It's so easy to get caught up in the excitement of a glossy company presentation and a compensation plan that promises you wealth and residual income beyond your wildest dreams. But before you get carried away, you need to ask a few hard-hitting questions first.

Getting the answers to these questions can mean the difference between success and failure in your new network marketing business.

First you need to take a good look at the company management. What's their background and experience? What's the financial standing of the company? Find the names of the directors and do a search on them. If there's any skeletons in the closet or dodgy financial dealings, it's a fairly safe bet there'll be something on the net about them.

Think about it, the last thing you want is to work your butt off, only for your company to go bust and leave you high and dry.

So the company looks sound, as far as you can make out the directors are solid and upstanding citizens. So now you need to ask: How old is the company? Where is it on the growth curve? Is there still room for further expansion?

Company growth is a bit like rolling a huge rock up a hill. Imagine the effort it takes to get the rock moving at all, then the backbreaking struggle of pushing it up the incline. And despite all the heaving and shoving, there's still the danger of it sliding back down again and crushing you if you lose your grip for just a milli-second.

Once you've reached the summit, the rock takes on a life of its own, rolling faster and faster with its own momentum, before slowing down as it reaches the bottom of the hill.

The high-momentum phase is the best time to join a company. It's already established and has built a reputation and is now in its prime growth phase.

This phase of the company's growth is statistically proven as the easiest time for you to build your downline.

So when is the high-growth phase? It differs from company to company, but is usually around the 3 to 5 year mark.

Of course, timing in the company itself is not the only factor, timing in the industry in which the company sells its products or services is also crucial.

Do some research. What's the market like for your company's products? Remember that a network marketing business is not just about building a downline, it also needs product customers, people who want to buy the product for its own sake, not just as a way of creating residual income.

Without those customers, no network marketing business can succeed.

So take a look at the product prices. Do they provide value for money? In the best and most ethical network marketing companies the product prices for distributors are the same as for product customers. If the retail prices are so high that no normal product customer would be willing to pay them, your alarm bells should be ringing.

Next step in your research is the compensation plan. Let's say your goal is to earn $10,000 per month. How many people will you need in your downline to achieve that figure? If it's difficult to work out from the pay plan, get in touch with the company and ask them.

The number that you need in your organization (downline and product customers) to earn $10,000 varies enormously, from 350 people in one network marketing company up to more than 8,000 in another.

If you only want to earn $1000 per month the figures are the same but divided by 10, i.e. 35 in your organization with one company rising to 800 with another.

This is a staggering statistic when you consider the difference in the amount of work required to build a 350-strong organization compared to one in excess of 8,000. And yet the monthly earnings are exactly the same.

The next important point you need to be clear on is training. What tools and systems does your upline offer to help you market your business and build your downline? Without proven strategies and tools, how will you succeed?

Ask your sponsor to show you exactly how they go about building their business and only if you believe that you could succeed using their methods should you sign up under them.

And last, but by no means least, do something that very few people ever do before they sign up with a network marketing company, read the Policies and Procedures.

The reason the vast majority of people enter network marketing is to create an ongoing residual income which will give them and their loved ones time and financial freedom.

You need to find out what will happen when the time comes to enjoy that financial freedom. If you become inactive, will your residual income continue or is that grounds under your company's Policies and Procedures to terminate you? What happens in the case of sudden death, can you bequeath your business to a beneficiary or does your business, and your monthly cheque, die with you?

As you see, there are a lot of important issues to consider before becoming a network marketer.

If you choose a company that meets the above criteria you'll find it hard to fail so long as you're prepared to put some effort into building your business. But you can be the most diligent, the most motivated business builder in the world and the cards will still be stacked against you if you don't.