 3-way calls with your business candidates. They should also offer personal one-on-one coaching or mentoring. Check their motives to see if they are only looking at what's in it for them or if they do sincerely seem interested in your success and are willing to devote the time to help you. A good company and product/service are important, but sometimes a good upline team is even more important.

So, there you go, three red flags to watch out for and 3 keys to success. Find a solid company with an excellent management team, a product/service that is in high demand and about which you can get excited, and a solid upline team that will help you accomplish your goals. When you find those keys and it feels right in your gut, jump in with both feet, put the blinders on and build like crazy. You'll love the results!

Rod Nichols has been involved in the network marketing industry since 1979, as a company founder/owner, distributor, consultant, trainer, coach, and author. His books Successful Network Marketing for the 21st Century and Would You Like to Dig In My Goldmine? were industry best sellers for several years and his newest books, The Twelve Power Secrets for Network Marketing Success and The Ideal Business are quickly becoming must reads for anyone serious about success in network marketing. Rod has trained tens of thousands of people and is know as a “nuts and bolts” trainer. He is available to speak at conventions, conferences, regionals, or any other event requiring a dynamic outside speaker. Rod is also available to coach individuals and small teams. More information about Rod, his fees, and other great network marketing resources are available on his website at or you can e-mail him at