In The Trenches

You are a Champion!

So you’ve been a great success in Network Marketing are you still willing to get in the trenches?

Ram Charan in his book Know-How wrote this about CEO of Home Depot Bob Nardelli and his Senior VP of Operations (Carl Liebert): “As Nardelli selected leaders, he kept a keen eye on their know-how in managing a social system and their tendency to be psychologically open, willing to be influenced by others, and intellectually honest in keeping the group focused on the business purpose. One of the people Nardelli entrusted with the social system is Carl Liebert, whom he appointed as senior vice president of operations and charged with creating processes where none existed. Knowing that any process designed by industrial engineers in a lab would ultimately fail, Liebert designed his own operating mechanisms at the crucial intersections of people from different hierarchical levels, from the executive suite to the “associate” (sales) level. For instance, Liebert set up a team to create a better process for receiving night shipments. The team included some of the night crews who actually did the job of accepting shipments. But saying that they were on the same team wasn’t enough; Liebert had to prove it. He won the trust of the people on the receiving dock by working side by side with them slinging boxes for a week, until, as Liebert says, they didn’t think of him as the VP of operations anymore. Then the communication began to flow, free of any hierarchical filters, and those who were closest to the problems began suggesting ways to resolve them. The result was a straightforward and fast solution that everyone endorsed.”

This is a powerful story hidden in the middle of a large book. How many of us have been in management positions and so far removed from the people that they laughed at our inability to solve some simple problems that had simple solutions? Why? Because we don’t have a servant heart.

You may be the superstar but your downline has the keys to your success. Don’t build unnecessary walls and get back in the trenches (that doesn’t mean with your peers). Can you just imagine what kind of morale builder this was to those on the front line?

“Heap praise on people that are dead and gone because they won’t disappoint you in the future.”  David Hendrickson

I’m Getting Excited - Why?

You are a Champion!

I can get excited when things aren’t going as planned and it gets us back to basics.

Problems get people back to the basic questions and real solutions.

I like to read nutrition industry financial statements because we are associated with that industry and I see questions–Why? It’s interesting to me that a particular public company has done so many things to help their Distributors (they are a good company). They provide a competitive pay plan, relaxed requirements on exclusive dealing, health insurance, car allowances, etc. Their solution to flat sales appears to be looking internal instead of external like they should be (market positioning and repositioning). While other ratios are staying in line their fixed costs grew over 3% on each dollar of sales. In other words, they will have to greatly increase sales just to cover the additional fixed costs. Companies always grow fixed cost with the excuse that it will increase future sales (bad bet).

They are talking external in their annual report and increasing (not cutting) their costs internal. For example, they admit to external positioning issues (beyond demographic, healthcare and lifestyle trends) that they need to increase the number and productivity of their Distributors (direct correlation to their sales). They have a good compensation plan so why can’t they attract Distributors to grow sales?

Externally (besides market position), we see things like FTC rules (The Business Opportunity Rule R511993) that will be gotten around even if the industry is fragmented and doesn’t effectively fight bureaucracies. Why charge anything to become a Distributor? Becoming a Distributor (if you want to call a customer that name) can be based on sales volume like everything else. Brochures (Distributor Kits) can be available online for free. We don’t have Business Opportunities we have Purchase Discounts (Let’s see if the FTC can do away with Purchase Discounts).

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Winston Churchill

Encouraging Commitment

You are a Champion!

Encouraging the Best in Others

Dick Richards in his book The Art of Winning Commitment wrote this: “William Purkey provides a metaphor for helping educators and students to become more aware of their involvement in creating an invitational environment. He calls it the Blue and orange card metaphor. Blue cards are dealt to others each time the dealer is caring, respecting, or optimistic. Orange cards are dealt to others each time the dealer, in any way, informs another person that he is unable, worthless, and irresponsible. Orange cards cause pain. It is possible to give blue and orange cards to oneself as well as others. Every card counts–it has an impact. Purkey believes that it takes twelve blue cards to overcome the destructive impact of one orange card.

Leaders, like educators, ought to be aware of how many blue and orange cards they distribute, and how they do that. Blue cards encourage the best in people. Orange cards encourage escape; for leaders, escape means withdrawal of commitment. Purkey wrote, ‘It is increasingly clear that everything we do and every way we do it is orange or blue.’”

Be True Blue…You are a Champion!

Renaissance Man

You are a Champion!

Do you believe that some people operate on higher levels, or perhaps different levels, than many of us?

What causes some people to be the Renaissance Man, “A man who has broad intellectual interests and is accomplished in areas of both the arts and the sciences,” while others just exist?

What causes some people to look at certain work as “slavery” while others get “great pleasure” out of the very same work?

What causes some people to be on a “mission” at one point in their life and at another point reject the very ideas of their “mission?” Going from a realm of hope to a realm of disgust and mistrust.

I personally don’t believe that this difference comes from intellect or IQ. Some of the least joyous people may actually be some of the smartest. In fact, Solomon (known for his wisdom) said this in Proverbs 1:14, “I have seen all the works that are done under the sun; and, behold, all is vanity and vexation of spirit.” This came from the lips of a person who was extremely rich (King Solomon) and could command anything be done with his power and riches. Therefore, his statement: “I have seen all the works that are done under the sun” was not exaggeration or hyperbole. He had the riches and power to make that statement.

When we read a famous parable in the New Testament we see the Renaissance Man come to life. Something that has to do with the Spiritual being and not the physical being. There is a continuum in life from the physical to the spiritual (with spirit at the highest level). Here was the message Jesus said in Matthew 13:18, “Hear ye therefore the parable of the sower.” He began his explanation to his disciples of the parable he had stated beginning at verse 3: “And he spake many things unto them in parables, saying, Behold, a sower went forth to sow; And when he sowed, some seeds fell by the way side, and the fowls came and devoured them up: Some fell upon stony places, where they had not much earth: and forthwith they sprung up, because they had no deepness of earth: And when the sun was up, they were scorched; and because they had no root, they withered away. And some fell among thorns; and the thorns sprung up, and choked them: But other fell into good ground, and brought forth fruit, some an hundredfold, some sixtyfold, some thirtyfold. Who hath ears to hear, let him hear.”

Is Jesus explaining your life? When the sun comes up, and the weeds spring up, and life happens will you be choked out? Obviously, he’s not talking about actual seed, soil, and plants!

This parable explains the existence of the Network Marketer, and any other being in this life, including the Renaissance Man. Therefore, we ask you about your message. Is it an emotional and spiritual message or is it a message of facts?

If you want success then change your message to a strong message and reach people on a higher level. Pierce their soul with your message (seed)!

” The intuitive mind is a sacred gift and the rational mind is a faithful servant.  We have created a society that honors the servant and has forgotten the gift.”  Albert Einstein

Tuning Out Static

You are a Champion!

We continue to learn and practice the basics in order to eliminate the static and get a clearer voice.

While there are basics to learn (paths to travel) in Network Marketing we will hear a lot of different voices. Many words will sound sure and convincing to us and still not make us any better in the business because there is art, style, etc. in each of us. We are all different particularly when it comes to our core values.

For example, once we get out of formal business school we begin to learn that people follow many ways to what they consider success. We must admit that there are many ways or roads to success (however we may define success). I once knew a business owner in construction that held some high level positions before going into business for himself and he was also a Professional Engineer (PE). He had one business practice that would make it difficult to sleep at night for many. If he bid on a contract (outside his core customers that he intended to do business with again) he would sign just about any contract without hardly reviewing the contract. At some point (generally when he had the construction project in a real bind for the designed building products) he would begin to negotiate the contract he had signed for more favorable terms. This left the customer with poor choices like finding a new supplier for designed products and keeping the project on schedule (serious money), suing for nonperformance, etc. These alternate choices were always expensive and he felt it was a good time to negotiate the contract. And, if he was threatened with bodily harm he could always come to more favorable terms for the victim. He was looking for filler business not repeat business. Don’t be an Ivory Tower theorist when it comes to your business like an inexperienced business person (throwing good money after bad) spending a lot of money to get a judgment against a shell company. You’re not going to get any money no matter what your high priced lawyer tells you (whatever he tells you will cost a lot of money).

You might not agree with how this person did business but what if he told you: “In a highly competitive construction business you have to do business in this fashion in order to succeed or survive.” Of course, he certainly believes that to be the case and that’s how he ran a successful business.

Often, people take various techniques they have learned and present them to us as The Way or Gospel according to ….

They are certainly techniques that work but do they represent our core values, talents and abilities, etc.? Many “high pressure” Distributors and “unethical” Company executives (based upon our personal training and opinion) do succeed with their techniques. Perhaps they make promises or say things they know are false upfront just to get things going their way. However, that doesn’t mean we have to use their style in order to succeed. Don’t give false hope or paint false pictures of success!

Studying, gaining experience, and watching successful people will guide us to the Best Practices that work for us. We need to be teachable and still an independent thinker. That’s why we work hard on improving and learning how to tune out all the static. Also, if we have well defined and strong core values to guide us we have a built in compass that will take us in the right direction and help us quickly make decisions.

In times of strong trials we may even doubt the validity of our core values but these values are what see us through. When we consider individuals, business organizations, churches, and governments (looking carefully) we begin to see a huge gap between reality and language.  We wonder why the words are so different from the actions.  In fact, we strangely see people and organizations, through their actions, looking a lot like or becoming the thing(s) that they criticize most.  Look at politicians and you see all these individuals espousing democracy around the world while each day we lose more and more freedoms (becoming the institutions we hate most).  We say the things we think people want to hear and do the things we think will benefit us or make us successful. Start tuning out the static and do what you know to do!  Begin to focus on matching words with actions.

“I have sworn, upon the altar of God, eternal hostility against every form of tyranny over the mind of man.” Thomas Jefferson

“All therefore whatsoever they bid you observe, that observe and do; but do not ye after their works: for they say, and do not.” Jesus Matt. 23:3

Sound Bites

You are a Champion!

We need to learn to listen more than we talk and we need to learn to talk in sound bites like the average TV commercial that is thirty seconds long. We should become good at reading when people have gone to sleep on us and we need to shut up immediately if they are sleeping (look at their eyes).  Also, the information we give needs to be to the point and addressed to the proper audience.

For example, it’s always easy to tell an inexperienced VP in the boardroom (or the VP that’s out-of-favor) after we’ve worked around experienced Vice Presidents.  First of all, the most powerful VP seldom attends a meeting (they can get out of) because they have already dealt directly with the correct audience (the President or decision makers of the company) on any issue important to them.  They certainly aren’t going to leave what’s important to them (or their career) up to a committee.  If they do show up to a meeting it’s to explain a decision made to the other VP’s or board members.  Secondly, they never attack another VP in a meeting because (if they don’t like him/her) they most likely have already buried him/her with the people that matter.  The person with hoof-in-mouth disease in the boardroom is generally the person in trouble or has serious ego issues.

People in general can tell when we are inexperienced in the business because we talk way too much, don’t know what we’re talking about, and tell way too much (say things that aren’t necessary).  Experienced VP’s never address an issue that isn’t important and never take sides just because “we’re friends.”  They don’t waste time on trivial issues and they never make an enemy over something that doesn’t matter or something they can find ways around.

Why is all this political information inserted into this article on Sound Bites? It’s to get us thinking like a person with influence. In any organization the person with a lot of influence can call shots important to them. No matter what their title they can greatly impact the direction of the Company. That’s why so many VP’s, or other key executives, want to make sure they have the biggest budget in the company or an area of fast growth, etc. It gives them power! That’s why Network Marketers want to build the largest Distributorship in the company too. The larger their organization grows the more powerful they become in the company and vice versa.  IF YOU WANT TO BE POWERFUL IN ANY COMPANY JUST GROW!

Influential people in any business may know a lot but say very little. Also, they will treat you with the deepest of respect no matter what they may think of you personally.  Often, a VP on their way out in a company is the one that is rude and crude (poor people skills) or doesn’t know when to just listen.

Play your sound bites (solid information) well and leave time for people to make a decision or “buy-in” to what you’re telling them.

1. Sound:  “Having a firm basis; unshakable: a sound foundation.”
2. Bites:  “To take bait, as fish.”
   

Put The Kids To Work

You are a Champion!

Do your kids deserve the lifestyle to which they are accustomed?

Have your kids been missing out on their fishing lessons? Setting in front of the computer screen or TV may not be preparing your kids for success (how to fish).  Of course, that may not be true if your little geek is learning to write programs building the next Google.  I won’t bore you with a long story about working at 14, buying my own car, paying my tuition to the University, etc.  However, I don’t mind talking about your kids!

We’ve all heard comments about being mistreated as kids and how their parents got all this free labor out of them when they were growing up.  I’ve noticed that those are the successful kids. The kids that got it all whenever they wanted it are still setting in front of the TV set, drinking at the bar, or setting in jail because they got involved with drugs.  Do you really love your kids?

After being in Network Marketing awhile you will have heard a lot of excuses about why adults can’t get ahead in life, make some extra money, etc. because Suzie and Johnny have a life and we don’t.  Your job is to provide the home, meals, entertainment, and big ticket items like cars and tuition.  Meanwhile, you can drive them to their sporting event.  After all, they will quickly be walking across the graduation stage and be gone (don’t expect them to come visit you after they put you in assisted living).  Oh well, it’s OK to live life vicariously through your kids.

Do you have a shy kid?  Put them on the phone working your business! My wife and I have seen a lot of top Distributors with kids running around everywhere promoting their Network Marketing Business.  They understand that it’s their job too.  Since this is a do as you go business there’s nothing like a sporting event to promote your products or business.  I’m sure some of these adults wouldn’t be as successful without the business training they’ve been giving their kids.  They are giving them great lessons in how to fish.  Oh, Johnny doesn’t want to fish?  You can see from looking at him that he sure likes to eat.  He will get over the ridicule from his friends because he has to work.

That last statement makes me think of a person from Africa riding in the car with me the other day in Tulsa, OK.  He said, “Your roads are so smooth” as he was thinking about his home country.  You know, that’s the first time I ever considered how smooth the roads are in Oklahoma–the land of toll roads and no roads (as many Okies would say).  Can you understand from his statement why a lot of us Americans make the world sick with our complaints?

As Mary and Joe Smith set in front of the TV they exclaim to you, “This business just doesn’t work!” And so, you begin to think of the people you know making six figures wondering why it works for them.  When I hear this statement again I think of my Dentist.  You know, a lot of Dentist schedule your appointment as you are leaving the office six months in advance.  Sometimes I forget my appointment but my Dentist always has me there on time because he has some young lady call me the day before to ask me if I remember my appointment.  In our business that’s called follow-up.

Does the Dentist make those calls himself?  No, he lets his kids do it (so to speak)!  There are many ways to make your business work for you and one way is to “Put your kids to work.”

By the way, if you are the young lady at the Dentist office making those calls you might want to think about some Network Marketing people making six figures doing what you’re doing many hours each day for near minimum wage.  The other day I listened to a person talking about their grownup kid needing financial help and thinking about all the years their kid watched them fish.  Didn’t learn to fish?

If you don’t have a job you can employ yourself or your kids any day of the week in Network Marketing.

Come Ride My Train

You are a Champion!

Ever see an automobile on the tracks trying to stop the MOMENTUM of a powerful Locomotive with a hundred cars attached? Scary thought isn’t it?

When we start our Network Marketing Business we go to work for a company putting freight cars (or sometimes more powerful Locomotives) behind our Locomotive and if we will just do the simple (duplicable) things to drive our train down the track we can’t be stopped because the momentum becomes awesome.

Many people make the business of Network Marketing way too hard because things have to be simple in order to be duplicable and successful. When we begin to pick up cars (recruits) along the way all we are trying to do is couple our efforts and move our freight in the same direction toward a destination (goal). Unfortunately, some people put all their efforts in trying to lay the tracks in front of the train.

The great thing about joining a Network Marketing Company is not having to lay the tracks in front of the train as we go on our journey because they have already been laid.

We notice too as we pass the stations and towns along the way Distributors have been this way before and the company has established the right system, tools, and training (no pun intended) to get us down the tracks toward our destination. Also, we don’t have to do the company payroll, keep the inventory in the cars, and worry about all the details (designing our own system or tracks) or running the railroad. Why? Because we’re the Train moving the freight through the system!

Our job is to look like a Locomotive, feel like a Locomotive, put some power to the wheels, and move the cars with freight down the tracks. Many people can recognize a powerful train with a lot of cars coming down the tracks. Some groups make it hard to tell what’s coming down the tracks or even if they’re on the tracks.

The reason that people get discouraged in Network Marketing is because they aren’t attaching cars and putting power to the wheels (side tracked by excuses). Since they have lost sight of their function (Locomotive moving freight down the track) and aren’t going anywhere (directing, attaching, and moving freight cars) they think it doesn’t work.

Come ride my Train!

“Even if you’re on the right track, you’ll get run over if you just sit there.” Will Rogers

Start-up Income Statement Projections

You are a Champion!

Assume a Pro Forma Income Statement to project income and breakeven sales for the first year in the business and the following ratios for each $100 (average sales mix) Net Sales:

Pro Forma Income Statement	Dollars	%
Sales:
Gross Sales (Suggested Retail)	$166.67	166.7
Wholesale Discounts (40% Retail)	66.67	66.7
Net Sales (60% Retail)	$100.00	100.0
Variable Cost:
Product Costs (12% Retail)	$20.00	20.0
Distributor Commissions and Royalties:
Override Royalties (10.5% Retail)	17.50	17.5
Leadership Royalties (9.5% Retail)	15.83	15.8
Other Bonuses and Trips (4% Retail)	6.67	6.7
Commission Expense (24% Retail)	$40.00	40.0
Variable Expenses (36% Retail)	$60.00	60.0
Gross Margin (24% Retail)	$40.00	40.0

Since this Pro Forma reflects a Gross Margin of 40% we need to determine our breakeven sales.

Note: This is a simplified projection because some variable costs have been left out (like freight expense). However, we will assume that Freight Revenue covers the cost and this is our first high level projection.

We estimate that our fixed costs for the year will be $500,000 (salaries, benefits, rent, and other period costs).

In order to determine breakeven Net Sales we divide the $500,000 fixed costs by the 40% Gross Profit Margin and determine the breakeven sales to be $1,250,000 which can be tested as follows:

Net Sales	$1,250,000	100%
Product Costs	250,000	20%
Commission Expenses	500,000	40%
SG&A (Fixed Costs)	500,000	40%
Net Income (Breakeven)	$0	0%

Obviously, before we do a Balance Sheet and Cash Flow Projection we test the reasonableness of breakeven sales and fixed costs. Based on average sales per customer, and industry turnover, we can determine how many Distributors we need to recruit to hit our sales projections. These are very KEY PROJECTIONS! Once the company reaches the Net Sales figure the net profit goes to 40% (within a reasonable range of sales and fixed cost).

Many start-up companies will copy other company agreements including their commission breakage rules and annual fees. DON’T! For one thing, it cost more than most annual fees (studies have shown 5 times more) to get a new customer. Distributor turnover or new recruit fees normally takes care of most of the annual cash flow lost by not charging annual fees to ongoing customers.

As we’ve said in other articles we would be better off if the Suggested Retail Discount is 50% (instead of 40% in this projection) because of sales psychology. Use the maximum Distributor commission schedule to do initial projections to eliminate any possibility of understating commission expenses. Remember, commission expense is a percentage of net sales and you want the best you can afford to attract the top Distributors. Reputation and Character are your most valuable corporate assets (word gets around).

If you can get past Breakeven Net Sales you will attract Distributors that they can’t attract. The Keys to Network Marketing companies are:

• Net Sales
• Fixed Costs

NEVER DRAG NET SALES!

If you can attract recruits (and get past Breakeven Net Sales) you have accomplished your major start-up objectives!

Why MLM Takes Time

You are a Champion!

People with influence (friends, acquaintances, etc.) or good at cold marketing or frontline (level one) recruiting or a dedicated business builder can begin to build quickly (win pay period bonuses, etc.) and then begin to fade. Why? Because this is a start-up organization. Your Network Marketing Company is an organization of Key Business Builders (Key people). People are your working capital, etc.

You decide to start a Church (You are the Pastor) because you have a product to sell. At first, this may be only your personal effort. Contributions allow you to build a building and every Sunday the people come (product users) and set and listen. You do it all:

• The Service
• The Recruiting
• Visiting

You will only get so big because it depends upon your efforts. What would happen if you started missing Sunday morning service? The Church would begin to die because it depends upon your efforts. On the other hand, what would happen if the product users (pew place takers) began to invite people, and leaders were established? You take off on Sunday morning and the people say, “I believe the student Pastor does a better job than the main Pastor.” This is your objective! The Church grows and builds people and a new Church (Leg) is started and another new Church (Leg). The organization develops leaders or business builders and grows.

Because of the design of the pay structure we may find that a student Pastor has a bigger Church (Leg) and makes more money than we do. Also, out of all the Churches built you get a percentage of the contribution and the percentage increases as you build more Churches (Legs).

Like Churches (MLM) has a formal structure (on which we are paid) and an informal structure.  The informal structure may be crossline and can greatly benefit our group at Large Group Meetings or Corporate impending events.

While the pay can be fantastic when we get to this level many people want to place the focus on themselves (doing it all) and never get to this level of activity.

Churches are great examples because everyone understands that Churches grow through people and so does MLM!