MLM: The Royal Treatment

By Ken Lord

This book pulls together enough of what you should know to begin a business of your own and making it successful. It's written for brand new MLM representatives, and the purpose is to provide business and sales training for this new adventure. Such training is not always available from the person who recruited you, and almost never from the company you will represent.

You have invested yourself in a direct sales multi-level marketing company. It makes no difference if your company is newly minted or is the largest direct selling company in the world. You have been attracted to it, and for the period of your present involvement, it appears to provide unlimited (or at least substantial) earnings. Your company may be a local firm, a firm from another country, or one with a long history and worldwide operations. You are a part of that company and you alone determine what you will obtain from the experience. If you don't make the effort to make contacts to move the product, then you derive nothing but frustration from the experience, because very few customers will come to you. And nothing happens until a sale is made.

Somebody has made you an offer you wonder if you can refuse. For some hopefully reasonable sum of money you have been invited to join, and you have made the decision to do so. This book will acquaint you with reality—the reality that if you wish to accomplish something significant, don't plan on merely sitting back and hoping the money rolls in. It doesn't happen that way. The investment you made to get involved is merely the first of many investments in time, money, and yes, heartache that you will make so long as you pursue this endeavor.

• Language: English
• Publisher: Ken Lord
• Release date: Jul 27, 2012
• ISBN: 9781476033020

Ken Lord

Author of more than 60 works of nonfiction, fiction, biography, historical fiction, and YA. Senior citizen living in suburban Syracuse, NY. 40 plus years of computer experience and a comparable amount of adult education. ABA and BSBA from University of Massachusetts Lowell, EdM from Oregon State University, and doctoral credits from the University of Arizona. And, are you ready for this? An Avon representative for nearly 18 years, a top seller, well awarded, and "the cutest Avon Lady" in Tucson, Arizona.

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INTRODUCTION

From my early teens, when I first began to peddle newspapers, I experienced unparalleled success in my sales activities. I won contests, gained prizes, took trips, and made considerable sums of money at my age in the early 1950s.

Those skills, developed in the 50s and 60s, were honed in the 70s and 80s, and by the 1990s I was going great guns in direct selling and MLM. I didn’t become the millionaire of my dreams, but that’s OK. It’s been a comfortable living. By the turn of the century, I had enough experience to begin to share what I knew.

The building of any business, much less a bricks and mortar business, is never an easy task. As we passed into the 1960s, it became obvious to some producers that there had to be a way to move product (or service) without the bricks and mortar, without the large warehousing, distribution, and advertising costs. In essence, these firms, move those functions out into the network, if you will, now allowing good products that might otherwise never have attained a market to do so and at a cost that was significantly less.

Princess House, Stanley Home Products, Pampered Chef, Nikken, Nu Skin Enterprises, Longaberger, Shaklee Associates, Tupperware, Watkins, Avon Products, Excel, Discovery Toys, NSA, Melaleuca, LegalShield, Herbalife, Mary Kay Cosmetics, Tahitian Noni, USANA, and Fuller Brush have all been opportunities for self-employment for more than a half-century. The list is endless. Wherever there has been a franchising opportunity, somebody has gone into business with a desire to become rich, maintain independence, or obtain personal growth. The granddaddy of them all has to be Amway, which has been around since 1959.

In any of these endeavors, the recruit joins the extended arm of a corporation organized to market and sell one or more products through nontraditional channels (read direct selling). For some, merely representing the company that chooses not to provide product to brick and mortar retail outlets is sufficient. Advertising monies are saved, while an independent sales force to which the company owes no benefit programs carries the company’s products worldwide. Watkins is like this, as is ACN, a recent start-up in the telephone industry. For others, the attraction, retention, and developing of a downline becomes paramount. A new vogue, the multi-level marketing system was born and is largely successful. The leader attracts, recruits, trains, and encourages the downline member, taking a slice of that person’s efforts as the reward. In this manner, there is residual income, at least to the extent of the originator’s involvement.

Direct Sales marketing has gained extraordinary favor in recent years. According to the Direct Sales Association, approximately sixteen million are people involved with direct sales in the United States:

Home/Family Care/Durables (cleaning products, cookware, cutlery): 24.4 %

Wellness (weight loss products, vitamins): 23.0 %

Personal Care (cosmetics, jewelry, skin care): 19.4 %

Services/Other: 19.2 %

Clothing & Accessories: 11.0 %

Leisure/Educational (books, videos, toys): 3.0 %

There are sixty million more in the rest of the world. Direct sales firms have large staffing turnovers. New people begin daily; few know how to launch a home-based business. This is a book of knowledge and wisdom; not only a how-to, but also a why-to. It is a course for the person who wishes to begin a successful home-based business. It teaches a no-withdrawal, no-retreat way to do it. To quote from the book: Success has a very simple formula; it’s when preparation meets opportunity.

In any of these schemes, and the word is used advisedly, there exists the possibility for Ponzi activities. The Federal Trade Commission takes a dim view of such. Thus, most available opportunities have proved that such structures are benevolent.

But marketing and sales are what it’s all about. No commissions exist where no sales are made. The man or woman embarking on such a vocation often finds that once injected into the stream there becomes the question of how it’s done. Formal training is virtually nonexistent. Worse, the novice often has a fear of interaction not unlike the stage fright faced by a new actor. You can find good treatises on selling by such luminaries as Tom Hopkins, but these somehow seem never precisely to fit.

Hopefully this manual will provide the kind of guidance he or she may find useful to build a new and successful business.

I AM A NETWORKER FOR THE MLM

WHAT MLM IS

Network marketing is a very misunderstood and often maligned industry. Focused on product movement through an informal arrangement of independent contractors, network marketing, or MLM as it is often called, is frequently compared and confused with illegal pyramid schemes. The fact of the matter is that there are currently over 1000 legitimate MLM companies operating worldwide with sales volumes in the billions of dollars annually.

Formerly the realm of the blue-collar worker and the ‘mom and pop," network marketing exploded towards the end of the 20th century, attracting self-employment seeking middle America. Now firmly entrenched in the new millennium, twenty-something web-savvy kids rub shoulders with squeezed-out executives in their fifties, all eagerly building their slice of the American Dream.

Ordinary people from every conceivable walk of life are making steady second incomes thanks to 'MLM.' In fact, thousands are becoming quite wealthy, with strong six-figure annual incomes and even seven-figure incomes quite commonplace amongst the top producers of some of the largest network marketing corporations.

WHAT MLM IS NOT

Victor Kiam (1926-2001) was for awhile the owner of the New England Patriots. A former salesman for Lever Brothers, he bought controlling interest in Remington Products, and appeared on TV with this catchphrase: I liked the Remington Shaver so much, I bought the company. In his book Live to Win, Kiam made this statement: If this country doesn’t begin producing products, we’ll one day all be selling insurance to each other.

In preparation for this rewrite of a book I did a decade ago, I decided to look into the kind of products and services available by successful entrepreneurs on the Internet. I discovered that a goodly number of people were developing and marketing information products that have been ghostwritten for a fee in places like the Philippines and are copying them around, each extracting pennies moved through intermediaries, notably Clickbank and PayPal. I discovered that list accumulators sell those lists to people who promote these information products from Facebook, YouTube, LinkedIn, Twitter, and other social communications sites. For all your concern about being interrupted by telemarketers, people whom you have friended can now provide contact information about you, and you have given permission and facility to be offered several times each week, without control. Learn about such in Mark Anastasi’s book, The Laptop Millionaire, listed in the bibliography at the end of this book. It is replete with quick-buck schemes to move things that are largely worthless, all the time calling them information products or special reports. In many ways in 2012, a major sector of our business volume has come down to selling insurance to each other.

MLM is NOT a get rich quick scheme. There are hundreds of reputable companies, each promoting physical products which have utility to the purchasers. Instead of moving nonsense around the world electronically, they have invested in development, manufacturing, and wholesale distribution to people such as you and me. MLM is a way to build a business that moves a real product from the confines of your home or office and from which you may derive some benefit by getting others involved. IF they are ambitious; IF you can motivate them; IF you can help them to achieve their dream, then you stand a good chance to fulfill your own dreams and make a decent living doing so.

But let’s not give selling insurance a bad name. There are MLM opportunities to do just that for everybody’s benefit.

Author’s Foreword

Multi-Level Marketing—MLM. It has rather a nice smooth sound to it, don’t you think? Get rich quick, some say. Others will tell you that here are ground breaking products, never before made available to the general public, at prices that are too good to imagine, and if you would like to become fabulously wealthy, you must get involved—today—well, maybe. Don’t believe everything you read. Some folks may have the Mercedes, Rolls-Royces, or Jaguars depicted on the covers of opportunity magazines. Some may even own them outright. Most of us will continue to drive our Fords, Chevrolets, Toyotas, and the like while we’re waiting for our ships to come in.

It should be remembered that if some of these products were so very wonderful, Proctor & Gamble, AT&T, Exxon, Coca-Cola, Bayer Laboratories and who knows who else, might already have considered and rejected them as being insufficiently profitable for their investment. It should be as obvious that it often takes hundreds of thousands of dollars to bring a product to market, from the first germ of an idea through every step of putting that product into the consumers’ hands. That’s where you come in. Not every person with a new idea for submission is going to be able to afford the idea broker, whose role in life is to get the inventor to fund the prototype development which he will then attempt to market to a manufacturer with pockets sufficiently deep to take the idea forward. As for the low percentage of new products that ever make it to market, there will be an entrepreneur somewhere whose pet rock will be this month’s national fad.

Don’t be surprised that firms such as those named above find that they can drastically cut their advertising, distribution, and warehousing budgets in favor of a sales force for which they need not pay benefits and perks. This allows them to more effectively use their research and development skills and their manufacturing capabilities. As small businesses struggle to become large or large businesses struggle to remain viable in a changing economy, we are certain to see huge changes throughout the world, as companies and individual entrepreneurs find ways to bring their ideas to market in the most efficient manner possible.

Therefore, the savings to be had, and the money to be made, will lie in the distribution of product. That’s why it’s called multi-level marketing. In the simplest of explanations, MLM provides the opportunity for a large company to significantly reduce, or remove altogether, a salaried (or even commissioned) sales force. You—and the people you attract to assist you—will become the marketing and sales arms of many manufacturers, some huge, some miniscule. You may even be someone from the downsized sales force of one such company, now put to work (even for the same producer) to move the product. Or, you may be a person who is looking for additional, and perhaps, residual, income—income that is generated by the efforts of others.

Advice received relative to the formation of this book told me that I should not treat the subject of sales—that was not the current buzzword. The current buzzword, I was told, is networking. That’s OK, but I maintain that what will make all this networking—this multi-level marketing—work, will be the fact that somebody sold something—or somebody bought something for which he has gained savings, made a commission, or received a personal benefit. So expect that in this book we will discuss sales, for nothing that generates income happens until a sale is made.

There is a division of interests in the MLM world. Some would have you to believe that MLM is exclusively a prospect networking activity. Others would have you perceive it as strictly a product networking activity. I do not side with either of these perspectives, with one exception. I firmly believe that many folks who represent the product networking opportunity have little success because they have little training and guidance. It is my desire, in this book, to address both perspectives, for without prospects there is neither a recruiting activity nor a product movement opportunity.

What distinguishes MLM from pure sales is not the movement of product. It, instead, is who receives, keeps, and uses the product. And then does it all over again. If I were to postulate a general rule for MLM, it would be this: Repetitive sales (or purchases)—by others—generate residual income for you.

But there is something else to be remembered—the reduction in advertising and distribution costs, the removal of salary and benefit support for a marketing and sales team, and the ultimate marginal contribution to an organization’s profit have now combined to remove significant barriers to entry, permitting the isolated entrepreneur to tool up in a garage or a slot in an industrial park, and to grow from there without the significant initial capital risk and investment often required to do so. It happened in the 80s for Apple Computer. It can happen in the 21st Century for your MLM opportunity.

So you’re sitting on the cusp of a revolution. Yes, MLM has been around for at least thirty years that I know. I got my first Amway dinner in the early 1970s. But so what? It was a novel idea at the time. We’ve managed to expunge most of the charlatans, though you should continue to be cautious. We’ve learned that structured compensation plans do not by definition equate to Ponzi, or pyramid schemes. We have become such a critical mass that the Federal Trade Commission and the Federal Drug Administration pretty closely watch what happens with the ranks of MLM companies.

The best advice we can give you here will fall into this nutshell: build a bonafide business; take the appropriate steps; participate fully in the opportunities you select; conduct yourself ethically; and you may well find you have gained the financial freedom you seek.

If you’re already performing MLM at high levels, perhaps this book would be a useful training tool for your downline. The book is designed to provide unique, independent chapters of guidance. Use it in any sequence considered to be most beneficial.

PROLOGUE

This book is my attempt to pull together enough of what you should know to begin a business and make it successful. It’s about building a business of your own. It is written for brand new MLM representatives, and the purpose will be to provide some business and sales training for this new adventure. Such training is not always available from the person who recruited you, and almost never from the company you will represent.

You have invested yourself in a direct sales multi-level marketing company. It makes no difference if your company is newly minted or is the largest direct selling company in the world. You have been attracted to it, and for the period of your present involvement, it appears to provide unlimited (or at least substantial) earnings. Your company may be a local firm, a firm from another country, or one with a long history and worldwide operations. You are a part of that company and you alone determine what you will obtain from the experience. If you don’t make the effort to make contacts to move the product, then you derive nothing but frustration from the experience, because very few customers will come to you. And nothing happens until a sale is made.

Somebody has made you an offer you wonder if you can refuse. For some hopefully reasonable sum of money you have been invited to join, and you have made the decision to do so. This book will acquaint you with reality—the reality that if you wish to accomplish something significant, don’t plan on merely sitting back and hoping the money rolls in. It doesn’t happen that way. The investment you made to get involved is merely the first of many investments in time, money, and yes, heartache that you will make so long as you pursue this endeavor.

In more than ten years of involvement in MLM and direct sales, I’ve learned that the candidate who expresses a desire not to gain training or attend meetings is pretty much the first one to cut and run, claiming, of course, that the opportunity was something less than worthwhile. The fact is that there are many MLM opportunities that are worthwhile, but an investment in training is absolutely mandatory if you are to be successful.

If you can’t make the time necessary to attend a sales or downline meeting when they occur, you fail to gain the knowledge necessary to present your product or opportunity, and because of that you may decide that this isn’t for you. With very little effort you could make yourself a shooting star, an outstanding salesperson with a stellar future. You can make it to your company’s first award level and then beyond. How far you go depends on only one person—you! And if you can’t be bothered to participate, you have told all of us that you know all there is to know—so we could reasonably expect great things from you and save the effort necessary to support you. Sadly, that’s not the way it is. You have contributions to make. We need them. You need us.

Your company is a good company. At least that’s what the person who wishes to recruit you says. If the investment is small, then it’s easy to give the opportunity a try. If it’s not all you wish it to be, it is just as easy to withdraw from it. If the investment is large, then you must do a little research with the Better Business Bureau or with the Chamber of Commerce to learn of the organization’s reputation. Look at the stock market, as well.

While there may be opportunists out there, the organization represents the dream of its founders, and these folks feel they can exploit their ideas with an opportunity for you to help them become successful. Good people have made an outstanding opportunity for growth and reward. Carry the ball as far as you wish—and your coaches will stand in the bleachers, celebrating your success. You have only to make the effort.

You would also be wise to determine as much about your recruiter as you can. Once you have decided to commit to this company, will that recruiter be your upline? Do you perceive him to be a help or a hindrance? Will he commit to train you or will he be happy just to get your name on a contract?

If there has been a single deficiency in my MLM experience it’s been that many do little to provide guidance on how to do it. Their advice on recruiting is shallow, at best. They’re good at describing their products, their contents, and their efficacies, but they do a highly inadequate job of sales training. Customer support or service? Forget it!

On the Internet, there is no shortage of such advice from many of the MLM companies themselves and from others involved with those companies. On them, representatives and consultants learn from each other. There are even a few who have made it their business to provide guidance, offering highly-priced books, subscription services, lead generation services, and the like. But there are also stories of failure sprinkled amongst the stories of success, and it is within my power to do something about it. That something first took the form of guidance for my primary MLM, and is now being generalized so the millions of other folks who could perhaps make use of my knowledge can receive, at a reasonable price, the kind of guidance a knowledgeable mentor might provide.

This book began as a post to an Internet discussion group, and became a part of a chapter in this book—Sales Versus Order Taking. It prompted questions that opened topics that are laid out in the balance of the book. By the time I was half through, I had learned that: (1) while there was a lot of literature on the subject, nobody had ever adapted it to the MLM market and (2) there was a strong interest to explore its entirety. That became a quantum expansion into related topics, topics that have been worked into this book, because with this one I have decided I must place at the reader’s hands as many tools as I can to help that person become successful in his or her MLM activity.

Chapter 1: Laying the Foundation for a MLM Business

While the structure of any book is linear, there is a bit of a problem with this section. In the scheme as it has been presented, Chapter 1, Preparing for the MLM Business, precedes Chapter 2, Goals for your MLM Business. But a case can be made for presenting them in the reverse sequence—Chapter 2 before Chapter 1. So, when the question is asked—should we prepare for the business first or establish some goals first, the answer must be an unequivocal, Yes. The author’s feelings, as the book was constructed, is that a new MLM entrepreneur’s perception of starting a new business is to get it going and then point it in a direction that seems most suitable. The subject of goals is no less important than the steps in launching a business.

Chapter 1.1: Needed: Some Spadework

It is very easy to become alarmed over some of the startup costs of a new business. It is an expense with no immediate income. Take a farmer analogy—how did you prepare the ground (your customers)? Did you plow or use a spade? How did you fertilize—what incentives did you use? How did you sow—did you place a seed quickly adjacent to each other or did you spread them out every hundred yards. How have you tended your garden—any follow-up? Any secondary incentives? Watering? Weeding? All this maintenance comes with ATTENTION, ATTENTION, ATTENTION.

I know of no farmer who plants his seed on Monday and expects to harvest an entire crop on Tuesday, or Wednesday, or even by the following Saturday. A harvest comes after the farmer has taken all the steps, perhaps even several times. And when a hill shows no fruit, he must plant another seed there that may take root, later than the initial sowing. And he must separate the seeds that have come up too close together where the plants choke one another by transplanting some of the seeds. And the entire process is governed by the calendar, the weather, time, and moisture—many things over which there are no controls.

Why should it be different for a person starting a new business? To the customer, the bricks and mortar store is solid. You may be perceived as something less. People will resist your efforts, feeling that they simply don't (1) believe you are really in business or (2) figure you won't be around very long. If you allow yourself to be defeated so quickly, you will declare them to be correct. There is no need to do that. You handle (1) with repetition, repetition, repetition, up to six times, if necessary. And then when a batch of seed catches, (2) becomes an unnecessary worry.

If you are to build a successful business, you must spade the ground again and again. Break up the sod—confirm your intention to stay the course. Invest in and plant seed, over and over in some places—always moving out geometrically from your base of operation. Pay attention to your customers. Get your relatives to buy something so you know a little success. Get your close friends to buy a little something—and give everybody you know at least two books—one for them and one for them to give away for you. And you must do all this now—to give your customers a name, a face, a phone number, and a piece of literature that identifies you as their business partner.

Chapter 1.2: Preparing for the MLM Business

There you are, a budding entrepreneur. All set to take on General Motors? Colonel Sanders? Major Muffler? Captain Crunch? Somebody has convinced you that you need to get involved with a specific multi-level marketing activity. I agree. There’s lots of opportunity. Lots of money to be made. Lots of work to be done.

Before you charge out of the paddock into the Light Brigade, perhaps it would be useful to talk a little about what it takes to start a business—any business. You’re going to need some things: courage, passion, wisdom, a business plan, some goals, and (like it or not) some money. I cannot do a thing to give you courage, passion, or wisdom (refer to The Wizard of Oz for further instruction), but I can pretty much sum up a business plan, developing some goals, and if necessary, attracting some money for your venture.

Do you really need a business plan? No, of course not. And if you sail a boat, neither do you need a compass—so long as you either stay in the harbor or maintain sight of land that has recognizable markings to permit successful navigation. And having said that, it is precisely this problem that faces thousands of otherwise potential MLM successes every day. Remember that the whole purpose of going into an MLM activity in the first place is to develop some sort of income stream. You will experience four forms of income from your MLM activity:

1. Direct income—the savings derivative. Purchase some of the product for your own use, and your income from that purchase will come in the form of savings—monies that you would otherwise have expended for products regularly used. Should you become involved in an MLM activity which places a monthly personal purchase quota upon you, this savings may be a mirage, as you may be faced with purchasing products you either might not otherwise have purchased, or with purchasing quantities which are overly-sufficient for your use. It’s even more troublesome should you now find yourself obligated to purchase things you’ve never used.

2. Direct income—the profit derivative. You will purchase some of the product for resale at some predetermined markup (established by the MLM company) or at a lower price you feel will be more successful. Because the retail price is normally predetermined and published, you have no opportunity to raise the price in order to increase your profit. Whether that available profit is 20% or 50%, there will be some top point that will be derivable from your sales efforts. Hopefully, if you have acquired products that you cannot personally use, you will be able to derive profit from the sale of those products.

3. Indirect income—the divided profit derivative. Often you encounter people who have no interest in participating in your MLM activity, but who do have an interest in the product and would be willing to broker your sales to their family, friends, and associates—for a piece of the action, of course. They do not make any guarantees as to volume. And while they may be willing to broker the communications between you and their acquaintances, they will expect some compensation either as a piece of the profit or as in-kind services or products.

4. Residual income—the external profit derivative. The thrusts of MLM activities are here. The idea is to locate a person who can be signed with the company to obtain product from the company on their own arrangement—in essence working the direct income savings derivative, with your becoming the beneficiary of any dispersed profits from those purchases. Hopefully, the recruit has a need for the product in sufficient quantities such that the income stream continues. If the product is a service activity, that income stream could continue indefinitely, as a service activity is an on-demand purchase, as opposed to a quota purchase.

It is useful to know what you’re after before you jump into any MLM activity. Which of these four different types of income interests you? All of them? Perhaps. Here is an appraisal of the advantages and weaknesses of each:

Direct income—the savings derivative. Anytime you make extensive use of a product or service, this approach has merit. If you make heavy use of legal services, then a prepaid legal plan might be of value to you. If you never sold the concept to anyone else, your savings alone might justify the participation. In the case of a product, however, the downfall of this approach comes when your arrangement with the MLM company requires you to purchase some set quantity of merchandise every month. Small families with insufficient need for a default product package each and every month will ultimately find the product accumulating, and in discouragement will terminate the arrangement with the MLM company. Even though the company may make the best product of its kind in the world, the saturation point, once having been reached, becomes a tether which can be easily avoided. For you, this may have been a necessity in order to promote any residual downline income, but for the downline member, once he or she has terminated, it’s freedom—and your income is lost.

Direct income—the profit derivative. There is a curious conflict here. Where the pressure is on to recruit people who themselves will perceive the opportunity to make a savings on products, the emphasis becomes less on the retail sale of the product and more on the consumption of wholesale quantities (at wholesale prices) of the product. Thus, the margins on these products are significantly more narrow—10% to 25%—than those offered by people encouraged to promote the product itself, whose margins may range from 20% to 50% or more. Yes, there are profits to be made from the sale of the product, but insufficient profits (where recruiting other folks is important) for one to be able to use it as a primary source of income. Thus, there is pressure for you to become involved in acquiring other people, or other customers, as opposed to moving greater quantities of the product itself.

Indirect income—the divided profit derivative. Here you will pretty much find that the activity will be product-related and in the retail movement of product to third parties. The assistant in this picture has no interest to become involved in the MLM business, primarily because it involves activities, such as recruiting, that may either not be of interest or may be feared. Insofar as meeting a personal product quota is concerned, having such a person is good, provided you have ensured that you order only what the assistant wishes and avoid the automatically distributed monthly product packages.

Residual income—the external profit derivative. This will be (even to the dollar extent of the quota) what your primary interest is. This will mean that your sale must be more the opportunity than the product. This will also mean that if you are successful in convincing other persons to become involved, the income stream can continue so long as the individual chooses to continue. Some income streams will require constant monitoring and encouragement. Some income streams will mean that it may never be necessary for you to have contact with your customer again. Automatic receipt of money is the idea—and that may be good so long as the product or service remains attractive to the downline member. Once the product or service loses ground to existing, or perhaps new, competition, people—being fickle—will move to where the grass may be greener—and probably into another’s downline.

No, you don’t need a business plan. You can wing it. You can charge off the plate and all the way down the third base line before you discover that the rules are written for the game to operate differently. Where are those rules? Where are they written down? Well, in baseball they’re completely codified, with little room for flexibility or little requirement for extra judgment. It would be nice if businesses had a similar set of rules. But a business—any business—requires you to move tentatively forward and then to measure your progress, making appropriate changes and improvements. And the direction your business takes should not be left to chance. You shouldn’t open the door and merely expect folks to come to you. Be prepared to take specific steps to locate and sign interested parties. You should become acquainted with the fact that sales require products or services, which in turn require even more sales, and so on, in a self-propagating activity that varies with the needs, tastes, and finances of the consuming public.

The building of a business plan will allow you to simulate your business before you have ever invested a dime in acquiring its equipment or operating its mechanisms. It is a requirement for you to select an adequate direction. And it is mandatory if the scope of your dream requires you to find underwriting for your organization and operation. It is with this perspective in mind that the following is presented. You’re going to need a business plan—at least informally. And should you have directors, financiers, suppliers, middlemen, etc., you may find it not only beneficial, but also necessary.

Chapter 1.3: The Business Plan

Since a business plan is something most new entrepreneurs might never consider, let’s identify the kinds of things that might be found in a business plan. What will be presented here is general in nature. You should pick those pieces that are pertinent to you—should you wish to develop a business plan.

Business plans are most often prepared as a means to justify financing. On the one hand, you might be wishing to attract venture capital. On the other, you may be wishing to justify a loan from the local bank. For me, building a big MLM business involved borrowing some money—going into debt. What follows is what I needed to do to get it. One thing is certain: you should be skeptical about opportunities that indicate little or no start-up costs. That may be true to get involved with the company, but be certain that you will experience costs you had never anticipated.

If you take the time to investigate all the ins and outs of your potential business, you may well find that your prior lack of knowledge could lead you down the road to financial and/or emotional disaster. If excited and ambitious new entrepreneurs take the time to thoroughly develop a formal business plan, they may well become aware that the scope of operation initially envisioned becomes something entirely different in actuality.

A sound business plan is important to success in any successful business venture. Even if you never wish to seek external financing, it can become the controlling document that will allow you to build a large-sized MLM business. A good business plan will communicate your enthusiasm for your business and, if done thoroughly and with reality, it can build upon that enthusiasm. Your own internal financing may fit the bill so long as you operate out of the spare bedroom, but what is required for you to expand your base of operations? Be certain that expansion of your efforts will require you to develop such a plan.

Chapter 1.4: Developing the Plan

Some important things to remember as you begin to develop your business plan:

Make the plan as concise as possible. If you're seeking financing, keep your detail within 25 to 30 pages, plus any supporting documentation you may wish to develop.

If someone else is to read it, it must be crisply written, easy to read and understand, and free from language, punctuation and spelling errors. If you're sloppy on your paperwork, it could mean that you'll be sloppy in your business.

Your plan should convey the marketing opportunities for your business, ranking them by potential return.

Your plan should convey the depth and strength of skills being used in pursuit of the business. This is particularly important if you expect your business to be large enough to involve more than just yourself.

If your plan is to involve the attraction of other people, some discussion of your recruiting methods and information about the type of people whom you plan to attract should be included.

Give some serious thought to having someone with business planning experience do the final preparation of your document. He or she may have some knowledge of necessary approaches that may prove useful to you, particularly if you wish to obtain outside financing.

Pay the money for a professional document preparation service to put this plan onto paper for you. The look of the plan may make a great difference in obtaining the assistance you may need.

Chapter 1.5: There Are A Few Cautions

Don't make unrealistic assumptions. Anyone beginning a new business is simply not prepared to take the market by storm. Even if you have a bottomless bucket of cash, it isn’t going to happen. Detail your growth, justified numerically, over a specific period of time.

Don't overlook the difficulties in growing your business. Finding new business involves advertising, developing networking contacts, and moving out of your specific sphere of influence. Your business plan must contain details of how you intend to do that, and the more detail the better. You would be well advised to support this business plan with a detailed work plan.

Don't underestimate the impact on the market of similar competing products and opportunities. Just how do you intend to meet the competition? Did you just become a representative of the Acme Widget Company? The person who recruited you—does that person live locally? Has he or she recruited others in your community? Just what might be the absorption within that community for this product or service?

If your business plan is to be read by an outsider, define all terms. Mr. Moneybucks may not have any idea what your product is or for what it's used. Similarly, if you are to make a presentation, have it professionally done and work at making that presentation until you have it polished to the high level that may be necessary to obtain the support you’re going to need.

In your document, avoid any technical documentation. Neither you, nor anyone that might fund you, will need to get hung up on the chemical composition of specific products in this document.

Any marketing approaches that you consider unique should not be included in this plan—for all intents and purposes, they are proprietary information. You may wish to allude to a general classification of procedures, but not the specifics.

If there are any risks to your business, they should be identified, not only because you need to recognize them, but also any potential financier must have that information to make a valid decision.

Chapter 1.6: And Quite A Few Benefits

Putting the effort into developing a business plan has many benefits. Among these will be the following:

You will be led to thoroughly think through what you are about to do. Often we enter a business on the spur of the moment, not counting the cost, not clearly focusing on the enormity of the tasks that lie before us. This will cause you to fully consider all the ramifications of your actions.

You will have the opportunity to establish measurable goals and objectives. It is only in the measurement that you will be assured of success.

You may have some idea of the kind of participation needed from others, those folks with skills and resources not available to you. Here you could add someone to your board of directors that has skills in advertising, direct mailing, accounting, etc.

You’ll have a clearer idea of what your costs will be and when those costs must be disbursed. A spending plan becomes relevant to obtaining financing, should that become necessary.

You’ll have as realistic an idea as will be possible of the scheduling of your sales. Perhaps they will be tied to advertising or other promotional effort for which you must prepare.

It will cause you to investigate the market, to determine the demand for your product in the marketplace you have chosen. It will give you reason to compare your forecasted efforts with similar efforts of others in your locale or in other places that may be comparable.

And when it is finished, it becomes the sales tool for you to promote your business to your supporters, financiers, friends, family, customers, suppliers, the Chamber of Commerce, the Better Business Bureau, and anybody at all to whom your business may be of interest.

Chapter 1.7: The Structure of the Plan

The general format of the business plan should include:

Cover page—professional and informative. If any confidentiality is involved, it should be identified here.

Executive summary—this is the introduction to your business plan, and the most vital part. It draws together the pertinent data sufficient for decision-making. Everything in this summary should be detailed and further justified in the body of the plan. Include in your summary:

Any history of your company or enterprise.

Discussion of the product and its competitive advantage.

Your goals and objectives (further discussed later in this book).

The market potential for your product or service. You may see MLM as the attraction of people, but don’t forget that there must be a product or service.

Financial forecasts, including forecasted profit or loss. If you were forming a large company, you could expect to be asked for summaries for three to five years. For your enterprise, put together summaries for at least two years.

Your experience and performance data.

What financing may be required to meet the growth you want?

And if it didn't happen, how you would get out of the business?

Chapter 1.8: Body of the Business Plan

This is a workable format for the final business plan document:

Tab 1: The company—description of you as a company, and any history you may have in this or related business activities.

Tab 2: Responsibilities of those persons involved with the business—you alone, you with spouse, these and any other acquired talent.

Tab 3: The product—describe the types of products and why the product can penetrate the local market for similar products.

Tab 4: Size of the market—include information as to how well covered the market in your area currently is. Appendices can provide the detail for this.

Tab 5: Competition—who, what, where, when, why, and how. Who is your primary competitor? How will you be different? What will make you successful in the face of this competition?

Tab 6: Marketing. This section should describe the marketing plan—hanging, rolling, tossing, advertising methods and media, word-of-mouth, incentives, etc.

Tab 7: Financial statements and projections. What are your sales targets? When will these targets be achieved? What specifically will you do with the proceeds? Are there extraneous costs? What will be your associated costs for distribution, etc?

Tab 8: Supporting appendices and further documentation.

The entire package should be professionally typed or typeset. It should have cover sheets, clearly marked tabs, attractive binding, and a cover letter calling for action.

There's the meat of it. If you can put these things together, even in a general way, you will have developed a viable business plan. It would be useful to have friends and associates review it with you. If you intend to take this plan forward for financing, the acquisition of a business plan writer would be a wise investment. You can find such people with the Small Business Administration, the Small Business Development Center at a local community college, or the Service Corps of Retired Executives (SCORE).

Chapter 1.9: Handling the Business

I was the moderator of an Avon Internet discussion group. As I wrote this chapter, one of my members posted the following. The lady’s perspective is valid for anyone going into an MLM business.

"I feel so proud. Today I finally opened a business checking account at the bank I have my personal checking account with. My husband thought this would be a great way for me to track whether I am losing or making money, selling Avon, and I should have done this a long time ago. It scares me to know his reasoning behind this account is that if I keep losing money, he wants me to quit Avon, but he is right. If I don't track what I am doing, how am I going to know either way? I really don't want to quit.

"As I was driving home this afternoon, I started thinking....wow....I really do own a BUSINESS, and I'm CEO! I couldn't get this title this fast working through a 9-5 job. Sometimes I really wonder if he would rather me give it up just by some of his reactions to things I am starting to do now that I am trying to increase my business.

I am so motivated by this now. I am going to make this work and profit from it, not lose my shirt from it. I don't want to be forced to quit. This really makes me feel good.

I felt motivated to respond, and my response follows:

"Congratulations. You may not realize it, but you have just taken a positive step for business independence. The next step will come with a business telephone line that will make you eligible to get into the yellow pages.

"A good way to get a handle on your business will be to keep it up to date on a spreadsheet—either on paper or on the computer. That will give you the picture fairly quickly. Keep that checking account on a spreadsheet. It should show your deposits, your withdrawals, and your account expenses and (perhaps) interest, each individually annotated as to source or destination. Set it up so you know your balance at a glance—and ensure that every time you deposit or write a check you post it within a couple of hours. Don't wait a few days to do it or you might have a few surprises. It is also a good step to get an overdraw account tied onto your checking account.

With the account on the spreadsheet and your line items annotated, you can sort that spreadsheet and know very quickly what your sources of funds are, what your expenditures are. As you close it out every month, transfer that month's portion of the spreadsheet to a separate spreadsheet, with each category summarized. You'll be absolutely amazed how much help this will be at income tax time.

You need to make some management decisions here, as well:

1. Do not ever, under any circumstances, write a check from your business account to anything other than a business expense. It will get away from you, if you do. If you wish to withdraw money from this account for some purpose, transfer that money to another account and write from there.

2. Keep track of your purchases. Remember that every sample, every stocking item, every bag, is an expense of your business that comes out of your profit percentage. That is not, of course, news to you at this moment. But the accounting for it may be. Also, your purchases may be for non-business items, such as your own personal purchases.

3. Deposit every penny you receive. Don't just put in the whole dollars and toss the change into your purse or pocket. Those coins add up to a lot of money, and remember that your disbursements are not in whole dollars.

4. Keep track of your specific profit every business cycle. List your orders, calculate what you pay for them, and take the difference. This is the amount you should be depositing into your account. If you make personal purchases, they are a draw expense, just as if you wrote yourself an expense check.

5. Decide what you wish to do with the profit as it appears in the account. Do not take it all for your salary. Take a fixed portion of your profit, preferably a fixed amount each campaign, and transfer that amount to your household accounts. Remember to deduct from that amount what you will be spending for personal purchases. So if you normally take $100, and your personal purchases are $10, take only $90 and put it into your household accounts. In other words, treat it just as if you had taken out the $100 and then spent $10 on yourself.

6. Determine how much of your profits you can afford to invest in supplies, samples, recruiting kits.

7. Determine how much of your profits you can afford to invest in advertising, including brochures, magnetic signs, ads in the paper, letters you have printed, etc.

8. Determine how much of your profits you can afford to invest in the growth of your business—new areas to open, expenses to attract helpers, and promotional costs.

Take points 5 through 8 and calculate a percentage of your average profit. Then each profit period, divide up your profit according to the percentages and spend it that way. Say your profit is $100, you might divide it up this way:

40% for a salary draw. Don't take it all. Limit yourself, even though you may have the money in the account.

10% for personal purchases. Perhaps this is too large, so limit it.

5% for stocking, supplies, samples, etc.

20% for advertising, brochures, etc.

15% for growth development.

10% hold in reserve—and separate temporarily from your balances, so you won't be tempted to spend it all. In effect, create a savings account within your checking account to cover contingencies (e.g., the car, which you use for the business, needs a new muffler). Also, this portion should be used to pay the account expenses—the monthly fee, the purchase of checks, the purchase of deposit slips, if you wish them.

Refrain from infusing this account with cash from outside the business. If you must ‘borrow,’ keep a list of the borrowings and develop a payback schedule to yourself, just as if you had taken a loan out from that very bank.

There's nothing sacred about these percentages. Adjust them as necessary. This is but a starting budget. If you want to prove that this is working, you will first need to prove that it is not NOT WORKING. Read that sentence again, slowly and carefully. In other words, get a handle on everything and keep within that profit figure. Once you have these things working, then you can change the percentages to reflect your reality."

You haven’t lived until you have experienced an IRS audit. I have. Twice. At one, I paid them an extra $239. At the other, they paid me back an overpayment of $9. In both cases, it cost me more than $1,000 to prepare for the audit. The very best way I know to avoid such fun is to avoid commingling your funds and to keep the most perfect records you can. I am not an accountant. Nor am I a lawyer. Just somebody who has been there. What is it they say about a word to the wise?

Chapter 2: Goals for Your MLM Business

Every MLM organization will suggest to its newest representatives that they should define the goals they wish to achieve once they begin the business. Good idea. Unfortunately, few have any idea how to go about the task. It’s easy enough to develop a pie-in-the-sky assumption and when it doesn’t happen, then Oh, well. Developing a goal is IMPORTANT, and here are some thoughts about how to do it.

Chapter 2.1: This Way to Failure

You've no doubt heard it said that if you fail to plan, you plan to fail. There's a lot of truth to that. Fail to plan? Plan to fail? What does that mean? It literally means that the absence of some kind of road map toward what you would like to happen could easily lead you astray or leave you adrift. If you don’t know where you’re going, you’re liable to end up somewhere else and not even know the difference. So many people merely drift along with the tide, which may make for a peaceful existence, but certainly not a secure or profitable one. Let's go back even further.

One of the things I've observed in more than eighteen years of MLM activity is that the people I sign up often have very little reasoning as to why they signed up. They'd like to do MLM because it looks like an easy way to make a little extra money. That's certain. But ask them how they intend to use this money, and you frequently will hear something on the order of: to pay bills. Well, that's a good thing to do with the money, of course. And then the next question becomes, And then what? The resulting discussion often reveals the fact that they don't know or are not sure. In short, they have thought very little about tomorrow, or the day after, or the day after that.

Try an experiment. Ask everybody in your family—or several people in your church—or even a bunch of people on the street what their goals are. And then don't be surprised if you suddenly discover they have none. Now, modify the question—ask each person what they are doing that will absolutely guarantee their failure. Now that's a shocking question. Nobody in his or her right mind is working towards failure—at least not intentionally. Everybody you talk with will be absolutely convinced that he or she is in hot pursuit of success. And yet, as you ask these questions, observe not only the responses, but also the body language. This is definitely a discomforting thought—that we would work, day after day, in pursuit of failure.

Is this because there is a lack of opportunity? No, certainly not. We live in a land of opportunity. You wouldn't have begun to work with any MLM if you didn't feel that it offered you some opportunity. The question is whether you will recognize the opportunity and do the extra things that will bring that opportunity to you. And remember, the opportunity is but the vision of the Emerald City—the journey remains. The journey requires you to have a specific vision of an end point that to you represents success. The journey requires that you take specific action to move along the path. The achievement of success requires that you have some specific knowledge of what the end will be, against which you will be able to measure success.

Do the people you know or encounter actually plan to fail? Of course not. The problem is that they plan nothing. Or at least nothing beyond today. If a goal is important, then perhaps that goal should be committed to paper. Haven't done that? Why not? There may be at least these reasons:

1. You've never been sold on establishing a goal. Your upline could well have told you that it would be good to establish a goal, but having been told you need goals doesn't do much for convincing you of their necessity. To some, achieving a specific award level is a goal—and a worthy one, but if pressed on the issue, could you respond with a number required for you to achieve that goal between now and the end of the award period? Do you know how far ahead you are—or how far behind? The goal requires you to plan on sales of a specific amount, or a given number of recruits in a specific calendar period. What sales have you planned to make? What recruits have you planned to find? It’s too easy to assume that what you sell, you will sell only if you are lucky and that luck will be enough to move you along the path towards that prize. So the first step must be to sell yourself on what you must do to make it happen. You can't build a plan until you know what you wish to accomplish.

2. You may not know how to set goals. Knowledge is key in any business. It isn't any different in MLM. You need at least two kinds of knowledge: knowledge of the product and knowledge of selling. The knowledge of the product is easy to acquire. Tell me—how much study time have you spent in the reference manual for your product or service? Think of how different your business might be if you spent at least 15 minutes a day reading it. Every new recruit receives a reference manual for the initial fee. There are courses and books that will impart this knowledge. What reading are you doing to gain that knowledge? What videos have you acquired to learn about the product? What sales or downline meetings have you attended? The second, the knowledge of selling, is another matter. Sadly, I don't think most companies do a good job of this, and for that reason I have put this book together to help with the subject. But there are tons of books available—even used—on the subject. Knowledge is power.

There may be a fear that if you set a goal, somebody will hold you responsible for it. Good! You should set the goals and tell somebody else about them—somebody who can hold you responsible for them. We often set our goals so very high that there is absolutely no way to achieve them—thus guaranteeing that we will fail. But establish reasonable and achievable goals and you CAN achieve them—and everybody will celebrate with you. I found, for example, that the goals I set for each year of my business required me to do the things to achieve at least a 30% growth. Now that doesn't happen all by itself. There are things one must do to make that happen—and they must be different things from what you've done in the