Research the Products

Many companies that market their products through distributors sell quality items at competitive prices. But some offer goods that are overpriced, have questionable merits, or are downright unsafe to use. Try to learn as much as you can about the products form your sponsor and also from other people that have had direct experience with the products.

Find out:

• What is the specificity of the products? 
• Are similar products on the market? 
• Is the product priced competitively? 
• Is it safe? 
• Can your sponsor — the distributor who is recruiting you — support the claims about the product’s performance?

Almost any product or service could be sold through multilevel marketing, including health, beauty, and fitness products that aren't available on store shelves. Apply a healthy dose of skepticism before buying or selling products advertised as having "miracle" ingredients or guaranteed results. Many of these "quick cures" are unproven, fraudulently marketed, and useless. In fact, they could be dangerous. You may want to check with a health professional, a dietitian or a personal trainer before using them — or selling them.

If you decide to buy into the program and promote the products, you must be sure your marketing materials are truthful and that there's solid evidence to back up the claims you make about the products. Before you repeat any claims the company has made, verify that there’s competent and reliable research to back them up. That’s the standard the FTC uses when evaluating advertising claims.

Learn More About the Company 

Find — and study — the company’s track record. Do an internet search with the name of the company and words like review, scam or complaint. Look through several pages of search results and don't just search out the negative but also find out what positive reviews say. You also may want to look for articles about the company in newspapers, magazines, or online

Do not limit yourself to sources such as private forums, blogs, and portals that scandalous titles attract attention to and may be one-sided "For" or "Against", but research them on neutral and relevant websites such as business portals that deliver MLM news and track events on the MLM market. Relevant websites are also portals of economy and stock exchange.

Find out:

• - how long the company has been in business?
• - whether it has a positive reputation for customer satisfaction?
• - what the buzz is about the company and its product on blogs and websites?
• - whether the company has been sued for deceptive business practices and what was the outcome?

Evaluate the Marketing Plan

Don’t pay or sign a contract during some “opportunity meeting.”

Take your time to think over your decision. Your investment requires real money, so don’t rush into it without doing some research first. Ask your sponsor for the terms and conditions of the plan, and ask for the informations in written form.

Find out as much data as possible, including:

• The compensation structure
• Your potential expenses
• Support for claims about how much money you can make
• The name and contact information of someone at the company who can answer your questions

Especially avoid any plan where the reward for recruiting new distributors is more than it is for selling products to the public. That’s a time-tested and traditional tip-off to a pyramid scheme. Keep in mind that when you recruit new distributors, you are responsible for the claims you make about how much money they can earn. Be honest, and be realistic. If your promises fall through, you could be held liable, even if you are simply repeating claims you read in a company brochure or heard from another distributor.

If you don’t understand something, ask for more information until it is absolutely clear to you.

Your sponsor and other distributors should be willing to answer your questions. Remember that your sponsor (and others above your sponsor's level) will make money if you join the program. So take your time, and resist if you start feeling any pressure to join. 

Find out about refunds

Check for information about refunds and returns of any unused product, including limitations and penalties. It may seem like a cash back guarantee ensures you and lowers your risks if you can return products for a reimbursement, but policies vary on whether you’ll get a full refund — and how long it may take. Many plans require you to buy training or marketing materials, or pay for seminars if you want to get product discounts or create your own network of distributors. Find out how much time and money other distributors spent on training, marketing materials, and seminars when they joined the plan, and whether the plan requires you to participate in periodic training and what happens if you opt out of the training?

Find out:

• Get the company’s refund policy in writing
• How much time and money other distributors spent on training, or spent on marketing materials, and seminars when they joined the company,
• Does the marketing plan require you to participate in periodic trainings and what will happen if you quit training? Can you get a return on money invested in seminars or education and training materials?

Ask a friend or adviser to read the materials with you

You may want to consult with an accountant, a lawyer, or someone else you trust who is not affiliated with the plan to review the terms of compensation, determine whether the plan can back up its claims about the amount of money you can make, and analyze the information you’ve been given.

Find out:

• Try to get reliable actual payment information of the company (monthly excerpt or tax card of your sponsor or person who wants to join you)
• Find out the product prices and margins you get by selling so you can calculate your earnings

Think about whether this kind of work suits your talents and goals 

Ask yourself whether you would enjoy selling or promoting this products to the public

Ask to be presented with the mission and vision of the company. Imagine yourself in this business and ask yourself if you have the desire to spend time and money carring on the mission and vision of the company you represent? Find out how many hours a week your sponsor and other distributors spent on the business when they joined and how much time they spend now. Remember that no matter how good the product and how solid the plan, you’ll need to invest sweat equity and money for your investment to pay off. 

Find out:

• How a product or service is marketed
• What skills are required for a product or service to be marketed
• Which tools you need to market a product or service to the market
• Will you be provided with all the required trainings and educations to perform the sales and recruitings

Take into account other business requirements and how much time you can dedicate to - for example:

• How much time will you spend going to the trainings
• How much time will you invest recruiting and training new distributors,
• Will you have a need to deal with a particular paperwork to keep track or whether you will need to register your own company or obtain an artisan permit to run such a work in your country
• How much time and investment you need to re-stock or ship the products

Ask Questions

Ask your sponsor and other distributors tough questions, and dig for details. Don’t consider it nosy or intrusive: you are on a mission to check out a potential business deal that will require your money and your time and you must be able to figure out whether this is the kind of job that suits you and if it will be profitable. Their responses can help you detect false claims about the amount of money you may make and whether the business is a pyramid scheme. Here are some questions to ask before making any decisions:

• What are your annual sales of the product?
• How much product did you sell to distributors and how much to the public?
• What percentage of your sales were made to distributors?
• What were your expenses last year, including money you spent on training and buying products?
• How much money did you make last year — that is, your income and bonuses, less your expenses?
• How much time did you spend last year on the business?
• How long have you been in the business?
• How many people have you recruited?
• What percentage of the money you’ve made — income and bonuses less your expenses — came from recruiting other distributors and - selling them inventory or other items to get started?

It’s important to get a complete picture of how the business works: not just how much money distributors make, but also how much time and money they spend on the plan, how long it takes before they're earning money, and how big a downline is needed to make the money YOU want - if it is a requirement.