Generally, I am not a proponent of network marketing companies. These companies face many challenges, which is why virtually all go under in about two years after they start.
The first problem is that they have to sell a product at a competitive price while still building in enough money to pay generous commissions to their sales representatives. This is very difficult to do in the age of Wal-Mart and the Internet. Today, margins on retail products are slimmer than ever. The network marketing company of today has to typically pay a commission to several layers of its agents on each sale. As a result, the products they market are almost always going to cost more than they do at a retail store. Many of them attempt to develop proprietary products that can not be price-shopped (secret nutritional supplements, Noni Juice, etc…). The worst of them simply markets poor products at inflated prices by selling only to its captive sales agents. They require their sales force to each buy a certain amount of the flawed and overpriced product to qualify for commissions. Thus, they create a kind of pyramid scheme which is based solely on their own sales force consuming the product.
There are some rare exceptions to these problems. Several years ago, we were approached with an opportunity to become involved with a 30 year old, New York Stock Exchange traded company. Pre-Paid Legal is a provider of legal services and offers a $26 monthly plan which gives members virtually unlimited access to attorneys. The concept works financially, since all of the money from the members in each area is pooled and large law firms are retained. My wife, Ann, officially became a representative of the company and she has done quite well. As you can imagine, we regularly receive e mails and other correspondence from people in need of legal help, and the $26 cost is very affordable. We have personally used them to create our Wills and to provide them with legal advice on a variety of issues. More info on Pre Paid Legal.
I have also heard that Amway has reinvented itself as Quixtar (a discount buying service). Although I know virtually nothing about Quixtar, it at least passes my test of its parent company (Amway) being around for a significant period of time. There may be other select good opportunities out there in network marketing, but the only one we have been able to officially recommend is Pre Paid Legal.
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