When evaluating network marketing companies there are a number of different areas that you can consider before making a final decision. Some examples include product line, compensation plan, management team and even the specific up line or team organization that you will be a part of.
However, another area that you can consider is whether the company is a public or private network marketing company.
There are significant differences between a network marketing company that is public and a network marketing company that is private. You should be informed of the advantages and disadvantages between each group of companies.
Public vs Private Network Marketing Companies: Open Book Glass House
One of the major advantages to getting involved with a network marketing company that is publically traded on the stock exchanges is the fact that the company’s finances are open to public speculation.
Public companies are required by law to share their financial documents to the public. By examining the finances, you will know for yourself whether the company is really profitable or not.
With a private company, the company gets to decide whether to share their finances or not. A public company has to follow what is known as generally accepted accounting principles. A private company can use any accounting principles it wants. Therefore, a private company can report in a way that makes it look profitable even if it isn’t.
Investigate and eliminate any limitations of your network marketing opportunity.
Who Is The Company Accountable To?
One challenge for a network marketing company that is publically traded is the fact that the company has to be accountable to its shareholders. If there is not a strong CEO at the helm, there may be a temptation to improve the bottom line at the expense of the sales force.
For example, the company leaders might be considering offering a cash bonus contest to the field for a particular month. However, the shareholders would like to see the company report increased earnings growth. Cash bonus contests result in lower earnings for the company initially. Who will win out in that battle? The distributors or the shareholders?
In a private company, there is no pressure to meet quarterly earnings projections or produce earnings profit to the bottom line at the expense of adding incentives to the distributor sales force. The owners have full control with the company and can make whatever investments they see fit.
So don’t believe the hype that just because a company is publically traded, that automatically means that it is superior to a privately held company.
At the same time recognize that in a private company there is a much greater chance of the company “fixing the books” or spinning information that may appear harmful to the company because of the lower accountability requirements.
Keep all of this in mind when you consider joining a private vs. a public network marketing company.
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