Category Archives: Network Marketing

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Evaluating A Home Business – What am I Paying for?

Posted on February 14, 2012 | Leave a comment

For several years I’ve had these thought floating around in my mind about what makes a good business and what are some warning signs to look out for. Because of my experience in this field, I’ve managed to save myself from falling for a few bad ones (if not out right scams) by using some very basic guidelines. You can find some of those guidelines relevant to the MLM industry here: http://www.firstclassmlm.com/2007/12/07/how-to-evaluate-an-mlm-company/

What I really want to write about is a big basic concept that has saved me some heartache several times: Follow the Money. This combines three different concepts:

  1. What am I paying for?
  2. How do I get paid?
  3. How does the company make money?
In the interest of space, though, let me talk about each question in separate posts, then come back to the big concept to wrap them up all together… lead you down the trail of bread crumbs, so to speak.

“What am I paying for” asks you to consider several things:

  • Is it legal?
  • Is it a good value?
  • Would I share it?

Is it Legal?Is it legal?

When it comes to home businesses, one of the things the Federal Trade Commission (FTC) likes to crack down on is whether or not a product or service is legal to sell. Now this might sound like a no-brainer, but sometimes you have to think for yourself a bit. Maybe even do some abstract analysis needs to come into play.

Now, the FTC is only making sure you’re not selling illegal products or services, or selling legal products or services via illegal means:

  • drugs (or pharmaceuticals),
  • alcohol (ya know the government has to be involved here!),
  • firearms (again, the government has to have their noses in any enterprise of this nature),
  • securities (you know… stocks & bonds & stuff),
  • money exchanges (dollars for euros, for example),
  • operating a Ponzi or pyramid scam,
  • gambling (which is pefectly legal in some municipalities),
  • anything else you can think of that would be illegal for individuals to sell.

While the FTC is looking at the legality, you still need to be concerned with whether or not it’s ethical. For instance there are some network marketing companies out there that promote products to enhance one’s sex life, and other network marketing companies that promote commodities (such as gold & silver), which is perfectly fine. But there are other “businesses” that prey on the weaknesses of others by practically selling sex, thinly disguised drugs, and gambling scams thinly veiled as something else.

For example, a friend was telling me about a business that was making him some good money. (Isn’t that what they always say?)

1) It was free to join.
Great.

2) It was real products that people were “winning.”
Winning? REALLY? How is that a business?

3) You earn a commission when people purchase “bid tickets” AND when they paid what they’d bid on that product.
AH! There it is.

Turns out it was an auction-based business. Nothing wrong with auctions. You can get some excellent products for awesome prices at auctions. But look at what the “customers” were paying for. First they had to pay for their participation by purchasing “bid tickets.” Then the “winner” got the privilege of paying for their item.

How many people were purchasing “bid tickets” and never winning a thing? Isn’t that called gambling? And how many people purchased “bid tickets” that they ended up never using? That’s wasted money.

Needless to say, that company has since been shut down by the FTC. Nope not for the gambling aspect, but because they determined that it was a ponzi because too many of their reps were representing it as an “investment” – which is a violation of the Securities & Exchange Commission (SEC).

Sure there are plenty of people out there that have no qualms running legal gambling sites. But I couldn’t do that with a clean conscience any more than I could run a porn site. If you’re running it like a network marketing businesses, though, it’s only a matter of time before the FTC shuts it down. I’m never looking for a quick buck, but a life-time business with which I can be proud to be associated. And I hope you are, too.

Is it a good value?

Yes, the products available via auction were valuable items in this example. But none were necessities, nor consumables. So, once your customer purchased an item which they won via the auction, you’ve lost a customer. Unless they liked the gambling and came back for more. Or until they had a need for another “toy.” Whenever that might be. And hopefully they’d remember to come back to the auction site. That’s called a fad. Again, not a strong company to consider.

Let’s look at another aspect that you should consider for EVERY business you evaluate. No matter what kind of business anyone is trying to get you into, always ask yourself if the entry fee is reasonable.

Another thing the FTC likes to crack down on is whether a company is making its money by “selling memberships” OR by selling real products or services that real people really want. So if a company asks for any money to join, consider how much it is and what that money is used for.

Is your fee simply to pay for your membership kit? If so, that’s the best situation. The next question to ask is, what’s included in that membership kit, and if the amount requested is reasonable for it.

If your fee is quite a bit more than you would expect to pay for what’s included in the membership kit, then you need to know why. Many companies charge $100 – $500 to join. What they do with that money is pay “enrolling bonuses” to the person who introduced you to the biz. And sometimes, bonuses also go to the “up line” of support that build that team.

If that’s the case, then you need to look closer at how people make money from this business. Be careful if they’re making money by selling memberships instead of by selling real products that real people really want.

Would I share it?Would You Share?

Now this last question is only applicable to affiliate or network marketing types of businesses. Because that’s the only time you’re going to be asking others to do what you’re considering doing right now.

In our current economy, is it reasonable to ask people who are struggling to make ends meet, to purchase product(s) or services they’re not already using? If they really need it, they’re already using it.

If they already use these products or services, is it reasonable to ask them to start purchasing from you and/or your business? Why should they?

Even in better economies, or considering people who aren’t struggling financially, is it reasonable to ask them to allocate some of their “extra” funds for your (your company’s) products or services? If you’re selling gold (to use an extreme example), do you feel that it’s reasonable to ask them to have that kind of money to tied up into not-so-easily-liquidated assets should an emergency arise? If that’s not a concern for them, then…

Would you feel confident and proud to be asking others to invest or spend their money as you’re considering doing so right now?

In summary, the question regarding what you’re paying for should have you at ease with the answers to it’s legality, value, whether it suits your personal ethics, and whether you’re comfortable sharing your products or services.

Next time we’re going to consider the question you should ask: How do I get paid?

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Throwing Gas On the Flames of Class Warfare

Posted on July 23, 2011 | Leave a comment

Psychology 101:

people are lazy. They’re not going to engage in an activity unless it’s:
a) enjoyable
and/or
b) they believe it will benefit them personally.

Can we agree that unless a person actually happens to like their job, then work is not enjoyable? Yet we engage in it because we believe it benefits us to doing so.

Sometimes even if the only benefit is a pay check.

Pay Day

If you could find a way to get paid without having to work for it, would you do it?

I know that a certain percentage of the population wouldn’t. They find satisfaction in the work they do – it’s physically, artistically, or intellectually stimulating for them.

Moocher Class

But there’s another portion of the population that has no desire to achieve, no drive to engage or contribute, and no willingness to learn marketable skills. Oh, they have desires, drives, and skills, but none for which society would be willing to compensate them for using. We’ll call them the moocher class.

“Disabled”

Then there’s a small percentage of the population that truly lacks the ability to care for themselves. Even if they possess desire, drive and skills, there are valid reasons which prevent them from being able to support themselves. Or their bodies cannot handle the demands that would be required to engage in a skill or trade for the amount of time required to earn such a wage. We’ll call them the Able Yet Un-Able class.

Middle Class

The largest portion of the population we’ll call the middle class. These I tend to think of as “worker bees.” They go about their day-to-day routine: do their job, go home, eat, sit in front of the TV or play with the family, and are pretty much content to live life as it comes to them. And there’s nothing wrong with being a worker bee. Worker BeesIndeed society needs worker bees – not everyone can be the queen. There’s a quiet nobility in the middle class. They, for the most part, are the heart of America. They bring up their children to know right from wrong, teaching them a good work ethic, and eventually how to find a mate and raise a family of their own.

Two Percenters

There’s another percentage of the population, commonly called “The Two Percent,” who has Desire and Drive, and are willing to learn whatever Skills are needed to Achieve and Earn more than most. In their efforts to benefit themselves, they end up benefiting society.

How? First, because the marketplace will not compensate the Two Percenters for their efforts unless they provide a product or service that the market place really wants or needs. Therefore, they’ve fulfilled a need that benefits the marketplace (society).

Second, if their product or service is in great demand, they eventually have to hire others to help. Now, they’ve provided jobs.

Now let’s look at how much “compensation” these Two Percenters are going to earn for their products or services. Well, that depends on how much the marketplace is willing to compensate them. If a hypothetical Mr. Two Percent decides to charge too much, nobody will buy. (And if it’s a really good product, someone else will figure out how to provide it for less.) But if he charges too little, then he’s unable to even recoup his costs. Therfore, he’s going to charge an amount which the marketplace tells him is reasonable, as long as he’s able to recoup costs AND make a large enough profit to support himself while he either improves this one product/service or begins work on a new one.

Let’s talk about the costs that Mr. Two Percent has to cover: materials and utilities used in production, wages of any employees and/or contractors, and space needed to manufacture and warehouse the product (if required) are all pretty standard. Some of these are “static” costs and others are “fluid.”

For instance materials and utilities tend to be pretty static. The charges that Mr. Two Percent must pay for these don’t fluctuate very much, unless there’s some kind of supply and demand, or even seasonal effect on price. Space can be a pretty static cost, although rent will rise annually depending on the economy and the area, but cost of ownership of a space will remain constant.

It’s the wages paid that will fluctuate the most. Wage or other compensation will depend on an employee’s or contractor’s position within the company and their particular value to the company (how easy it would be to replace them, their skills, and their knowledge). Although we don’t normally think of Mr. Two Percent actually earning less than anyone else that he would employ, I’ve known many businesses in which the owners made a point of making sure that their staff was paid before they were – even if it meant they DIDN’T get paid at all. That was a choice they made between letting someone go & doing more of the work themselves (when they were already working 80 hours per week), or living on less in order to remain sane.

The Bitter Class

Now! Let’s talk about another portion of our population. We’re going to call them the Bitter Class. You’ll find them among the 98% of the population outside the Two Percenters. How much of that 98% is actually a member of the bitter class is unknown. Definitely 100% of the moocher class belongs in this portion of the population, some of the Able Yet Un-Able are in this class, and there seems to be a growing portion of the middle class within them (thanks to the class warfare that’s being pushed by leaders within the Bitter Class and politicians who would use them). Although we can’t know how many there actually are, here are some was to recognize them:

  • They’re envious of anyone who’s a member of the Two Percent class. More than that, they’re jealous.
  • They seem to think that the Two Percenters shouldn’t make more than anyone else. And if they do, they should give it all away to “those less fortunate.” And if the Two Percenters aren’t willing to do that, they want the government to play Robin Hood by forcibly taking what the Two Percenters have worked for and EARNED, and redistribute it to those who didn’t work for it nor earn it.
  • They seem to think that businesses shouldn’t make profits. I guess they expect the owners and stockholders to work and invest their time, energy, and capital without thought to compensation. Yet they don’t seem to think it wrong for entertainers and artists to be compensated for their work or uniquely created material.
  • Some go so far as to think that companies shouldn’t charge for their products or services. I suppose they expect all the company employees to work for free, too. What would they think if someone were to suggest the same to their employer?

Remember our first point of agreement: people are lazy and will not engage in activity they find either unenjoyable or does not benefit them in some way? You see, the Two Percenters are the same. They either enjoy what they do, or expect a benefit (compensation) for engaging in that activity, or both.

And the Bitter Class will always enjoy and/or see the benefit in buying into the socialist agenda of class warfare and the concept of “from everyone according to their means, to everyone according to their needs.” They’ll always blame everyone and everything else but themselves for their standard of living. They’ll always point fingers, shake fists, Point Fingers and Shake Fistsand shout to anyone who’ll listen that somehow they’re a part of “those in need” and are not only owed some of those means, but that it’s those with the means that have held them back and kept them down, and that’s why their standard of living isn’t to the level that they’d like. To them, there’s always a conspiracy of “the rich” to keep others “poor.”

Some members of the Bitter Class will NEVER leave it. But there are some who can be educated enough to realize that:

  • There really is no benefit to “the rich” to keep others poor.
  • There really is not a limited amount of wealth in the world – it can be created.
  • They can improve their standard of living simply by learning to make themselves more valuable to the marketplace.

I can tell you from personal experience that the Bitter Class mindset will never make you valuable to the marketplace. You’re the kind of person that the marketplace “smiles when you walk out of the room” instead of when you enter it.

Grow Up!

So stop ranting about the rich not paying their fair share. (And when you hear someone else spout such dribble, remember that they’re just being a crab in your bucket – yeah, go look that one up.) The “evil rich” have paid more than their fair share through blood, sweat, and tears in order to reach the status that they’ve achieved. And they still contribute to society in more ways than you can ever comprehend with your limited understanding and your limited viewpoint – that refuses to even look in order to begin to understand. You don’t know how much they make nor how much of it they give away. And they’ll never give it to you because they choose to give where they see fruit – and you ain’t producing it. As a matter of fact, you’re most likely the poison that’s killing the fruit of others.

If you want to increase your value to the marketplace, start first by closing your mouth and start looking at the fact that everyone (including “the rich”) has the same problems and issues as you, yet some are somehow able to overcome them. Then figure out how they overcame them. If you want to do the same, then take the same steps they did.

Everyone is human and shares the same frailties. Why don’t you stop asking, “What can I get for free?” And start asking, “What can I do in order to EARN what I really want?”

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