It seems like everywhere you turn, another MLM opportunity is thrust upon you. So how do you cut through the clutter and decide which opportunity is the REAL DEAL?

There are way too many schemes, scams, and disastrous opportunities out there. Each one claims to be the best and the brightest. Many aspiring Network Marketers get burned everyday because they don't put in the time to truly research a company or product before committing their time and money to it. They are unable to look past the 'smoke & mirrors'.

There are, however, some guidelines you can follow to determine the validity and profitability of an opportunity before you commit to it. Getting honest answers to the questions below can save you a lot of time, money, and heartache in the long run.

What is the start-up cost?

With the exception of a small handful of companies like this one, most MLM companies require you to purchase a starter kit during the signup process. Many of these starter kits are pretty flimsy and contain a DVD or two and some company literature.

• Depending on the company, starter kits can range from $20 to $300.
• If you must purchase a starter kit before becoming a distributor, make sure to find out EXACTLY what is included.
• A company that includes some actual products in their starter kit is a sign of a legitimate opportunity. 

What are the price points of the products?

Too many MLM companies offer products that are ridiculously overpriced. Some of the health juice companies that have sprouted up lately are a perfect example of this.

If a company's products have an overwhelming price tag, it may be a red flag and you may want to stay away. There are exceptions though. A few companies have truly unique, beneficial, or patented products that justify the high price.

If however, the company's products are ordinary products that sell for 5 times the price of similar products on store shelves, then you should skip it and look for a better opportunity. It usually means that the company relies predominantly on sales generated from their distributors’ personally consumed products...and you will be relying on the same thing from your downline while finding it difficult to sell the products retail customers.

When deciding on whether a company's products are worth distributing and if their price is justifiable, ask yourself the following questions:

• If I went to a store to buy a similar product with comparable quality, would it be within the same price range, or would it be significantly less expensive at the store?
• Is the wholesale price I pay for the product actually higher than the retail price I'd pay for a comparable product made by a non-MLM company?
• Is this is a product that people can easily find at the store or online?
• Would my retail customers be willing to pay more for this product because I can deliver it to them personally?

Does the company have more than just ONE product?

People like variety. This is why Avon, Mary Kay, Forever Living, Shaklee, and other solidly grounded companies with a broad product range have been successful for so long.

If you are offering your customers just one product and they don't want it...well, you really don't have anything else to offer them do you? There's nothing to cross sell. The potential for a growing customer base and repeat purchases lies in the ability to offer something for several purposes and several types of individuals.

Hence, a company with a diverse range of products is usually a better opportunity than a one-product company.

How long has the company been in business?

A company with a proven track record of at least 10 years is often a better bet than a company that has just started up. While "ground floor opportunity" may have a nice ring to it, it is significantly riskier than an established, long standing company with a reputation for excellence. While this should not be the ultimate determining factor in your decision, keep in mind that startups can be risky.

Simply put...it's a gamble.

Does the company require you to purchase inventory or stock up on products?

Bottomline...IT IS ILLEGAL. So move on!

What is the profit margin?

This is one of the most important factors in your decision.

I know of some companies that give you about 15% off of the retail price of the product and then have the nerve to call it a "wholesale" price. When you add in the tax and shipping of your "wholesale" order, you can wind up spending more than what you make off the sale.

A good profit should be where the product's suggested retail price is marked up by at least 33% more than what your wholesale price would be..

Many good companies out there allow you to make roughly 20% to 25% profit by retailing their products. Although these companies may be a solid, you won't make much by retailing their products. In such cases, you will often find yourself putting heavy focus on recruiting new members.

In such cases, it is ultimately up to you.

• If you feel you are a good recruiter, then go for it...you may be able to succeed.
• If you expect to rely on a lot of retail sales as a network marketer, or recruiting is simply not one of your better skills...then you find yourself disappointed with a lower than expected earnings by choosing an opportunity with a low profit margin.

Does it have a binary compensation plan?

Some companies operate on a modified or hybrid type of binary comp plan. That can be ok, but it still forces you to recruit more than you would have to recruit if it were an infinite leg plan or a unilevel comp plan .

There are also companies out there that still use a pure, old-fashioned binary comp plan. You should stay away from these companies at all costs. You will get burned.

A true unadulterated binary plan requires you to have 2 legs (2 people directly underneath you). You rely on each of those legs to grow and generate sales volume. But here are some of the problems with this plan:

• You need to balance each leg every month to ensure each one's monthly volume is not too offset from the other.
• You are ONLY paid on the weaker leg (the leg that generates LESS volume. In other words, if Leg A generates $10,000 for this month...but Leg B only generates $6000, you will get paid bonuses on Leg B ONLY!
• Where does all the bonus money for the $10,000 leg go?
• Most of it goes to the folks at the top, who are taking you for a ride.
• This type of plan also forces you multiply your efforts in recruit more members to make up for the stronger leg that you are not getting a dime from.

I hope this article can help you make a wise decision when choosing your opportunity. Remember to be smart and ALWAYS do your research and due diligence before jumping into something.