Read The Economy Entrepreneurship Part 4
[This is the transcript of a lecture Dr. Brooks is preparing to give around the country. Please contact him for more details.]
Eric Worre, entrepreneur, researcher, and film maker, related the conclusions of his most recent documentary, Rise of the Entrepreneur, “In our search for a better way to make a living, we’ve come to the conclusion, that becoming an entrepreneur is actually safer than being an employee. And through our look at the entrepreneurial options, one particular path kept coming up from expert after expert.
And I think most people will find it surprising, because it’s certainly a non-traditional business model. That model is for people to start their own business and become an entrepreneur through the creation of a network marketing business.”
Some people call it direct selling because the product is sold directly from the manufacturer to the end consumer, cutting out the middle man. Other people call it multi-level marketing or MLM because there are multiple levels of commissions paid.
The most common term used today is network marketing, because network marketing best describes using a large group of independent distributors, independent entrepreneurs, to distribute a product or service more efficiently.
A traditional company will spend up to 50% of their total revenue on marketing. Network marketing companies use a different approach. Instead of having that huge marketing expense, they utilize a network of independent distributors to do the marketing for them.
Why are more and more companies moving to this model?
1. The old fashion “Word-of-mouth” advertising is still the most effective way to market goods and servicing, always out producing traditional media advertising.
Remember, talking about a service or product that you love on Facebook or Email or Twitter or Instagram is faster, unbelievable cheaper, and more effective than anything that ad agencies can conjure up.
2. Some products need to be explained or demonstrated, and an independent salesperson can do that more effectively than an ad campaign.
3. It’s completely efficient. The company only pays for the marketing of their product after the sale and not before, that’s 100% efficiency.
Imagine if Amazon allowed you to become an independent distributor and paid out 40% of its revenue to that distributor group. All you had to do as a distributor was recommend a product, and if a person bought it on Amazon, Amazon would take care of all the logistics, and you’d get paid for introducing the customer to the product or service.
Now imagine you got paid for every purchase that customer made for the rest of their lives. Well Amazon doesn’t offer this option, but network marketing companies do.
Who are some of these companies? There are those that you know well; Amway, Shaklee, Herbalife, and Marykay, but there are other companies that are associated with network marketing that may surprise you:
Citigroup
Bodyshop
Wiggles
Hallmark Cards
Nestle
Gillette
Colgate-Palmolive
Rexall
Sara Lee
Vanity Fair
Microsoft
IBM
Coca Cola
Xerox
GE Money
General Motors
Toyota
Goodyear
Firestone
85% of all buying decisions in our society are made as a result of word of mouth. Word of mouth is the oldest and most reliable form of advertising. We are recommending things to each other all the time, who’s you doctor, who’s your dentist, what law firm do you use, what stores do you shop at, where do you get your hair done, which barbershop do you use?
Dr. Ferrell commented that, “network marketing can educate consumers better than any other form of marketing. It certainly can do better than advertising, because advertising usually has a certain amount of hype to it, and you can only get limited information. Network marketing triumphs advertising.”
If you were a typical sales company and you wanted to sell a $1million of product per month you might go find 100 super star salesmen. The quota would be $10,000 per month.
So Network Marketing, as a distribution system, just flips the numbers. They use 10,000 happy, raving fans (distributors) of a particular product, and they don’t concern themselves with how much each distributor sells. If they sell just $100 or $200 a month and there’s 10,000 of them, you are selling $1m to $2m worth of product each month.
These companies allow people to become independent distributors at extremely low cost, and with no minimum time or sales quotes. Essentially they own their own business, and can engage in as much or as little sales as they choose.
In other words, the distributor gets all the benefits of traditional business ownership, without the risk.
Entrepreneur Cody Bateman said, “the key to network marketing is providing an opportunity for the masses to get involved. Providing an opportunity for the average person who doesn’t have the resources to start their own business.”
So far, this is fairly straight forward. But network marketing offers another benefit, and it is this benefit that makes it so interesting for entrepreneurs. Network marketing allows a distributor, to build their own network of other distributors and then compensates them on the sales created by the entire group.
This is no different than a sales manager and her team in corporate America. The salesmen get commissions on what they sell, but only the sales manager earns overrides if the team hits their sales goals. In network marketing, every distributor can have this advantage is they choose.
Paul Zane Pilzer wrote, “Network marketing is the only industry, where your past doesn’t determines your future. It looks at your past and says, ok what can we train you to do so you can have a great future. Every other employer out there wants to exploit you for what you already know. Not teach you something new.”
Network marketing has the potential to save the U.S. and other world economies, because it is teaching millions of people world wide to be entrepreneurs rather than employees.
According to the Direct Selling Association, the sales from all the network marketing companies around the world combine are $178Billion in retail sales annually.
To give you an idea of how big that really is, the NFL brings in approximately $9B, the music industry does a little more than $16B per year, and the movie industry does about $80B in sales each year.
Using a conservative average, network marketing companies pay their distributors about 40% of their annual retail sales in the form of commissions, which comes out to about $71B of our $178B per year. That’s almost $6B per month and it’s almost $200M in commissions every single day.
So it is certainly working and people are making serious money. Last year I attended a conference for network marketing professionals representing over 500 companies and nearly every country of the world. A roll call survey was done of people making $1M or more.
It was interesting to see maybe 100 millionaires there. But what was really astounding was to see the number of distributors who were earning at least $50,000. There had to have been at least a quarter of the room standing out of the 8,000 attendees, that’s at least 2,000. This approach to entrepreneurship is working.
To take this point further, in the network marketing profession, there are roughly 500 people in the world who earn over $1million a year. If you round that number up to $2million a year, that adds up to about $1Billion paid to those 500 top earners.
That takes the $71Billion paid out each year in distributor commissions that we mentioned before, down to $70Billion.
So where does the rest of the money go? 98% of the network marketing commissions goes to part time people making anywhere from a few hundred dollars a month to full time distributors making many thousands per month.
Everyday people are using the money they earn through network marketing to cover their mortgages and living expenses, to pay off debt, have more fun, and improve the quality of their lives and the lives of people around them.
There are 16 million Americans and 96 million people worldwide currently participating in network marketing.
The truth is that network marketing professionals work lot of hours and very hard work. To succeed, distributors need to develop themselves and their skill set because it’s a business like anything else. They need to provide leadership and training, but after all that, in the end many will tell you it’s just a better way to earn a living.
Life is too short and uncertain to spend it building someone else’s dream instead of your own. It’s too short, to be living at a fraction of your potential. Can being an entrepreneur be a challenge, yes it can, but in exchange you end up with the fulfillment of your dreams.
Conclusion
Over 200 years ago, our ancestors founded this nation as entrepreneurs. It was an event that literally changed the course of history.
It was led by a group of unsatisfied people—people who were tired of being told what they could do and when they could do it.
People who were feed-up with their lack of choices and diminishing personal freedoms. People who were feed-up with their lives being controlled by others.
People tired of being oppressed and manipulated. They finally said, “ENOUGH, I’ve had it, and I’m not going to live like this anymore.”
Our ancestors were people who took full responsibility for what happened to them. It was that spirit that ignited a country and shaped this nation into a GIANT in the free world.
Although that spirit has been seriously reduced, I believe that through entrepreneurship and network marketing it can once again re-ignite the hope for the American Dream in all of us.
Call To Action – If you are not satisfied with your current method of providing a living, if you what more from life, or if you are ready for the challenge and rewards of building your own business, contact me and I will be happy to introduce you to a number of options. Entrepreneurship is not perfect…it just better!
Dr. Shanon Brooks – 435 590 1661/sb@monticellocollege.org
