Saturday, March 14, 2009

How Do You Make Money?

Do you remember being asked this question when you were a kid, "How will you make money when you grow up?" Of course not. We were generally asked, "What will you be when you grow up?" My son wanted to be a fire engine. The options were virtually unlimited. We could dream of being anything but then we grew up and realized that dreams were for kids. We needed to get practical and settle on something that would get us through life.

We learned the lesson that money really does make the world go round. And while we certainly didn't want to end up serving the next dollar, no one doubts that having money is more than a little useful.

Somehow, I missed the lesson that there were only 4 categories for making money. I certainly never considered looking at the pros and cons of each model. And yet HOW we make money will determine many things in our lives: how we spend our time, where we live, who we hang out with, who we will help, the number of children we will have and how much education we will need. These are just a few examples that show that determining how we make money will significantly impact our lives.

So how do people make money? Let's look at the 4 different categories that all jobs ultimately fit in. (I won't look at investments since this model tends to come after doing ok in the other categories.)


The first and most common category is simply working for someone else. What most people don't realize is that this model requires that you give up your time and abilities in order to make someone else money. Employees are often thankful to their employers for giving them their job, while in fact it is the owner who should thank them for making him/her a profit. This model usually requires a person to be tied to a specific location and income stream. Or in the case of management positions like banking, retail or the military, to be to told where to go and how long they will live in a particular location.

The cost of education is often a significant factor when one is determining how much they will eventually make when they go to work for someone else. There is often the expectation from employers that new employees will have already invested a significant amount of time and money in their education prior to being hired. When going for a job interview there are 2 questions that will inevitably be asked, "What is your educational background and how much experience do you have?" Employers love finding people that they don't have to invest in. Never mind that it often takes 3-7 years to be able to pay off educational debt and this is only if they get a well paying job.

The risk of being passed over for promotions because of favoritism or that others aren't pulling their weight is a constant point of frustration. That's why unions are often accepted and even desired. Equality is often the rallying word for employees. Employers tend to not like this idea at all. They would rather employees be subject to whatever they want, whenever they want it. Whether it be pouring coffee, managing a large group of people, being a minister in a church or even being a professor with a PhD at a university, everyone is simply an employee and are not free to come and go as they please.

They are also very vulnerable to changes in the economy or in the specific business that they are employed in. When I got into being a toolmaker 30 years ago, it was considered one of the best paying and secure of all the skilled trades. Today, I know a number of highly skilled tool and die makers that are now driving trucks due to advancements in technology and globalization.

The one thing that this model does not produce is the potential for financial equality between the workers and the owners or the educated and uneducated.


Category number 2 is the self-employed business model. Historically this was the most common model but as we moved away from an agrarian society, more people ended up working for someone else. This model makes you the master of your own destiny and you don't have to bow down to a boss. Not quite true, they often end up having to appease many bosses, their customers. This model includes jobs as diverse as a mechanic to a salesman to a farmer to a doctor and each one has this one thing in common: they are are always vulnerable to a catastrophic event such as sickness or an accident. And if a loved one needs more of their personal time, the self-employed person doesn't always have the freedom to respond to the need. Even a farmer is at the mercy of the weather while other occupations can be drastically effected by economic downturns in their particular area of expertise.

The challenge in this model is that the individual has to be more than just good at his particular skill but has to understand all aspects of making a business work. There is often a significant investment in hardware or education. The constant need to keep up with developing technologies, market trends and ongoing educational upgrades can be overwhelming at times. A mechanic friend says it this way, "I'm not sure if I own this business or if this business owns me."


The third category is owning a business. Essentially, all businesses are based on the simple principle of leveraging other people's time and skill to profit the owner. This model has the potential of producing significant profits for the owner. Bill Gates has done fairly well within this model.

However, the vast majority of people never even consider this possibility. The complexities of starting a business and seeing it through to success is a mountain few people are willing to climb and even fewer climb it successfully. 4 out 5 new businesses fail within less than 5 years. There are so many facets that have to be mastered: Research and Development, understanding market share and demographics, having a great product, hiring and firing, training and development of workers, warehousing, customer service, deliveries, accounting, sales, etc. The biggest hurdle of course is the initial start up capital and ongoing capital investment.

This is why many have opted to own franchises where much of the expertise necessary has been supplied through the franchise. It's why people are willing to invest $500,000 in a Tim Horton's. The rewards can be significant but the financial risk, emotional investment and the huge amount of personal time are still significant to anyone who dares to see the view from the top of this particular mountain.

The idea of teamwork is very popular in this model because the owner knows more can be accomplished by getting his employees working together. Naturally this improves his/her profit margin. Owners have all the power and even though this isn't always the best for the business or the employees, it is the reality. He/she took the monetary risk, so therefore deserves all the benefits. The fact that their employees took a lot of risk when committing themselves to the company is never even considered when it comes to critical decision making. This model never considers the idea of equality for all.


But there is a fourth category that is often misunderstood because it literally takes the best of each of the above categories without being cluttered with their inherent weaknesses. I never cease to be amazed by this, the most revolutionary of all business models, network marketing.

In its simplest form it requires little (no) financial risk like that of owning a traditional business but has the potential for anyone and everyone to enjoy financial freedom. It thrives by benefiting from the work of others without making a slave of anyone. It is a little like being self-employed in that one gets to use their skills and talents for their own advancement but without taking the risk of relying solely on oneself. It also gets to optimize the tax advantages only granted to business owners, something that hourly/salary workers never have the chance of doing. If personal circumstances demand more time, this business can continue to grow without direct involvement. Equality for all is the heartbeat of this business.

The one thing it doesn't bypass is that you must be willing to do some work and have some perseverance to get the job done. But unlike other jobs it doesn't take 30 years or a significant investment to achieve financial stability and freedom. The biggest challenge is that no one can ever force you to do the work since personal autonomy is one of the pillars in this model.

All businesses require the selling of something, whether it be a product or a service. And yet one of the most misunderstood aspects of this business is that it does not require everyone to be great at sales. Virtually anyone who is willing to help 2 or 3 others pass this model on to just 2 or 3 people, can enjoy the dream of becoming financially free.

Is it really this simple?


Why doesn't everyone do it? Why aren't more people successful in it?

The immediate concern for most people is that this business is involved in sales. Usually there is an initial response of a tightening of facial muscles, a knot in your stomach, breaking out in a cold sweat or in my case a combination of all 3. But when you consider that we all sell stuff everyday this response should be a little surprising.

All of us, spend most of our days selling something. Some have sold their skills and services to the highest bidder. That might mean being willing to stand at a drive thru pouring coffee while taking the next customer's order. Or another person may spend an exorbitant amount of money and time to become a forensic scientist and then have to sell their skills within a very limited, niche market. You may enjoy encouraging your friends to go to a great movie that you just saw. How many of us have been involved in advertising by wearing designer clothes with the logo prominently displayed? Do you know any Mac owners who seem to always be selling the idea of owning a Mac or the "need" we all have for an Iphone? You'd think they had stocks in the company. No matter what we do, there is rarely a day that goes by that we have not sold something, either products, services or ideas. What you didn't learn in kindergarten was that it is ok to get paid once in awhile for selling something.

Generally, we have been taught since kindergarten that our role in life will be to work for someone else. Since about 95% of what we learned programmed us to do just that, is it little wonder that this is how 95% of us make money? We were taught over and over that financial security is the dream and that happens only after many years of keeping our nose to the grindstone. We simply can't imagine that doing well financially can be relatively simple, quick, and easily shared with others. We definitely were never taught to measure personal financial success by how financially free we helped others to be.

That is far different than the single owner model where success is measured by how well one person manages to control a group of people. The employee model measures success with terms like reliability, teamwork, hard work and doing what you're told. Some may even get satisfaction that they made Sam Walton and his kids billionaires but I can't say that I really understand that kind of satisfaction. Becoming financially free while helping others become financially free is never a consideration within the self-employed model since others are not even part of the equation.

The Dream of Financial Freedom

Financial freedom is not the language, let alone a goal for most people. They have only thought in terms of letting their circumstances determine the limits of their dreams. Most people have never contemplated this simple question, "What would you do with your life, if money was not a consideration?"

Safety and security is the language that is used by owners to control their many workers. And while loyalty is often talked about, as soon as things get tough for a company, the first ones to pay the price are the loyal employees.

I believe there are many people who believe we should be working together and looking out for the good of each other. They just didn't see it through the eyes of making others financially better off. The days of a community working together to build one person's barn is a thing of the past. Well, almost a thing of the past. Working with others to build a successful network marketing business is the modern day equivalent of this kind of teamwork. And just as the farmer remained fully independent after the barn was built, he always knows that working with and serving others is a very rewarding experience.

Does Network Marketing Work for the Average Person?

I know of a couple that had almost gone bankrupt at the age of 63 from a business they had owned for 30 years. Within a year in my company they were making a wonderful living and after 5 years were millionaires.

In just the past three weeks, a 21 year old man, with no experience in this business made $4,000, won a trip to Costa Rica and a laptop computer by understanding and applying this simple foundational principle for success: just get 2 more people involved and help them get their 2. Not only did he do well in his first month but his 2 best friends also made $3,000 and will be joining him in Costa Rica.

Freedom Really is an Attainable Goal

This cooperative business model allows you to go where you want, decide how much you want to make and choose who you work with. No longer does anyone have to be tied to a job that doesn't allow them the freedom to live where they want. And no one has to be at risk because of decisions that are out of their control. Nor do they have to fear economic uncertainty since this model works well in good times and even better in difficult times.

The secret to success in this business is very simple: have great, proprietary products that people use regularly and a great compensation plan that can be easily explained to those who have little or no training in either sales or business.

Does this mean their isn't any work involved? Of course not. The business is not complicated but it isn't magic either. No successful business owner has ever accomplished anything without a good plan, good training and the willingness to follow through with their vision.

Most people shrink their dreams to match their income, few expand their incomes to match their dreams. Since we know that many hands make the work easier, why not choose to join a team of like minded business owners that have chosen to work cooperatively together for the purpose of making each other successful?

The secret to success is adding something positive to your life each and every day. Take 15 minutes to watch this presentation to see how dynamic and reproducible this model is and then take an action step to make it work for you.

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