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Does the Recession Aid Network Marketing?

Does the Recession Aid Network Marketing?

Supplement sales are up in direct sales, unless you are in network marketing. In my last blog post I guessed that network-marketing supplement sales were down as a result of much lower traffic to their websites, but I wanted to find out if I was off or not. It turns out that lower traffic to network marketing websites has definitely resulted in lower sales.

If sales are up everywhere else for nutritional products, besides price, what else could be wrong with network marketing? Why would sales be down for network marketers if they were up everywhere else? Is there something wrong with the leadership in network marketing for sales to be lower across so many companies?

According to Nutrition Business Journal the Internet and other non-network-marketing direct sales companies had a banner year in 2009. As people lost their job and benefits, they turned to preventative health, which means increases in supplements. So, once again, why are sales for nutritional supplements down for network marketing?

There are many network marketers who claim that when the economy is slow, network marketing booms.  In 2008 MLM author, Rod Cook, wrote, “When recession hits the economy, network marketing booms.” Cook even claims that during past recessions network marketing showed explosive growth.  Not so in today’s recession.

I am a small business entrepreneur.  I have made money in ventures inside and outside of network marketing.  I have many friends involved in network marketing and I am a major stakeholder in a network marketing company. I do not write this article to try to hurt network marketing. I write it to show that network marketing is not currently capturing the hearts and minds of consumers. If this trend continues, network marketing will be set back many years.

In my next post I will explore some of what I have seen across multiple companies that I believe to be hurting network marketing. I believe that government agencies can try to stop bad practices all they want, but in the end, the market corrects itself and that is what I see happening right now.

Business Tips from a Fanatical Entrepreneur

Business Tips from a Fanatical Entrepreneur

I am a fanatical entrepreneur, I admit it. I love the thrill of attempting to organize chaos.  I love taking new and undeveloped ideas and making them a reality. I love challenging myself and others. I started my first business when I was 8 buying candy in bulk from a wholesaler and selling it to the neighborhood kids at retail. I have helped raise millions of dollars for two startups and I have had some great successes. I have also had some miserable failures.

For you new business owners and also you job-laden entrepreneurs seeking to strike out on your own and throw so-called security to the wind in hopes of achieving the seductive dream of riches and independence, I speak to you. I embrace you, my fellow entrepreneurs, and applaud that fire in your belly that keeps you up at night seeking something more, but I also have a couple of suggestions and warnings.

1. Estimate how much money it takes to run your own business, then double it. Felix Dennis, a famous magazine publisher, described how to get capital: inherit it, steal it, win it, marry it, earn it or borrow it. I certainly don’t advocate stealing it (and few of us are lucky enough to marry, win or inherit it), which means most of us must earn or borrow it.  Never underestimate the financial requirements of getting a traditional business off the ground.  If you fail to properly finance your company, you will never be able to gain enough business momentum to make it past your first year.
2. Learn how to deal with people and study the art of sales. If money is tight, consider a business that needs little startup capital such as a home-based business or consider taking a commission-based job before you venture into business ownership. There are many companies that have tremendous sales training and educational systems that teach you how to make money from sales-based activities. If you can’t make a living selling, you will struggle to make it as a business owner. Business owners must sell to prospects, employees, vendors and their significant other.  However, in addition to their sales responsibilities, business owners also have the combined duties of company accountant, gopher and janitor.  Learn people skills and get a sales background, it will become invaluable as you grow your business.
3. Have a written plan. After a couple illustrious childhood entrepreneurial ventures of selling candy and mowing lawns, my first real venture into financing my own company came in 1996 when I put $10,000 on my credit card to have an online information portal built by a local web design company. The site was built on the latest technology and was a great reference tool. It was everything I dreamed it would be, but I had forgot to figure out how to monetize the thing. Three months later, I was paying interest at 15%, wondering why such a great site with so many visitors didn’t have any income.
There are many entrepreneurs that practice the philosophy of “Take a leap and a net will appear.”  I know I sure did in the beginning, and I have to fight from doing it still today. It can be disastrous. Entrepreneurs are confident and often cocky because they truly feel they can accomplish anything out of sure grit and determination.  Many entrepreneurs think that they will figure out the details as they go. However, taking the time to properly run some numbers and research new or profitable niches will give you the focus to truly exploit them.  You will spend less time jumping from idea to idea and have more time to use your creative resources to sell your product or service.
It does not matter if you are in a home-based business, network marketing distributor, or even if you are working on commission for someone else, a game plan is never a bad idea.
4. Spend $500 on an attorney.  I went to three years of law school to be better at business, not to become an attorney. Trust me, legal protection is important. For a small investment, you can protect your personal assets by forming the right legal entity or by protecting the partners from each other.  If you plan on having a business partner, you better understand the rules of engagement.  Partnerships work great until you start making money, or after you’ve lost all your money.  Either way, protect yourself by having a good legal entity and a real understanding of your partnership responsibilities. I frequently say that partnerships are like marriage without love. For better or worse, you are stuck together once you open that bank account together. If things fall to pieces, divorces are always easier to settle when you know who gets what.
5. Get Lucky. Luck doesn’t just happen. I have yet to win more than $5 on a lottery ticket and besides, Vegas-style roulette is a bad way to cover payroll.  Edna “E” Mode from Pixar’s The Incredibles says it best, “Darling, luck favors the prepared.” Luck rarely finds those unwilling to take a chance. Sweat, passion and perseverance are the most important ingredients to “getting lucky.” Constantly educate yourself on your industry. Study successful businesses. Read books and work hard on finding employees that buy into what you are doing.  When you are really prepared, you may get lucky.

Small & Simple Successes

Small & Simple Successes

In network marketing we build romantic stories about the successful leaders. We imagine that they hit home runs every at bat, throw 90 yard touch down passes and sink hook shots from 50 feet out on a consistent basis. It reminds of the Mel Gibson Classic Braveheart, where a young soldier doubted Wallace’s identity because he looked too ordinary:

William Wallace: Sons of Scotland! I am William Wallace.

Young Soldier: William Wallace is seven feet tall!

William Wallace: Yes, I’ve heard. Kills men by the hundreds. And if HE were here, he’d consume the English with fireballs from his eyes, and bolts of lightning from his arse.

http://www.youtube.com/watch?v=Im3S8PRWjeg

It borders the absurd how we describe the accomplishments of ordinary people (Network marketing icons are really just normal dudes like the rest of us). This improper characterization is bad for new people and discourages rather than keeping them going. Who in the world really ever built their business without getting the crud beat of them?  New people get discouraged if they think they have to live up to impossible feats of marketing. In reality network marketing legends become what they are because they do the little things well. In an Eric Worre video post, he accurately tells us the secret to retention in network marketing is really just small victories. He is right.

Jenkins Lloyd Jones summed life up pretty well when he said, “[The fact is] most putts don’t drop. Most beef is tough. Most children grow up to be just people. Most successful marriages require a high degree of mutual toleration. Most jobs are more often dull than otherwise… Life is like an old?time rail journey delays, sidetracks, smoke, dust, cinders and jolts, interspersed only occasionally by beautiful vistas and thrilling bursts of speed.”

The people who think they will build their businesses with 4,000 people at every meeting and sponsoring only superstars do not understand how real success is achieved in MLM. Only marketers who consistently and diligently achieve small successes will create extraordinary profits in network marketing or make a lasting difference in the lives of their downline.

If you want a group of successful people in your downline, teach them that you will not fill coliseums without filling out a ton of names lists with newbies, teaching them to get passionate about a great product and sharing it with others. Great accomplishments are rarely achieved by overcoming the impossible with a miraculous effort in a short period of time. Great success in network marketing comes from creating habits over time that allow you to build persistently and which allow you to consistently improve your performance.

Great marketing leaders such as Eric Worre, Dexter Yager and Doug Wead are often credited with making a giant impact on groups. These icons within network marketing became who they are because of their ability to do the small things every day. I would even go so far as to say that the icons in network marketing are who they are because of the thousands of people like you and me who are doing the small things each day in their downline. The ultimate downline does not consist of just an incredible leader, but a group of people dedicated to the same goal. May I be so bold as to say that our main goal should be to deliver small victories every day to our new people.

It is time to dispel the myth of the network marketing Hail Mary which is the false belief that we can skip the growth pains and create the foundation for our business instantly and painlessly.  Hail Mary’s almost never work in American football and it does not work in MLM either. True success comes from the small and simple things done continuously. When we do the basics of network marketing consistently it can lead to exhilarating moments when we fill an arena with people.

Great leaders in network marketing are just simple people. I have met so many of them and what makes them geniuses is the fact that they know they are not geniuses. Our industry will become respected and our incomes sustained when we realize that we too can create extraordinary results by consistently doing the ordinary.

“If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”

Antoine de Saint-Exupery

Network Marketers Are Learners

Network Marketers Are Learners

This entry is part 3 of 4 in the series Network Marketers are Liars.

To improve, we must recognize where we fall short. Some companies and distributors are willing to accept they can improve, others stick their heads in the sand.  My last post I quoted Seth Godin when I wrote, “So, go tell a story. If it doesn’t resonate, tell a different one. If people are not asking for your product when you finish your presentation, it is time to change your story. Either you’re going to tell stories that spread, or you will become irrelevant.

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All (Network) Marketers are Liars

All (Network) Marketers are Liars

This entry is part 1 of 4 in the series Network Marketers are Liars.

Network Marketing is powerful, use it wisely. When you are busy telling stories to your prospects who want to hear them, you’ll be tempted to tell stories that just don’t hold up. Lies. Deceptions. In his book All Marketers are Liars, Seth Godin made the points above about marketers, but does the same hold true for network marketers?

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