Top 10 Red Flags When Researching a Home Based Business
Red Flags when Researching a Home Based Business
1. No Physical Address or Contact Numbers
The Internet has made it simple for new home based businesses
to create a presence without having any real infrastructure or
substance. While not all mlm businesses require a physical
address, those that are offering goods or services to reps and
consumers would be expected to have some traceable location. The
lack of a phone number makes it all but impossible to pursue any
customer service, commission, or other representative issue.
2. Executives with a trail of short lived, closed companies
behind them.
Every story is a success story when you hear them from a rep
selling on a new deal. But how successful can the executives of
a new company be if this is their third or fourth new mlm
company in as many years?
3. The Vague Executive Bio
No company names, or other traceable details about their
supposedly stellar careers. Phrases like "Has had fifteen years
of success in the Network Marketing Industry" are meaningless
without specific facts to back it up. They may have been
successful in collecting a salary check and filling the company
coffers, but wouldn't you expect them to name the various
network marketing companies they've "built from the ground up"
if all they've left is a trail of happy, successful reps?
4. The Bigger, Better Biz Opp
Repackaging a network marketing business opportunity that has
failed elsewhere does not a success story make. Sometimes a
business opportunity that has failed elsewhere is rewrapped in a
new website, a new name, a new comp plan and sold as a new,
viable opportunity. Often, the failures are blamed on poor
management, etc., when perhaps it is the "opportunity" at fault.
5. Answers to Due Diligence Questions that do everything but
answer the Question
We continually run into this as we research mlm companies.
Simple questions like "Where is your corporate office" that are
answered with questions like "Why do you want to know?". Or
answers about the business stability that garner responses like
"Of course this is a great mlm opportunity, you can tell just by
looking at our palatial offices."
6. Payment Accepted by Check or Money Order Only
Eliminating the ability for reps to pay for product with a
credit card eliminates their ability to dispute charges if the
company fails to deliver.
7. Offshore Address
Speaks for itself.
8. No Tangible Product
Without a tangible network marketing products, its difficult to
show there is something being sold to an end-user other than the
opportunity - which can be the defininition of Pyramid Scheme.
9. Minimal or Non-Existent Refund Policy
Any legitimate mlm company will stand behind its product or
service. A lack of a refund policy, or one that expires in a
very short period are often questionable situations. Others may
incorporate a non-refundable setup charge, or non-refundable Rep
Kit fee.
10. Stock Hype
"We're a publicly traded company, so we must be legitimate."
New network marketing companies that "go public" before or
shortly after their launch typically do so by doing a reverse
merger - acquiring the public "shell" of a dead company. Or, a
"parent" company "aquires" the new company to add value to a
traded stock.
While none of these items might individually flag an opportunity
as "Stay Away", several of them together might be cause to take
a closer look at the opportunity and do further due diligence -
if the answers are available.