The Warren Buffett Way to Choosing a Network Marketing Company

Read More: Companies

Lately, I've been reading The Warren Buffett Way by Robert G. Hagstrom. Hagstrom writes about the fascinatingly simple principles that have guided Warren Buffett's decision making in investing over that past 60 years that have allowed him to accumulate such immense wealth.

Warren Buffett's formula for investing fundamentally has not changed since his first fund was established over 50 years ago. Buffett never gets distracted by fads or promises of explosive returns. So called experts have often criticised him for his stubborness and his "old fashioned-ness" and yet he's always had the last laugh when their bubbles burst.

Whether he's buying stocks or buying entire companies, he has the mindset that he is going to keep that business forever. Therefore he looks at the business both quantitatively and qualitatively to be certain that he's making the right decision.

Some say, Buffett spends 8 hours a day at his office, reading annual reports and trade journals with the goal to make just one good investment decision every year. Just one!

He does a ton of research on a company and its executives to make sure they both have integrity because he wants to be certain that what he invests in will continue to grow and prosper long into the future.

In the book The Warren Buffett Way, Robert Hagstrom writes...

"He looks for companies he understands, with consistent earnings history and favourable long-term prospects, showing good return on equity with little debt, that are operated by honest and competent people..."

Network Marketers ought to use the same approach when it come to choosing the company they want to build their long term residual income with. Work hard and build it once. Then enjoy the lifestyle. That's the Big Promise of MLM. You DO NOT want to have to build it over, and over again.

If you just want to build it once, there are three things that are critical to your long term success in an opportunity.

  1. It's important that you understand the business model of your company.
  2. It's important that your company has consistent earnings and its products have long term residual value.
  3. It's important that your company is run by good people who are honest and have integrity.

Unfortunately, most people are building their MLM businesses "by gosh and by golly" without understanding any of these fundamental aspects.

The strange thing about this business is not many people do their due diligence on an opportunity that could dramatically change their life. They think "Oh, it's just a hundred bucks to sign up... what have I got to lose?" It doesn't become apparent until they lose the downline that they've worked so hard to build.

Too many people are attracted by the hype and the glitter and because of that, too many people have been burned in this industry by start up companies that explode and then collapse after two years.

Too many people have had their dreams destroyed by scams disguised as legitimate network marketing opportunities because they didn't understand the business model and they didn't know the guys running the operation were crooks.

The third point is the most important. The company has to be run by good people with integrity, with distributor's interests at heart.

When looking at your next opportunity be sure to know who's at the helm. Look at their history. This will really give you a good insight as to whether the opportunity is a scam, and if the company will be around for the long term. If the executives of the company are not listed on the company's website, RUN!

Thankfully, today you have a very powerful tool to assist you in doing your due diligence. It's called GOOGLE. Please use it.

To your MLM success,


Original article: The Warren Buffett Way to Choosing a Network Marketing Company at The Profitable Networker

Login or register to post comments  |  Views Views: 7,576  |  Comments Comments: 12  

About the Author: Wayne Wu

Member Since: 09/12/2008

Company: The Profitable Networker

Industry: MLM

Primary Web Site:


excellent! i liked this

excellent! i liked this article,very nicely done,keep up the good work wayne! i am gonna go and pick a copy of this book.

Martin Vera — Wed, 12/02/2009 - 9:25am

The Warren Buffett Way to Choosing a Network Marketing Company

This is a great formula to follow. Mr Buffett is like that old old old commercial about listerning to E F Hutton.

Terfa Nyamor — Wed, 12/02/2009 - 9:35am

Wonderfull Choice

Great choice wayne! To the rest of you guys, this book is a must read.

Selwyn Hawyn — Wed, 12/02/2009 - 9:42am

Perfect Advice

No offense brother Sage, but I suspect that Pearlcium wouldn't even begin to stand up to the tests Warren Buffet would give it. It's exactly the kind of company that he runs away from.

ERIC WOLL — Wed, 12/02/2009 - 10:57am

We Represent Exactly What Warren Buffet Demonstrates

Great article on what to look for in when choosing a company. Everythng you've mentioned is exactly what we represent as a company.
- We're debt free with over 20 years experience
- Integrity - The same leadership from the begining - honored and recognized by the DSA, CRN, Pope John Paul II Foundation, and several others for their business leadership. Promoted by several business publications (Forbes; BusinessWeek etc..) as a leader within its industry.
- Publicly traded on NASDAQ with 2 Boards of Directors - 1 for the investors; 1 for the distributors. No decisions/changes can be made WITHOUT the approval of both boards.
- #1 compensation plan according to the DSA
- Proven, effective, safe and patented products that work!

[email protected]

Dave Zuro — Wed, 12/02/2009 - 11:06am

Amazing Application Of A Great Book

I wish more people understood this before they chose a company unfortunately most people in our industry are led like cattle to the slaughter called a Hotel Meeting :D They sign up immediately, never do any research and wonder why they didn't make a million overnight by signing up just two friends. Keep the info coming... can't wait for your next article...

Ralph G Jordan IV — Wed, 12/02/2009 - 3:48pm

Warren Buffett

WE all would fare well if take Warren Buffett example of choosing a business seriously. You have to do the research. The businesses I see on the internet being promoted as a legitimate money making job quitting opportunity is very disturbing. Those type of businesses have a great deal to do with the high fail rate in the mlm industry.

Carneal Harris

Carneal Harris — Wed, 12/02/2009 - 7:34pm

A Must Read!

Great article Wayne. Thanks for sharing I'm going to pick up the book!


Tami Ross — Wed, 12/02/2009 - 9:51pm

Hey Dave and brother Sage.

Hey Dave and brother Sage. I'm glad that you've picked companies that you love to work with. Keep spreading the good word about it.

Wayne Wu — Thu, 12/03/2009 - 9:51am

Hey Tami and Martin. It is

Hey Tami and Martin. It is definitely a book I'd recommend, especially if you're looking to invest in publicly traded companies. I see many parallels between MLM and investing. Wealth is created with a proven system in both of these vastly different worlds.

Wayne Wu — Thu, 12/03/2009 - 9:56am

Hey Carneal and Ralph. You

Hey Carneal and Ralph. You guys have hit the nail on the head. People definitely need to make their business decisions carefully and not get caught up in the hype of a slick presentation. After all, this should be something that pays you for life once you've built in. I'd be pretty pissed off if all my hard work goes down the drain because the company collapses.

Wayne Wu — Thu, 12/03/2009 - 10:01am

The Network Marketing Approach

Great article, Wayne! Basically... after precise research and learning... if you are not experiencing a passion for a company... then it is not for you.

Thank you for your wise tips!

Derek Fobert — Thu, 12/03/2009 - 5:59pm

We respect your privacy and do not tolerate spam. Tens of thousands of home business owners have already benefited from this revolutionary information, and now you can safely do so as well.

Are you a robot? Just checking.