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Everything You Always Wanted To Know About Network Marketing, But Were Afraid To Ask

July 26, 2010
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Why I’m Writing This Blog

I’ve had a some people ask me what books I recommend . I thought this would be a good opportunity to let you know what my favorites are, and why. And then open up the discussion and have you comment back and tell me which books, videos, etc. are your favorites and why.

My First Choice

My first choice is Inside Network Marketing by Leonard W. Clements, not because this is a how-to book that tells you how to do network marketing and achieve your dreams, but more because it’s an eyes-open insider’s look at network marketing.  As Mr. Clements says in the introduction, which he calls Read This Before You Proceed, ”… this book isn’t about getting rich. It’s about getting rich with knowledge. If anything, it’s more about how not to lose money in MLM.”

Mr. Clements sub-titled the book “An Expert’s View into the Hidden Truths and Exploited Myths of America’s Most Misunderstood Industry,” so if you haven’t read this one, you’re in for a treat of little known facts about the industry, and it includes a list of resources for further study.

Second Choice

My next choice is a book called Your First Year In Network Marketing by Mark Yarnell & Rene Reid Yarnell. This is one of the best that I’ve read on off-line network marketing. It goes into all the ins and outs, what to expect, what it takes, where to start, how to get trained, how to train, staying focused, maintaining enthusiasm, and many others.

In the foreword, written by Richard Poe, also an author of books on network marketing, Mr. Poe says, “This is a book that every first-time networker needs to read. It shows you exactly where the pitfalls lie and how to avoid them. And it does so in language that anyone can understand, reinforcing each point with inspiring, real-life anecdotes. For those networkers who take their business seriously, Your First Year In Network Marketing is, quite simply, indispensable.”

A Video

My next pick is a video called Brilliant Compensation. This presentation was put together and narrated by Tim Sales, a network marketer who put together this video to handle the “is this network marketing/mlm” objection. He does it brilliantly, using an analogy to a type of business that most people are at least somewhat familiar with. It also includes Dr. Charles King, a college professor who offered the first college course in network marketing.

Final Pick

My last recommendation of this blog is The Slight Edge by Jeff Olson. Although Mr. Olson made his fortune from network marketing, this is not a network marketing book per se. It is a book that teaches you why some people succeed where others don’t, the slight edge that makes the winners who they are. And how you can become a winner by using the slight edge.

So, What Are Your Favorites?

I want to know what your favorites are. What book taught you the most? What book inspired you the most? What speaker or video turned things around for you and put you squarely on the road to success? What book have you read more than once?

I want to hear from you, write me back in the comments and let me know what your picks are. I look forward to hearing from you.

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Network Marketing – The Chicken or the Egg?

July 19, 2010
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The Books Say The Egg

It seems like every book I’ve read says you should begin your network marketing career in this fashion:

1)    Find a great company with a wonderful product

2)    Find an awesome sponsor within that company who can mentor you to success

3)    Go to work with your sponsor

4)    Learn the ropes

5)    Make money while you learn

6)    Find others to duplicate these steps

That would be the egg.

But The Chicken

Might look like this:

1)    A friend or relative tells you about the company he’s working with

2)    You sign up because you like the product or the company or your friend

3)    You don’t know what to do and neither does the person who signed you up

4)    You tell a few people about it and nobody else is interested

5)    You quit

Or maybe like this, which it did for me:

1)    My brother tells me about the company he’s working with

2)    I sign up

3)    With the help of my brother’s sponsor, I sign up someone

4)    That person makes several sales

5)    I get excited and try to repeat steps 3 & 4

6)    Number 3 runs out of warm market to talk to and loses interest

7)    I move on to another job and while not losing interest, don’t network market for several years

8)    I read books, I start and run my own traditional business

9)    I sign up for another network marketing company and fail

10)     I keep running my business

11)     I read more books

12)     Etc.

The Reality

I’m guessing that most people reading blogs about network marketing or home businesses or work from home jobs have experienced some version of the chicken scenario; jumping in and trying to figure it out.

The ones who persist through the failures and keep learning eventually discover that there is a reason most books give you the first version, i.e. the egg: you increase your chances of success by doing things in that sequence.

It doesn’t mean the chicken is wrong, or the pig or the cow or the bull moose; if you keep your eye on the goal, you’re going to get there. (For more on the goal, see my earlier post “Why, Oh Why.”)

I want to help you speed up the process.

What Do I Do If I’m already A Chicken?

Keep going! The only thing that can stop you is if you quit. If you know where you want to go, you can get there. As Jim Rohn once said, “working hard on your job makes you a living, working hard on yourself makes you a fortune.”

The difference between the first chicken who gave up and the second chicken (me) is that I didn’t give up. I kept working on myself, reading books, finding mentors, etc.

If you’re already in a company and you’re happy with the products but not so much with your sponsor, find a mentor, read a book, learn how to talk to people. Develop the skills and attitudes you need to attract people into your life, whether mentors, teachers, or business partners.

What If My Company or Product Isn’t So Great?

Hey, it happens. The initial hype can generate enthusiasm for a company or a product that isn’t that good. Don’t throw out the baby with the bath water! Find a better company/product and go to work.

Not only will your attitude be better, your honesty with yourself and your prospects will improve and so will your results.

For more info on how to pick a company or a product, see my post called Five Things To Evaluate, or go to www.AlansMLMTips.com for free emails on how to pick them like a pro.

Another Quote

“Would you like me to give you a formula for… success? It’s quite simple, really. Double your rate of failure. You’re thinking of failure as the enemy of success. But it isn’t at all… you can be discouraged by failure / or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that’s where you’ll find success. On the far side.” – Thomas J. Watson, founder of IBM


Network Marketing and Product Sales

July 12, 2010
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Where Does The Money Come From?

I really didn’t think I was going to spend any more time on the basics of picking a network marketing business to work from home with, but an email I received this week changed my mind.

It was an email asking me to check out a company that this individual thought was a “winner” and wanting to know what I thought about it. Since one of the things I do to continue my own education is check out other companies, I did go to the website and look around a bit.

Doing so got me to wondering if people have any clue where the money comes from in a business – traditional or network marketing – either one.

What does a company get paid for? Anyone want to take a guess? Yes, you there in the pink blouse? Sales, you say. Well, close, anyone else? Okay, you there in the cowboy boots. A product or service. That’s right!

The only thing a company gets paid for is delivery; delivery of service (think electrical company providing electricity, lawyer providing legal service, phone company providing phone service) or delivery of product (anyone not know what Wal-Mart, Target or 1-800-FLOWERS sells). Every company is in the business of delivering something, whether it is a service, a product, advice or access to information.

Some people think it is sales because that is where the money usually changes hands, but what is that money paying for? It’s paying for the past, present or future delivery of the service or product.

You may be asking by now, what the heck does this have to do with network marketing? (Or, maybe not, you might be brighter than I was when I first started in business for myself.) But bear with me, I’ll get to the point shortly.

What Does The FTC Say?

In a 2004 United States Federal Trade Commission (FTC) Staff Advisory letter to the Direct Selling Association states: “… The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.”   – Kohm, James A. (January 14, 2004) (reprint). RE: Staff Advisory Opinion – Pyramid Scheme Analysis. Federal Trade Commission.

In plain English, that means that if you make money from recruiting other people into the program without any product or service changing hands, you might be in a pyramid. On the other hand, if nobody makes any money from recruiting, it’s probably not a pyramid.

If the product or service sale is obviously separate from signing up for the business, it’s probably not a pyramid.

This gets tricky to evaluate sometimes because less ethical companies try to obscure it.

Where Does The Money Go?

In a traditional business, money gets allocated to various parts of the business; so much for basic overhead (rent, lease or mortgage; lights; phones; water; trash service; etc.). Then so much for marketing and advertising, so much for salaries, so much for the sales force, accounting department, the actual production of the product or service, and so on, to cover all the various functions that make a business go.

In a network marketing business, money gets allocated the same way. But it gets divided up differently. In a network marketing company, you still have the basics of putting the company there, just like with a traditional company. There has to a headquarters, production facilities, lights, phones, etc. But all the money that a traditional business puts into marketing, advertising and sales gets put into the compensation structure to reward the independent sales force for their work promoting the company and the product and making sales.

Traditional Business (Brick & Mortar)

Now, I’m probably belaboring the obvious, but here are a couple examples of traditional businesses.

TV Repair Shop – rent, test equipment, advertising, employees’ salaries, electricity, phone service, internet service, heating/air conditioning, water, trash disposal, shelving, computers, TV parts, etc. plus profit. Product  = repaired TVs. People pay for repaired TVs which pays for all the foregoing.

Flower shop – rent, advertising, employees’ salaries, electricity, phone service, internet service, heating/air conditioning, water, trash disposal, shelving, computers, flowers, vases, baskets, balloons, greeting cards, ribbons, stuffed animals, etc. plus profit. Product = beautiful ways of saying thank you or congratulations, Happy Birthday or “I love you.” People pay for those, which pays for all the foregoing.

Network Marketing

The network marketing company itself has to pay for the home office, the home office employees, rent, electricity, phone service, internet service, heating/air conditioning, water, trash disposal, product development, product delivery, etc., but theoretically no marketing or advertising. (Most companies do some marketing and advertising to their sales force, that’s you and me, to keep them motivated, interested and in the know about company plans.)

Then there’s the independent sales force. You/me/they sell the product or service the company provides which brings in revenue for the network marketing company, which in turn pays you for those sales.

Examples:

Mona Vie – sell a bottle of their nutritional drink and get paid for it.

Pre-Paid Legal – sell a legal plan and get paid for it.

Primerica – sell an insurance plan and get paid for it.

Seems Simple, Doesn’t It?

But, some companies don’t keep it simple like that.

One company I investigated paid a residual commission on cell phone service that your job was to find customers for. That’s legitimate. Where it got murky was that they paid commissions on the purchase of the website you needed to do business on line, they paid commissions on the sale of their promotional magazines, and there was a bonus on signing someone up for the business. Near as I could tell, most of the money was not being made on the sale of the cell phone service.

Point! I said I would get to the point shortly. Here it is, the company this individual wanted me to check out was a grocery company. You pay a one-time fee to sign up, I think it was $200. You recruit others into the company, who pay their $200, after five people cycle through under you, you get $500 of which part of it goes back to start your new “cycle” and part of it is paid to you in the form of a voucher.

The selling point was that this $200 voucher, which you could earn as often as you could sign up five people, would pay for your groceries and so you’d never have to pay for your groceries again.

Now stick with me here, if nobody ever actually buys groceries except with their vouchers, and you can’t get vouchers without recruiting people to work with you, what are you getting paid for? If you answered that you are getting paid for recruiting, go to the head of the class.

They are selling it as a business where you can earn free groceries, but in reality you’re getting paid for recruiting people. Which means when enough people complain to the FTC, they’ll look into it and shut it down. The people who haven’t had time to recruit anyone when the FTC shuts it down are out their $200.

For more on pyramids and scams and how to detect them, you can look at Pyramid, Scam, or For Real.

Free Groceries? Or Free Information?

One of the 7 Insider Secrets is what kind of products to look for, along with what kind of company to look for.

It’s really a great set of criteria to evaluate a company with. Go to www.AlansMLMTips.com and sign up for the “7 Days, 7 Insider Secrets” email newsletter.

Quote

I always wanted to be somebody, but now I realize I should have been more specific.  – Lily Tomlin


Happy 4th of July!

July 5, 2010
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Celebrate The Reason For The Day

I want to wish all my friends the best Independence Day ever. Before I move on to the topic of network marketing and working from home, I want to remind everyone why we celebrate this day, so bear with me for a small demonstration of my love for the good old USA.

The Declaration of Independence

“When, in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness. …”

Thus began the grand experiment in self governance that is the United States of America.

Begin Your Own Grand Experiment

Network marketing can provide you your own personal declaration of independence. Lest you jump into network marketing thinking you’re going to get wealthy overnight, let me  remind you that there was a long road to hoe between the Declaration of Independence and actual independence. This little thing called the Revolutionary War, or the War for Independence, came before actual independence, and so did the intra-colony squabbling over what type of government we should have. There were many heartbreaks, heartaches, losses and setbacks between the Declaration and the reality of Independence.

Do you think you’re going to go from where ever you are right now to where you want to be overnight? The odds are against you. But, are you willing to suffer through your own war for independence? Are you willing to suffer the slings and arrows of loved ones who don’t believe in you? Are you willing to search for the right mentors who will help you learn what you need to learn to achieve your independence?

Do you know what independence means to you? What type of freedom are you looking for? The Declaration was a statement of where we wanted to go as a country. Have you stated where you want to go with your independence? What  do you want independence from? Independence from the 9 to 5? Independence from having a boss? Independence from a job you hate? From a job that you think makes no difference in the larger scope of things?

Are you willing to fight for your independence? Are you willing to work and learn and fail and work and learn and work some more to make your dreams come true?

Your Why

You may have noticed from all my questions in the previous section that being willing to start on your path to independence and success, and stick with it till you reach it has a lot to do with your why. Why do you want what you want? Is it strong enough to keep you motivated through whatever self-imposed barriers you’ve created or the doubts of others, or the rejections you might get. To help you figure out your why and locate what will drive you to success, see my earlier blog “Why, Oh Why.”

Once I Know Why, What’s Next?

Once you know why you’re going into business, you have to figure out what you’re going to do and who you’re going to do it with. In other words what home business or opportunity are you going to go to work with. You should find a company to work with or a business to do that aligns well with your why for doing it and thus increase or maximize your chances for success.

To get assistance on this, go now and sign up for the free newsletter 7 Days – 7 Insider Secrets newsletter. It gives you some tips on things to look for and think about before jumping in with a company on your road to independence. Good luck and may the force be with you!

Quote

“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous? Actually, who are you not to be? You are a child of God. Your playing small does not serve the world. There is nothing enlightened about shrinking so that other people won’t feel insecure around you. We are all meant to shine, as children do. We were born to make manifest the glory of God that is within us. It’s not just in some of us; it’s in everyone. And as we let our own light shine, we unconsciously give other people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.”  – from A Return to Love, by Marianne Williamson ©1992