I was really good at goal setting in my early days of network marketing. Being young and naive, they were mighty impressive and awe inspiring. Boy, was I fired up!
Well, I quickly learned that setting goals was easy, achieving them was quite a bit harder. The expectations were great and so were the disappointments.
I’m not knocking goal setting here. I still have my goals. Goals are important, but I’ve learned to not be so emotionally attached to them. Instead I focus on the day-to-day process. There are no unrealistic goals, only unrealistic time frames.
So having said that, the first goal for any new network marketer, before setting any lofty goals, should be to break even on their monthly business expenses! (i.e. autoship, advertising, etc.)
Why?
Think of it This Way…
How long can you stay in business if it’s not costing you anything to build it? Answer: Forever!
In my last post I wrote about the implications of building your business under heavy financial pressure. If you desperately need the money, you have an agenda to try to recruit as many people as you can into the deal.
This behaviour only attracts the wrong people for starters, and may very well put you in a place of social isolation, making life pretty miserable indeed.
On the other hand, if the business is not costing you much to build, if you’re not under financial pressure, then TIME will work in your favour and you will have a much greater chance of long term success.
Get Down Into The Nitty Gritty…
It’s time to whip out that calculator and do some math!
I know it’s boring, confusing, even intimidating to do this, but it’s imperative to your long term success.
In fact you should do this BEFORE signing on the dotted line to join ANY network marketing company. I didn’t do this, like most people. But if I had been better educated, I would have.
Start by working how many product sales, customers, distributors, reps, etc, you would need to cover the costs of your monthly autoship.
Just by doing this activity, you’ll realise that some businesses are just not worth building. It will give you a great insight into the amount of work that’s required to reach your goals.
Retailing vs. Recruiting…
Some companies have overpriced products that are simply unsalable at the recommended retail price. In such companies, the emphasis is always on recruiting. Get ‘em into the deal so they can buy at wholesale!
Here’s the problem with that business model. When you have distributors buying at wholesale, you’re only going to get a small percentage in commissions based on the wholesale price.
If a company pays out an average of 5%, which is pretty common, that means you need to sponsor 20 (!!) people just to break even on your own autoship.
What’s the likelihood of the part-time networker being able to do that in a reasonable amount of time? Not very! This is why recruitment driven companies have high attrition rates.
But conversely, what if a company emphasizes retailing first, recruiting second, and has competitive retail prices for their products?
This makes a HUGE difference, because you can sell products to customers and get a 20% to 50% commission on the retail price of the product. Therefore to break even, you only need 2 to 5 customers.
And customers who love the product will always come back to you for more.
If you are serious about long term MLM success…
…please do this little exercise of calculating how many customers/distributors you need in order to break even.
It will give you the power to see beyond the hype, a clear picture of the work required, and the ability to stay in business forever without having to stand in front of the mirror every morning chanting…
“I’m good enough, I’m smart enough, and doggone it, people like me!”
To your MLM success,
Wayne Wu
P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.
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{ 25 comments… read them below or add one }
Hey Wayne,
You make a really good point. All of the big numbers people look at are what attracts them initially to any business, but breaking the numbers down into smaller ones make them a lot easier. Goal setting becomes simple if you know what where all of your numbers are and what you need to be profitable.
Great post and something I don’t think a lot of people do,
Eric
Hey Eric,
Yeah, we do have to let people know of the potential they have with our business, but more importantly we have to manage their expectations too. Going from zero to $100,000 per month is entirely possible, but if you’ve never done it before, you can set yourself up for a lot of disappointment if you expect to do it straight away. So yes, the break even point is a real good indicator to the amount of work you have to do in order to achieve your big goals.
Hey there Wayne.
This is a great way to put “running the business” into perspective. Far too many get caught up in “this and that”.
I’m with Eric. Goal setting is simple if you know what you’re working with.
Have a great day,
Jerome Ratliff
.-= Jerome Ratliff´s last blog ..Another Blogging Tip That Will Increase Your Prospect to Lead Conversion Rate =-.
Hey Jerome,
That’s right, we are running a business and we’ve gotta keep an eye on the numbers. And the problem is, people don’t even know what “this and that” really is!!
I’ve just run into your site today and I am really impressed with the content!
I love the quote you gave: “There are no unrealistic goals, only unrealistic time frames.” That’s a great one!
Thank you!
.-= Stacy´s last blog ..Who Are You Becoming? =-.
Hey Stacy,
Well welcome! It’s great to have you here. Thanks for the kind words.
I learned that quote from Brian Tracy. It’s a great one because it really does tell me I can accomplish anything I set my mind to, but also saves me from feeling disappointed if I don’t succeed at first.
I love your posts because you always have solid, fundamental keys to success.
Seriously, you are doing a great job, Wayne!
.-= Derek Alvarez´s last blog ..Talking SEO and playing video games with Eric McMillan =-.
Hey Derek,
Well thank you my friend. I appreciate the encouragement.
Hey Wayne,
Great job in breaking it into smaller bite size pieces. It makes total sense. A lot of individuals don’t set up a goals. Therefore, they miss a lot of opportunities. Thanks!
Chat with you later…
Josh
.-= Josh Garcia´s last blog ..See How Easily You Can Avoid These 3 Common Mistakes in Video Marketing =-.
Hey Josh,
Yeah, we’ve heard it all before – the way to eat an elephant is one bite at a time. People always want to take that quantum leap, but you have to walk through the jungle to first to get to the destination.
Hi Wayne, that is valuable advice on doing the maths before getting in the deal. Anyone starting a regular business would do that and maybe even get an accountant to advise. Yet common sense goes out of the window when people start in this industry.
Really appreciate your posts.
.-= Charlie Holles´s last blog ..A True MLM Leader – part 4, being the leader =-.
Hey Charlie,
Thanks. Do the maths, because the numbers and the numbers, they don’t lie – you can’t sugar coat them. People getting into this industry need to develop a business mindset, where things they never considered as employees must now be considered.
Hi Wayne,
Great detailed break down on the numbers! It so important that people set realistic goals … and celebrate even the tiniest achievements.
As always, very valuable content.
To your success,
Ilka
.-= Ilka Flood´s last blog ..7 Reasons Why Women Make Natural Network Marketers =-.
Hey Ilka,
Yes. Celebration is a must. I’d say it’s important to set “stepping stone” goals and get a good measure of the work required and then you know just how quickly the big goal can be achieved.
Wayne,
You make a great point. When I first launched my business, we got hit really
hard that it almost knocked us out completely. Instead of quitting, I focused on retailing my products and believe or not, we made almost 60% of our losses back on a $0 budget.
And yes, the customers who like the products do always come back. Even if it’s a year and a half later!
.-= Tommy DiPietro´s last blog ..Four Steps On How To Start A “Fame Monster” of An MLM Blog Lady Gaga Style =-.
Hey Tommy,
Well done, and awesome that you did it on a $0 budget, my friend. Retailing is such a critical part of our business, because without it, we don’t have a business, and the entire industry would be illegal. It’s the best way to get your money back because you’re not asking prospects for a commitment, just to try or buy a good product.
Great points Wayne and very valuable advices for people who are starting in out industry. Great job.
Jiri Majkus
Internet Marketing Coach and Author
.-= Jiri Majkus´s last blog ..How to Accomplish Your Goals As Soon As Possible =-.
Hey Jiri,
Welcome to my home on the internet. Thank you for stopping by. I’ll be visiting you very soon too.
People starting out are the most vulnerable and they need the best education they can get. I do my best to help.
Hi Wayne,
If you need money, then don’t get into network marketing! You hit the nail on the head, my friend! Getting money is just like getting a girlfriend…when you stop looking for it, it will find YOU. Thanks for the info.!
Shannon
Hey Shannon,
Welcome to my home on the internet. It’s a pleasure to have you here. Your comment just made me laugh.
Hey Wayne,
Great post and great advice. I did all of this calculating early on when I was trying to decide on a business. The problem was that I couldn’t settle on any of them. After researching company after company I finally found top tier. Big up front buy ins, big up front commissions, and little focus on residual. For me it was the perfect fit. For others that residual is what gets their attention. I now recommend both for those who have learned the ins and outs of internet marketing. You get the big up front, and fund higher marketing expenses for your mlm. Might not be for everybody but my team is loving it.
.-= Chris Owen´s last blog ..Starting a Business Continued…Keyword Research and SEO Silo Architecture =-.
Hey Chris,
Thanks for your input. Either way, this home business thing needs to be treated like a business, and part of that is understanding the financial aspect of it. It just doesn’t work when you have more outgo than income. Business can only grow when you have more income than outgo.
Hey Wayne,
Like you say, you need to know your numbers. It’s stupid to think you can run any business without knowing your costs.
Thanks,
Matt
.-= Matthew Pedler´s last blog ..How To Build Your Own Marketing Blog – Part 1 =-.
Great post Wayne . I like the part of the financial pressures
Mohamed´s last [type] ..5 Killer Tactics To Build A Relationship With Your Friends On Facebook
wayne,
not only is your reccomendation of putting retail first, and recruitng second sensible, but also the legal way. if at least 70% of your product is not sold to the general public, you are breaking FTC guidelines, and your business is just a ‘PYRAMID SCHEME” covered up by a product.
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