Network Marketing is a business structure that offers a relatively simple point of entry. This makes it a popular option for people wanting to start a home based business. However, some network marketing (NM) companies have significant hidden costs that may not be apparent until you dig into the details of the company. Here are some of the more common things you might look out for when evaluating an NM opportunity for a home based business.
Monthly Fees – Most NM companies have monthly fees but are they well articulated and affordable? Or will there be unpleasant surprises after you sign up?
Product Purchase Commitments – Sometimes NM companies require you to use their product and structure that as a monthly requirement. What will the cost per month be for having to use the level of product they are requiring if that is the case?
Product Sales Requirements – The flip side of product purchase commitments are sales commitments. Some NM companies require that you sell a certain level of their product per month. Should you fail to sell that level, various penalties might leveraged like forcing you to purchase the shortage yourself. Naturally, you will want to sell the product, but it may take some time to get your business to the point where you can begin selling the product. Can you deal with this requirement in the meantime?
Educational Materials – Some NM companies actually make you pay for educational materials they produce. Be sure you factor this into your cash flow budget as something you have to pay for.
Marketing Restrictions – Are you able to market your business online or offline or does the company have heavy set marketing restrictions in place? Some companies have restrictions on the ways you can market the business which tend to force you into using their marketing processes (such as buying leads from them). Make sure you read the fine print in the distributor or IBO agreement and understand what limitations are in place for marketing.
There are many things to be considered when starting a network marketing home based business, but make sure you watch for those hidden costs that can come back to hit your checkbook later. Here are some related blog posts on the subject of Network Marketing