By Scott Arvin
The MLM Funding Company
One of the things we all live with is risk. We don’t think about it very much or we’d be afraid to leave our homes, except that statistically, 65% of all accidents occur there! You’re really safer driving a car or jumping out of an airplane!
That having been said, let’s take a quick look at risk.
As average consumers, we don’t think about risk very much but we live with it daily and it affects us in ways we often don’t realize.
Risk and risk management is the driving force behind all business – and life.
The stock & bond markets, the mortgage markets, the insurance markets are all about managing risk. Someone is placing a bet based on statistical analysis that something will go up or down, that someone will get hurt, or that someone will die at a certain time, etc.
The headline in the Wall Street Journal today said that the US Government is charging Goldman Sachs with fraud.
Look at this scenario...
and you’ll gain some insight into how the financial markets work – and how they are manipulated. You’ll also see how we, as average people, are on the outside looking in on how risk really works, and why we almost always lose.
From the WSJ
“Beginning in late 2006, the Paulson firm identifies 123 mortgage-backed securities that it expects will decline in value. The firm approaches Goldman Sachs about creating an investment vehicle known as a CDO that will track the value of these securities.
Goldman asks an “independent third-party” ACA Management, to help design the security, to be known as Abacus. ACA does so with heavy involvement from Paulson. ACA is not aware that Paulson intends to bet against the portfolio.
A number of investors buy slices of Abacus expecting consistent returns from home mortgages.
Paulson buys credit-default swaps from Goldman, wagering that Abacus would decline in value. By January 2008, 99% of the portfolio had been downgraded. Paulson’s bet paid off, netting about $1 billion in profit. Goldman collects fees from all sides in the trade.”
In other words, Paulson hires Goldman to create a fund it can sell to other investors and then bet against! That’s the way Wall Street works, and you and me and even other companies unknowingly invest in the fund and get taken to the cleaners. Don’t you love it?
What does all this have to do with network marketing? I was thinking, what if we were to create a fund of 1,000 network marketing companies, sell shares in it to distributors, and then place a bet against it that 800 of those companies would be out of business within one year?
Do you think we would make money or lose money if we bet that 800 out of 1,000 network marketing companies would be out of business within one year?
I’d take that bet and even put my house on the line. That is a risk I would totally be willing to accept. And it’s a sad fact that I would win, and win big. In fact, it would be unfair to take that bet because statistically it’s a proven fact that 90% of all new companies fail!
Why is that? Let’s look a little deeper. Network marketing companies are composed of independent representatives that sell their products and recruit others to do the same. That’s the definition of network marketing. Once again, let’s look at the statistics. 80% of all distributors fail, meaning they quit the company they signed up with. They drop out.
It’s a cliché in the industry, but most clichés are based on truth, so take this for what it’s worth. The cliché is this: at any given time in a network marketing company, 30% of the distributors are coming in, 30% are leaving, and 30% are trying to decide whether to stay or leave.
That leaves 10%. These are the people that show up for conventions!
The odds are that 80% of the people you sign up will quit.
Look at it this way. When you sponsor someone, aren’t you making a bet? There’s a time vs. money risk involved that’s totally speculative. Will they perform? Will they produce? Will they bring in other people? Will they stick or will they quit?
What about the company you’re signed up with or thinking about signing up with now? Aren’t you placing a risky bet, too?
You’re placing a bet that there’s a market for the product, that the product works for most people most of the time, and that it’s priced to sell.
You risking that people will buy it when they try it, and that they will become enthusiastic about it enough to want to sign up as a representative and start marketing it.
Aren’t you placing a bet on the management, too? That they are ethical, that they are competent, that they will operate the company in a way that insures timely delivery of the product - as well as your paycheck?
Aren’t you betting the owners have a long-term vision, good intentions, and are financially capable enough to carry the company through the ups and downs of a very unstable economy, and that they not only have the money, but the expertise to do so?
Once you sign an app, it’s not just the owners business anymore. Now it’s your business, too.
In the final analysis, when you sign an app, aren’t you taking a risk on your self? That you will take the time to learn the products, the comp plan, and the marketing systems needed? Aren’t you betting on your own persistence that you will do whatever it takes to become successful, no matter the obstacles, no matter the distractions?
When someone signs up with you, they’re betting on you as their sponsor.
Would you bet on you as a sponsor? That you will provide the leadership and the support your team members will be needing - and expecting - and that you won’t quit? Would you take that bet?
You don’t have the time or the money to risk on network marketing if you’re not willing to make a commitment to yourself and to others. That’s why so many people fail. They quit, sometimes before they even get started! Ever have that happen?
The #1 thing I see missing in people today is the quality of Commitment. Commitment to yourself, your marriage, your family, your job, your friends, your team, and the MLM company you decide to become involved with.
When you’re sponsoring someone, the hardest thing to get is get a commitment. And if they do make a commitment, will they really stick to it and follow through over the long-run? Will they do what they say they will do? Not just to get hyped up emotionally, but make a real commitment of sustained effort? Probably not.
If you want to know why there is so much failure, it’s because of a lack of commitment.
Lack of commitment is why marriages fall apart, right? That’s why marriages fail. Jeff Bridges is one of my favorite actors. In fact he won the Oscar this year as Best Actor. Jeff is a rarity in Hollywood because he’s been married to the same woman for 28 years. That’s good for anyone, but in Hollywood? Wow!
An interviewer asked Jeff Bridges the secret to staying married for so long. He said, “It’s simple. Don’t get divorced!”
A simple answer but a profound answer, you’ll agree. Every marriage and every life has its ups and downs, its good times and bad. But Jeff and his wife made a commitment to each other at the beginning NOT TO QUIT!
That’s the essence of Commitment, isn’t it?
No matter what, promise yourself you won’t quit. Think about that the next time you’re signing an app.
Thanks A Million,
Scott Arvin
615-750-3392
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Written on Monday, 19 April 2010 11:39 by OYC Admin Administrator
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