How Does It Really Work?

Most of us

grew up with

a traditional

direct selling

paradigm.

In direct sales, if

you’re offered a

product and the opportunity

to earn money by selling that product, the amount of money you

make will be based on the amount of product that you personally sell.

In the traditional direct selling paradigm, if you had a goal of selling $1

million worth of product a month, you might hire 100 full-time, professional

salespeople to work for you, giving them each a territory and a quota

of $10,000 in sales per month. If they couldn’t meet that quota, of course,

you would fire them and find other salespeople who could.

While Network Marketing is a form of direct selling, there are some very

important distinctions. As a Network Marketer, you would use a very different

paradigm to achieve the same $1 million in sales.

Instead of full-time, professional salespeople with terrifying quotas,

Network Marketing is based on satisfied customers; most of whom do not

like to sell but are happy to tell others about the products they, themselves,

use. These customers are not full-time or part-time employees. They are

some-time, independent volunteers with no quotas and no protected territories.

They “work” when they feel like it.

Network Marketing is not necessarily about personally selling a lot of

product, although some distributors do. It is about using, recommending

and selling the product, and finding a lot of others to do the same.

What to Look For In a Network Marketing Company

1. PRODUCT

You must find a product

or service you

absolutely love:

• Something you

would buy forever,

regardless of

whether or not

you are a distributor.

• Something you can recommend to others without reservation.

If you have to try to feel this way about the product, let it go. It will not

work for you long term. Less important (but still vital) is that the product

or service is consumable, which means that the customer is required to

regularly buy more.

2. YOUR UPLINE

These are the people above you in your line of sponsorship. They will be

partnering with you, training you and supporting you. You will be spending

countless hours with them. They will be in your home, and you in theirs.

You may be earning them a lot of money. You must at least like them.

Preferably you will love, honor and respect them.

Look for people who are dedicated, loyal, focused, positive, committed,

generous and successful. Hook your wagon onto a rising Network

Marketing star and you will increase your probability of success immensely.

And most importantly, once you choose your sponsor and upline, listen

to them. Follow their lead. Get trained by them. Be coachable. They can

only be successful if you are successful.

3. THE COMPANY

You must be proud of and trust the company: your “mothership” and its

leaders. They are your partners in product development, legal and financial

issues, human resources, customer service, product development, order fulfillment,

data processing, international expansion, public relations, ethics

and culture. They are crucial to your long-term success.

Imagine working hard for two or three years to build a solid Network

Marketing group, then having the company go out of business or embarrass

you and your group so badly that everyone wants to quit.

Choose your mothership wisely.

AVOID choosing a Network Marketing company that:

1. Has distributors who promise quick income with very little effort.

2. Has distributors who promise to sell and recruit for you.

3. Is a brand-new, ground-floor revolutionary company — unless you

absolutely love the products, people and company and are willing to

take the risk.

4. Has a compensation plan that encourages you to “buy in,” “buy

slots,” or order what seems like a “garage load” of product.

5. Says you do not have to sell (recommend or share) product.

6. Has frequent product backorders. Backorders do happen, but if they

are anything more than a rarity, look out.

7. Is late with commission checks.

8. Has training, policies or promotions that consistently violate your

personal values. You will not be able to sell this opportunity with

any personal conviction or power.

9. Sells photocopied sales literature at full-color prices.

Network Marketing Myths

Myth #1:
Getting
in on the
ground floor is the best way to success
in a Network Marketing company.
The truth is, it is the worst time to join. Ninety-five percent of all companies,
including Network Marketing companies, go out of business in their
first five years. Of course, no company is going to tell you that in their promotional
materials. Everyone involved at the start of any company hopes
for it to succeed.
Another risk with a new company is that no company has its best foot
forward early on. It takes years to develop competent, experienced staff,
reliable procedures and efficient services.
The best time to join a Network Marketing company is usually when it
is at least five years old. By then, it has demonstrated a commitment and
ability to:
• Stay in business;
• Grow ethically;
• Honor its distributors and customers.
And yet, this allows you the opportunity to get involved with the company
before they are so well-known that everyone has either already given
them a try, or decided they aren’t interested.

Myth #2:
Network Marketing is an opportunity for
someone who is not doing well financially to make
some money — maybe even a lot of money.
Unfortunately, many of the success stories have perpetuated this myth
with a rags-to-riches theme. Although there are enough people to substantiate
the myth, it is still a myth.
The same skills it takes to succeed in any marketing business are required
in Network Marketing:
• You must have confidence;
• You must be assertive;
• You must be dynamic in your ability to express yourself;
• You must have enough resources to propel yourself through the
challenges.
Those resources should include working capital, contacts, time, discipline
and a positive, crystal-clear vision of where you intend to go with your
business — whether it is easy or not.
The truth is that many people who are struggling financially are doing so
for a number of reasons, including low self-esteem and/or lack of the basic
skills and preparation that allow one to succeed in anything. Network
Marketing is a powerful and dynamic economic model, but not so powerful
that it can overcome people’s lack of readiness or persistence.
The fact is that the people who are already successful in whatever they
do, tend to also succeed in Network Marketing. The great part is, they
are apt to do better financially in Network Marketing because the economic
dynamics are so powerful.

Myth #2:
Network Marketing is an opportunity for
someone who is not doing well financially to make
some money — maybe even a lot of money.
Unfortunately, many of the success stories have perpetuated this myth
with a rags-to-riches theme. Although there are enough people to substantiate
the myth, it is still a myth.
The same skills it takes to succeed in any marketing business are required
in Network Marketing:
• You must have confidence;
• You must be assertive;
• You must be dynamic in your ability to express yourself;
• You must have enough resources to propel yourself through the
challenges.
Those resources should include working capital, contacts, time, discipline
and a positive, crystal-clear vision of where you intend to go with your
business — whether it is easy or not.
The truth is that many people who are struggling financially are doing so
for a number of reasons, including low self-esteem and/or lack of the basic
skills and preparation that allow one to succeed in anything. Network
Marketing is a powerful and dynamic economic model, but not so powerful
that it can overcome people’s lack of readiness or persistence.
The fact is that the people who are already successful in whatever they
do, tend to also succeed in Network Marketing. The great part is, they
are apt to do better financially in Network Marketing because the economic
dynamics are so powerful.

Myth #3:
Network Marketers succeed by being in the
right place at the right time. Luck is a big factor.
Network Marketing is a business; it is not a hobby, a game, a scheme, a
deal or something in which to dabble. People who treat it lightly do not
succeed. People who treat it as a new career, a profession and a business
have a reasonable opportunity to make it pay off very well.
As with any new career, profession or business, you need to:
• Learn what you are doing:
• Practice what you are doing;
• Invest in your education and tools;
• Apply yourself diligently to succeed.
All of this takes time, effort and money. It is not unusual for a successful
Network Marketer to have invested hundreds of hours and thousands of
dollars before profits and Residual Royalty Income start to flow. This is
actually “the norm.”
Myth #4:
The way Network Marketing works is the “Big
Guys” make all their money off the “Little Guys.”
The “big guys, little guys” myth is usually perpetuated by people who define
fairness as “everyone gets the same benefit, regardless of their contributions.”
That is how socialism works, not how Network Marketing works.
In Network Marketing, the people who attract, train and motivate the
most salespeople earn the most money.
There are basically three levels of participation:

Wholesale Customer
This is someone who gets involved just to use the products and buy them
at the same price that higher-volume distributors would pay. This often
requires a little higher minimum order and an annual renewal fee, very
much like being a member of Costco or Sam’s Club. Many distributors end
up just being wholesale customers after pursuing the income opportunity
and deciding it is not for them.
Retailer
A retailer is a distributor who focuses their efforts on just selling the products.
In many cases they do not understand the income opportunity well
enough to sell it as effectively as they can sell the product.
A retailer will earn 20 to 50 percent commission on their own personal
sales, and the upper limit of their income will usually be in the hundreds
of dollars a month.
Network Marketing Leader
A Network Marketing leader is someone who is a wholesale customer, a
retailer and who understands the income opportunity well enough to add
selling it to their mix.
A Network Marketing leader may enroll as many as 100 people to build
with them; sometimes two to three times that many. Out of the hundreds
enrolled, most will just use the product; some will just retail it, and a very
few will actually do what the Network Marketing leader did by enrolling
many themselves.
To be a successful Network Marketing leader, one must be able to enroll
lots of people to sell with them, and they must be able to train and motivate
the group to continue growing. The better one is at these roles, the more
money they earn.

In simple terms, if a person sells a little and enrolls just a few people,
they will earn far less than someone who sells a lot and enrolls, motivates
and trains a group that grows. That’s basic capitalism, which most North
Americans consider quite fair.
Myth #5:
You have to use your friends and family to
make any money in Network Marketing.
The truth is, you do not and you should not. Your friends and family
should only become a part of your business if it serves them to do so. If
it serves them — if they see an opportunity for themselves just like you
did — then they are not being used; they are being served. If you do not
believe your opportunity can serve them, do not offer it to them … and
question whether or not it even serves you.
An opportunity that truly inspires you will most likely inspire them as
well. Offer it to them. If they say no, respect and honor their viewpoint
and do not make a nuisance of yourself.
Myth #6:
If Network Marketing really worked,
everyone would get involved and the
market would soon be saturated.
The truth is, although this is mathematically possible, history has proven
that saturation is not an issue. The largest Network Marketing company in
the world — Amway — has been drawing circles and recruiting sales reps
for more than 50 years. You probably are not a distributor, nor am I, nor
are 239 million other Americans. Yet three million people worldwide, and
more than one million Americans are, which makes for some very, very
wealthy Amway distributors.

WHAT DO THE EXPERTS SAY?

Real estate mogul Donald Trump has this to say about

Network Marketing in his book Why We Want You To

Be Rich, which he co-authored with financial educator

Robert Kiyosaki:

“Network Marketing has proven itself to be a viable

and rewarding source of income. There have been

some remarkable examples of success, and those

successes have been earned through diligence, enthusiasm and the right

product combined with timing.”

Billionaire investor Warren Buffet called his direct

selling companies simply:

“The best investment I ever made.”

Tom Peters, the legendary management expert who

wrote such New York Times bestsellers as In Search of

Excellence and The Circle of Innovation, calls direct selling:

“… The first truly revolutionary shift in marketing since the advent of

modern marketing at P&G and the Harvard Business School 50 to 75

years ago.”

Jim Collins, author of bestsellers Built to Last and Good

to Great, marvels at the energy and enthusiasm of direct

sellers and suggests this may illustrate how the best organizations

of the future might be run:

“… in the spirit of partnership and freedom, not ownership

and control.”

David Bach, a financial planning expert and author of the New York

Times bestseller The Automatic Millionaire, said this:

“The beauty of direct selling is that it’s all done for you. You don’t have to

create a business plan. You don’t have to create a product. The only thing

you need to do is find a reputable company; one that you trust, that offers

a product or service you believe in, and get passionate about it.”

Robert Kiyosaki, financial educator and author of the New York Times

bestseller Rich Dad, Poor Dad, observes:

“When you build a Network Marketing business, you’re actually building

an income-generating asset. Direct selling gives people the opportunity,

with very low risk and very low financial commitment, to build their own

income-generating asset and acquire great wealth.”

Stephen Covey, acclaimed author of The 7 Habits of Highly Effective People,

says direct selling is the opportunity to find a genuine higher calling:

“Direct selling helps affirm people’s worth and potential

and can open up a whole new alternative income

stream that can make a huge difference in their life. It is

an entrepreneurial opportunity where people can use

their talent and their passion toward a greater good.”

Indisputable Facts

Fact #1:

It’s legal.

In the United States,

Network Marketing — also called Multi-Level Marketing or MLM — has

been legally used for product distribution and compensating distributors

for more than 50 years.

During this time, Network Marketing has repeatedly been upheld by the

federal and state courts as a legal distribution and compensation method,

when the following legal guidelines are followed:

1. The main objective of the business is selling viable products or services

at a reasonable price.

2. Each independent distributor maintains a retail customer base, usually

of ten or more.

3. Potential incomes for recruiting others are not promised; or in some

states, even mentioned.

4. Distributors are not paid (head hunting fees) for the mere act of recruiting

others.

5. Distributors are not encouraged to buy more product than they can

reasonably resell within 30 days.

6. The company must refund unsold product and sales materials, including

enrollment fees, if the distributor chooses to resign.

Because Network Marketing is legal, there is a large upside potential for

Network Marketing corporations and distributors. The concept attracts

very dynamic promoters — some are ethical, some not. Many Network

Marketing companies have crossed the line legally and have been the

subject of negative media, as well as civil and criminal penalties.

Listen to how a Network Marketing company’s distributors present the

opportunity, and review the company’s business materials to discern if the

company is engaged in legal product distribution. Any business opportunity

promoted in a fashion similar to that of a lottery, chain letter or

investment opportunity will not pass established legal guidelines.

If you have questions about a company, the Direct Selling Association

(DSA) in Washington, D.C., is the professional association that represents

and sets high standards for the Network Marketing industry. The

DSA has been in existence for over 100 years. You may visit their website

at DSA.org.

Fact #2:

There are successful Network Marketing

companies … and there are others that fail.

There are more than 2,000 Network Marketing firms distributing over

$110 billion a year in goods and services. Many of these firms are publicly

traded companies listed on the NASDAQ, as well as the New York and

American Stock Exchanges. Amway, HerbaLife, Mary Kay Cosmetics, Nu

Skin and Primerica each boast over $1 billion annually in sales, and have

been in business and growing steadily for 30 to 50 years.

However, as is true for every kind of business, most Network Marketing

companies fold within a few years of launching.

Fact #3:

There are successful Network Marketing

distributors … and there are others who give up.

Some individual distributors have earned and enjoyed long-standing

Residual Royalty Income fortunes of $1 million or more per year, for many

years. Many more earn from $1,000 to $10,000 a month.

Most individuals who pursue building a Network Marketing business, however,

give up before they see the level of success for which they hoped. The

average Network Marketer never creates enough success to warrant doing

anything beyond buying product at wholesale.

The fact is, people with average ambition, commitment and effort usually

don’t do well in a business like Network Marketing.

Fact #4:

It’s a major player in the global economy.

The Network Marketing/Party Plan Direct Sales method of marketing as

an industry has grown 19 of the past 20 years, including over 90 percent

in just the past ten years. A staggering $110 billion worth of goods and

services are sold worldwide each year in this industry.

Fact #5:

It’s growing.

Each week, about 475,000 people worldwide become sales representatives

for one of these companies. That’s 175,000 each week in the United

States alone.

There are 15 million Americans and 67 million people worldwide who

participate at some level in this concept.

Fact #6:

It’s tried and true — and here to stay.

The concept of Network Marketing (paying multiple levels of commissions

on sales and allowing all levels to sponsor new levels) has been in

play since the 1950s. Although it has its share of bad examples, historically

it is a legal and ethical method of marketing. Today, it is held in

the highest regard by many of our country’s most prominent business and

success experts.

The Investment Strategy

The Investment Strategy

What about investment strategies? The models for us to choose from have

traditionally been real estate and equities. Equities have averaged a 10

percent return over the past 100 years; real estate 6 percent. And equities

can go from 100 percent to zero overnight if you pick the wrong Enron,

Global Crossings, MCI, AIG, Fannie Mae, Freddie Mac, Bear Stearns,

Washington Mutual, IndyMac, etc.

Real estate in higher-end markets like California, New York, Florida and

any waterfront community historically return much more than 6 percent.

However, we have also seen market corrections that have dropped real

estate values by up to 50 percent.

The challenge for most people who consider these strategies is deciding

what to invest in and, more importantly, where to get the money to invest.

These strategies work great if you have the extra $1,000 a month to invest.

Without it, you are a spectator. Are you tired of being a spectator? Do you

know anyone else who is?

There is a third strategy that anyone can employ to build extraordinary

wealth and financial freedom, regardless of age, experience, education,

income level or social status:

A Residual Royalty Income Business

Offers Huge Advantages

1. You can build it part time, any time.

2. You can build it from anywhere; any city, any virtual office.

3. You can launch it for less than $1,000.

4. You are “in business” for yourself, but not by yourself.

5. You can create enough tax deductions alone each year to make it

worthwhile.

6. You can learn it while you earn it. You can create profit your very

first month.

7. You can earn an extra $500, $1,000, $5,000 or more a month — every

month — to invest in the traditional options of real estate and equities.

The Promise of Network Marketing 11

8. And the most valuable and lucrative benefit is that of Residual Royalty

Income and its asset value. Built in the right company — one that has

proven it pays over the long haul — that income can, and should, be

there forever.

Think about it …

The asset value of your Network Marketing income will be approximately

200 times your monthly income. If you are earning $5,000 a month in

Residual Royalty Income, and you can rely on it continuing, your Residual

Royalty Income could be worth $1 million.

Refer back to the compounding chart. How much would you have to

earn to invest enough to build $1 million in real estate or equities? How

long would it take? How much would you have to sacrifice in your lifestyle

to do it?

It is 200 times easier — and makes 200 times more sense — to build your

net worth all three ways, using your Network Marketing income to fund

the other two options. And you can get to your target net worth in five to

ten years, versus it taking your whole lifetime.

Investing in Your Future

Investing in Your Future

The rules most of us grew up with have consistently been thrown out the

window over the past 30 years. Loyalty to one particular job no longer

provides security. A four-year degree might get you a job, but that’s about

it. The average person today will change jobs seven to ten times in their

lifetime. Most will not end up settling in the careers for which they majored

in college.

Saving and investing won’t start to happen for most people until their kids

are out of college — when most adults are well into their fifties. Starting

to invest at age 50 only leaves about 20 years for accumulation. As we can

clearly see from the compounding chart below, it is not so important how

much you invest, but for how long you invest.

Take a close look at the compounding chart for a reality check. Invest

$500 a month at 7 percent from age 30 to 70 and you will have over $1.3

million. How much would you need to invest to end up with the same

amount if you wait until you are 50?

In order to achieve the same cash value in only 20 years (starting at age

50 through 70), your required monthly investment is nearly $2,500.

That’s almost five times the monthly investment needed than if you

started at age 30!

Why Network Marketing?

Creating

Financial

Security

About five out of 100

people ever achieve

security, and only one

enjoys freedom (defined

as being able to

do and have virtually anything you want, within reason). It’s a goal most

of us strive to achieve our entire lives. Our educational paths and investment

strategies, combined with 30 to 40 years of hopeful accumulation,

are designed to get us there.

However, a troubled housing market, rising unemployment, much publicized

turmoil surrounding the banking industry, and cautious consumer

spending all point to a faltering economy, which has most Americans

scrambling for a Plan B. And according to economists, financial instability

and a looming recession in the U.S. is expected to have significant spillover

effects on the global economy.

history

Network Marketing
or Multi-Level
Marketing has been
around for over 50
years. As an industry,
it has earned a less
than stellar reputation.
Most people do
not believe it to be
legitimate, nor do they believe it is a viable way for them to build wealth.
Most who have tried it have failed, further solidifying their beliefs about
the business model.
And yet, there are 67 million people worldwide who claim to participate
at some level … most presumably as distributors, just buying for their own
consumption. Out of 67 million, someone has to be earning some income
… and some have to be earning a great deal.
Network Marketing IS an opportunity to earn a check sent to your mailbox
every month. Maybe for just enough to cover your own product usage
cost; maybe for a few hundred dollars a month, and maybe for a lot more.
This book, full of facts and true-life experiences, will help you answer
the “mailbox money” question for yourself. These pages explain Network
Marketing, one of the most innovative, yet misunderstood, business concepts
in the world.