Do you know what Financial Leverage is?

Financial Leverage is something the wealthy understand but poor people don’t understand. It can take many forms.

You can invest your income into assets which generate additional income. This then grows your income stream larger which you can re-invest into more incoming producing assets.

You can invest in business.  Think about the CEO of Google.  How many employees does he have working for him? He isn’t paid millions because of his efforts. He is paid millions because of the efforts of all his employees. If he had to run Google by himself he wouldn’t be able to do it. However he can manage the people, that manage the people, that manage the offices, that run the computers, that run the software written by the programmers that power Google.

Ok that was a little bit complicated. Let me apply the concept of developing leverage to my network marketing business.

Would you rather get paid on 100% of your efforts….

Or 1% on the efforts of 1000 people?  That would be the equivalent of 100% * 10 people = a lot more income right?

My team just crossed the threshold of 7,000 members.  I am getting paid 2% on a lot, 5% on a bunch more, 7% on even more, and 12% on several more of those 7,000 members.  Needless to say I have “leverage”.  I’m not basing my income entirely on my efforts.  I can take 5 days off to go to the beach (I leave tomorrow) and still make money because I’ve got 7000 members around the world all working.

That is financial leverage.  This is why more people are starting home businesses today than in recent history.  We realize that working for someone else isn’t going to get us anywhere.

Let’s be honest… most of you don’t work 100% at your job. You work just enough to not get fired. Maybe that’s 30% of what you could be working. Maybe it’s 60% or even 80%… but most of us don’t work 100% at our jobs. We just do enough to get by, or maybe enough to get a raise or be better than the average employee. But unless we have a lot of incentives we don’t put in maximum effort.

So would you rather have 100% of one person’s effort, who is only working enough to get by, or would you rather get paid a small percentage on THOUSANDS of people?

That’s network marketing.

That’s why you should be looking to join a network marketing home based business today!

- Ben Fitts

MLM Training > mlm

You are a network marketing professional.

Your upline just called to you to tell you that your about to be wealthy. MLM IPO.

That stands for MLM company filing for an “Initial public offering” or IPO.  This means that your company is going public. Your network marketing company is now going to sell their stock to the general public. They’re going to be listed on one of the stock exchanges like the New York Stock Exchange.  This is great news, right?

Your MLM IPO may be great news. It may be a good thing or maybe not.

Here are some of the pros and cons of your MLM company filing for initial public offering.

PROS

• Publicity – Mainstream media is going to be covering your company. You’ll have a chance to appear on the various television news shows related to the stock market.
• Credibility – Not only the fact that mainstream media is covering you but the fact that your company is listed on a stock exchange besides other companies everyone has heard of gives you a ton of credibility.
• Wealth – Yes it’s true. If your company allows you to buy shares of the IPO you could get wealthy.
• Expansion – One of the main reasons company’s file for initial public offering is to raise money. They sell a percentage of their stock to the public to raise money for expansion. This isn’t necessarily true in the MLM industry but the extra income could help your company launch new products or expand globally.

That’s a lot of really positive stuff.

But what about the negatives?  When I mentioned a well known MLM start up filing for IPO on a network marketing group that has a lot of leaders and experts with 10-20 years (or more) of experience… a lot of them had negative things to say about it.  Here are some of the negatives they listed.

CONS

• Publicity – It’s a two edged sword. You’re company is now public. Unfortunately that means all your financial records are public. If you had a bad quarter you have to disclose it. Private companies don’t have to do that. If you have problems with manufacturing you have to disclose it. If you lose a chunk of distributors suddenly (maybe they go to a competitor) you’re going to have to disclose it.
• Regulations – Privately held companies deal with different federal regulations. When you go public you are asking the FTC (Federal Trade Commission) to come in and look over your company with a fine toothed comb. This means they’re going to look at all  your bookkeeping and accounting but also all your marketing practices, testimonials, your web sites, your videos, your compensation plan, your percentage of customers to distributors, etc.
• Wealth – Again a two edged sword. If you’re company stock price continues to go up all the people that bought in early will continue to make money. Typically a lot of people get excited when a stock first goes public. But it doesn’t always last.  For every Google there are stocks that go public and instantly go down, down, down. If that happens then most people lose money.
• TWO Masters – This is the biggest problem with a company going public. When a company is private they basically reserve most of their profits to pay back to the distributors. That’s one reason why we love network marketing. We love the fact that our companies don’t pay out big profits to investors. When a MLM company goes public they now have to pay out profits to their stockholders as well as their distributors.

Let’s talk about that last issue a little bit further.

When your MLM company is private you have the original investors and owners.  Their goal is to make distributors profitable. They want to pay out as much money as possible to the distributors. The original investors usually make money through what’s called “breakage”.  That is distributors that don’t meet the payout qualifications for some reason. Maybe their volume dipped below the number they needed so they got paid a little less. They can also make money selling tools, back office web sites, etc.

Keep in mind that most profits are paid back to distributors.  They want distributors to succeed.

When your MLM company goes public you now have to show profits for a new master. You now have to show profits for people who invested in you. You have to show profits for Wall Street and your investors.  If you don’t show profits then all that positive publicity turns negative. All that positive credibility you got now works against you.  It’s easy to point to your stock price or your earnings statements to show how bad your company is doing. Your private competitors don’t have to show that stuff and they love to tear you down.

If your company doesn’t show profitability then they won’t attract new investors. It’s that simple.

So how does your company show profitability? Essentially they take money that could be paid out to distributors to show profitability to investors. Would you rather have a company that shows a $25 million profit for investors, or a company that has $5 million in profits but paid out that extra $20 million back to distributors like you?

On the facebook group of MLM leaders, I heard several scary examples.  Examples of companies that terminated some of their top distributors after going public.  Companies that changed the compensation plan after going public. SURE these are just examples. There are just as many examples of successful MLM and direct sales companies. There are plenty of leaders in our industry that have successfully gone public.

Successful direct sales and networking companies that are publicly traded include:  Avon, Natura, Herbalife, Tupperware, Oriflame, Nu Skin, Primerica, USANA, Avon, Telecom Plus, Blyth, and many more.

Back to the original point. Is a MLM IPO a good thing for your company? In most cases, yes!

In some cases however you want to be cautious. I myself was involved in a company years ago that had gone public to pay for expansion. Since then it had taken a nose dive and had become a penny stock. Another company came in and took over and changed our comp plan from a 7 level unilevel to a 2 level affiliate program.

I think there were a lot of problems with that company.  The fact that the company was publicly traded wasn’t the only issue.

If my company was going public today you can bet I’d be buying a bunch of shares.  However I’d also set some limit (sell) orders so that I don’t hold the stock too long. I would treat it like a business investment. I wouldn’t hold on to it just because I was involved in the company.

MLM Training > mlm

Here’s another great lesson from Tom Big Al Schreiter’s newsletter:

“When bad things happen, don’t lose the lesson.”

* I ate a bad meal once, but even though I had a bad experience, I decided to continue eating in the future.

* I ate another bad meal once (I attempted to cook), but even though the experience permanently scarred my attitude toward food, I decided to eat again.

* I saw a boring movie once, but even though I wasted my ticket money, I decided to go to other movies.

* I exercised once, and quit (okay, maybe this is a bad example).

* One of my friends bought a lottery ticket and lost. Yet, my friend continues to buy more tickets in the hope of eventually winning.

* Your prospect went bowling once and had a bad score. Yet, your prospect continues to bowl and he continues to enjoy the Tuesday nights out with friends.

* Your prospect had a bad date once, but continued to date new people.

* And your prospect may have failed or had a bad experience in network marketing once, twice, or even three times . . .

See the trend?

Just because your prospect had one bad experience, your prospect can still choose to take advantage of network marketing.

Don’t let the failures of our past dictate our future. We can change and improve our results.

MLM Training > mlm

Dear Readers,

My buddy Jay McHugh shared this video with me. It is a little long but is a great video explaining the age old question, Is this a pyramid scheme. You should share this with your team so they can see how to rebut this.

Hope you’re having a great new year!
- Ben Fitts

MLM Training > mlm

Dear reader,

What is your batting average?

I like to use a baseball analogy sometimes.  The difference between an average player who goes from pro MLB team to pro team, and a good player that gets $5-10 million a year, and a great player that gets $15-20 million a year… the difference is only a few percentage points.

A player who bats .270 for their career is someone who is average.

A player that bats .300 for their career is a quality player that gets paid good money and is someone who can have a long career.

A player that bats .330 for their career is a player that is one of the most sought after players in the league. They make the really big bucks. If they do this for a year or two they’ll make a lot of money. If they do it 10+ they are a hall of famer.

The difference between each of these? 3% between mediocre and good and 3% between good and great…

The success rate of a player batting 270 vs a player batting 300 is that he gets 3 more hits per 100 at bats.  The difference between a hall of fame player and someone struggling to stay in the major leagues?  Only 6 more hits per 100 at bats.  Only 6%!

The point is a minor adjustment that makes you a little bit more successful can make a huge impact.

Now let’s apply this to Network Marketing and MLM.  What if you could improve your closing rate? What if your closing ratio was 10 in 100.  What if you could improve that to 11 out of 100?  Or 13 out of 100?  It wouldn’t take a lot of effort but making small adjustments can really improve your success.

An example my friend talks about in his book is:

You collect 100 business cards from local business people

What do you do with those cards?  Do you throw them all in a drawer somewhere?  Or do you follow up with them?

Let’s talk about follow up.  There are different things you can do which can improve your success ratio.

• Did you send them an email follow up to say it was nice to meet them and maybe recap some items you talked about to remind them of the conversation and show you were paying attention?
• Do you call all the people whose business card you collect? Do you call them just to say hello, it was nice to meet you?
• Do you send them a card afterwards to say nice to meet you?
• Do you setup an appointment to meet with them for coffee and learn more about their business so you can better give them referrals?
• Do you keep in touch with them with an email, phone call, or greeting card occasionally?

You see how if you only do one of these activities instead of throwing the business card away will increase your closing ratio. If you could do 2 or 3 of these activites then your closing ratio will be a lot higher.  If you do all of them then you’ll have the highest closing ratio of all.

It doesn’t take a lot, just a little extra effort.  A little effort can go a long way.

Just like the baseball player, if you can improve your MLM batting average and improve your followup you’ll improve your closing ratio with prospects.

Does that make sense?

- Ben Fitts

PS. I use a greeting card follow up system that allows me to do the greeting card follow up and it’s just as easy as sending an email…

MLM Training > mlm