While these criteria are relevant to the entrepreneur, they have absolutely no bearing on the interests of the customer. The customer’s sole interest lies in whether his or her purchase yields good value.

Simply stated, value = benefit ÷ cost, or alternatively, everything is relative. A product or service is considered to be a “good deal” or “bad deal” compared to something else. If the derived benefits between two items are similar, then the lower priced item is of greater value. However, if two items yield significantly different benefits (or provide a similar type of benefit but at substantially different magnitudes), then comparing the costs alone between the two is immaterial.

On a recent episode of Top Chef Masters, one of the contestants serves a $5,000 hamburger at his restaurant, and he proudly claimed that they actually sell a number of these plates on a regular basis. By contrast, as evidenced by the government’s recent “Cars for Clunkers” program, this amount of money exceeds the market value of a perfectly functional, albeit aged, automobile. So for this same price point, a market exists for each item even though the provided benefit and scale of pricing for a hamburger versus an automobile are widely disparate. By this illustration, price points alone are nearly irrelevant unless dealing with commodities, in which there is little to no differentiation in benefit provided for a given product or service and competition is primarily driven by price alone.

Given the economies of scale available to large businesses or franchise models, the small business owner will likely find it much easier to compete through clearly differentiated benefits in lieu of low-margin commodities in order to provide a high level of value to customers. A commonly used term for concisely identifying this aspect of a product or service is a unique sales (or value) proposition, or USP/UVP. In the current economy, there may be a knee-jerk reaction to move toward a commdity-scale pricing based on the perception that a product or service is dropping in value as consumers use more discretion when spending. Is this actually a rational move?

Keeping the value equation above in mind, products or services whose benefits are clearly known and articulated among competitors remain of good value even if discretionary spending dollars are more scarce. After all, how does the state of any external economic condition affect the benefit offered by a product or service which has a timeless quality and solves a basic problem for people? Highly beneficial products and services have relatively inelastic demand, which essentially means they are price insensitive for a fixed supply.

The challenge for the entrepreneur is to be particularly clear on communicating the key benefits, uniqueness, and differentiating elements of one’s product or service. In doing so, one essentially avoids having any real competition in the marketplace and rather serves a niche by providing something which is simply unavailable elsewhere in the same way (scarcity) and thereby generates great value for customers. This method lends to having a recession-tolerant business which is sustainable through the cyclical nature of any given market.

For those who have some exposure to the industry either directly or indirectly, perception tends to fall on one of two opposite ends of the spectrum: they either know someone who is making more money than seems rationally feasible/legal, or they know someone who has racked up a garage full of product and never made a dime from their business. In reality, there are people in each category, as well as a significant, nondescript middle-class segment which comprises the “full-time” established networkers that earn, on average, nearly twice the national median annual household income (at least for those affiliated with my corporate partner).

If only I had been properly approached with the concept of network marketing while I was an undergraduate student, I may have reconsidered my choice of profession at an earlier age. After all, the average full-time compensation of network marketers cited above is far greater than that of electrical engineers, even while EEs command among the highest salaries of new graduates with either Bachelor’s or Master’s degrees. Of course, compensation is not the sole determining factor in selecting a career, but it was a significant consideration for a pragmatic student such as myself (and a widely touted selling point for the curriculum by faculty in the EE department).

Ironically, I was exposed to network marketing as a freshman in college by an acquaintance from high school, though unfortunately he was poorly trained in how to conduct his business. “Randy” was a senior when I as a freshman, and we had both played in orchestra together while in high school. I remember one day receiving a call from him out of the blue; we had not been in contact since he graduated from high school nearly four years earlier. He mentioned having “something to run by me,” and I happily accepted his request to stop by as I thought it would be great to reconnect with someone from high school, especially since I had not yet established a large number of friends in college.

Randy arrived at my dorm room within a few minutes, sat down in a chair on the other side of my cramped quarters, and began our brief conversation with the phrase, “Where do you see yourself in five years?” My reply was, “Is this an ________ pitch?” (referring to one of the most recognizable company names in the MLM industry). His response was, “How did you know?” and I indicated that it sounded like a pitch for that company, even though I had never been approached by someone with that company or in the industry before. He left my dorm room, obviously discouraged, and I never heard from him again. In reflection, I’m not sure how I could even have made a connection between his approach and his particular company, much less the industry, since I had no education or background in the subject. Apparently I had tapped into some collective consciousness that somehow equated agenda-driven, inauthentic communication with MLM, even though I had no real understanding of the business model.

Regardless of how my preconception was formed, the approach taken by Randy stood as a barrier of communication between two old acquaintances who otherwise could have not only reconnected personally but may have formed a precocious business alliance. Individuals who utilize Randy’s approach when addressing any individual, regardless of intention or industry, are likely to encounter a similar response when they have not first connected meaningfully with another individual. This approach also does nothing to help overcome the objection some may have regarding network marketing as a scam or otherwise over-hyped pitch.

Certainly, there is no shortage of fraudulent scams in place today. Scams have always existed and probably always will, especially since technology can facilitate their reaching even more people with greater ease now than ever before. I receive a half-dozen or more of these duplicitous emails each week, among the more recent looking to capitalize on the stimulus package administered by the IRS. While many intelligent people can readily separate the wheat from the chaff, an otherwise healthy dose of skepticism can sometimes hamper one’s ability to reasonably evaluate a new idea or concept if it does not match a prior paradigm or belief system. Consider how the measurable effects of global warming have been ignored for decades simply because many people live in places where they still experience snow in the winter and conclude that global warming is nonsense simply because cold winters still exist! Unfortunately, a similar leap of irrationality is sometimes drawn between network marketing and fraudulent operations such as a pyramid scheme or Ponzi scheme. While there are much more detailed explanations of this distinction available, I offer a nutshell version below:

• Pyramid scheme: promise of profit gained for recruiting other individuals into the scheme (at a cost) without moving any products or services as a legitimate business
• MLM: identical to any traditional company except in how it chooses to market its products or services

A network marketing or MLM company advertises its product or service through a network of entrepreneurs who market the company’s products/services via word-of-mouth. These people earn commissions based on their effectiveness in moving the company’s products and services to customers through their own teams of affiliates, as opposed to more traditional advertising methods (e.g. celebrity endorsements, national TV or print ad campaigns, etc.). Those whose marketing efforts generate the most product sales make the most money, not those who “started at the top.” It’s a simple concept, but it is unpopular with the excuse-prone who would rather blame the model rather than be accountable for their own failings as entrepreneurs.

Simply stated, network marketers are paid for moving product and teaching others how to do the same, with the greatest financial reward resulting from their effectiveness in the latter. In this business, one’s ability to teach and work in collaboration with others is far more lucrative than one’s skill as a point-of-sale professional. As networkers, we are mentored and, in turn, grow to be mentors of others who also want to build their own businesses. We are rewarded when we are able to help others achieve success as they define at their own scale, whether this equates to “mad money,” supplemental income to help pay household bills, or ultimately a means to replace one’s job.

Do I believe network marketing is a good fit for everyone? Absolutely not. Neither is engineering, holistic health, performing arts, investment banking, or any other professional career. Simply because starting a business in this industry can be done on a shoestring budget, with no formal education, and with no prior related experience, it does not imply one will be successful at it or find it to his/her liking.

Success in this industry is most probable for one who is teachable (i.e. adopts a “beginner’s mind”), has a desire to teach/coach/mentor/connect with other people, and commits to taking effective, daily action to grow his/her business. Results are not instantaneous but rather the fruition of committing to a process over time. This aspect is no different from that which is required to achieve a meaningful outcome in any lasting endeavor of value: earning a degree, obtaining/maintaining personal fitness, gaining experience and higher levels of responsibility in a corporate structure, building lasting personal relationships, etc. The difference with network marketing, however, is that building this business to maturity may be done in a part-time fashion (as opposed to being a full-time student or employee) and it yields ongoing fruit for this cumulative effort (residual income). This is in sharp contrast to merely developing the skill necessary to continue trading time/labor for a pay check (linear income), even if at a higher hourly rate when having obtained specialized training or education.

Having started my networking business 2.5 years ago, I am grateful for the mentors who have helped me build it to a level which has paid me weekly, residual commissions for more than a year now. In turn, I look forward to continue helping others with a similar desire to learn/teach the same. Furthermore, the business and interpersonal skills I have learned from this venture have greatly facilitated the expansion of my private practice as a therapeutic bodyworker, as well as serving as an educator in holistic health. Hopefully this provides some perspective to those who are evaluating the industry of network marketing with a healthy dose of skepticism and wonder not only, “Is this legal/ethical?” but for most people, “Can I do this?”

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Many times I’ve heard Tim speak of being focused on your prospect (or one could easily substitute your client, customer, spouse, etc. here–basically anyone with whom you are engaged in conversation), and I’ve always consciously held this in my mind not to be distracted by other people or events in my surrounding when communicating one-on-one. Despite my intellectual understanding of this, however, I gained an even greater understanding of this simply by being in Tim’s presence.

For the mere 3 to 4 minutes in which we spoke while a line of other eager fans of Tim’s stood nearby awaiting him to sign a book or CD, his attention was focused 100% on me for the entire duration of our conversation. It seemed as if there were a cocoon-like environment created around just the two of us in what was an otherwise VERY noisy entryway to a ballroom filled with people, booths, and activities. I felt as if Tim had all the time in the world to really listen to, understand, process, and give a response to my questions. I know this sounds like a very simple process (and is one he speaks of time and again in his own training materials), but to have experienced his embodiment of this in-person has truly deepened my appreciation of and sensitivity to the profound impact this has on another human being. Thanks again, Tim, for helping me to gain yet another level of understanding through your example… one which serves to enrich both my professional and personal life.

The savings in personal income tax are particularly profound when a portion of one’s home also functions as a place business, since the overhead of having a roof over one’s head is an expense which all must incur anyway, and having a means to legitimately convert a portion of these living/operating costs as deductible business expenses can really add up to significant tax savings.

There are a number of different industries and business models which may be reasonably run from home, especially in today’s age of ubiquitous e-commerce and efficient delivery systems. A few of the benefits in running a business from home include:

• Little to no overhead cost
• Zero travel/commute time to one’s home office
• Increased time flexibility
• Ability to employ children tax-free up to the standard deduction amount
• Reduction of personal tax liability through migrating a percentage of personal expenses to legitimate business deductions

The latter is an extremely valuable benefit of which many are unaware and is available to all home-business entrepreneurs. The key requirement is having a sufficient system of recordkeeping (tax journal) which must be maintained regularly in the course of running one’s home business. One of my favorite authors and speakers on the subject is Sandy Botkin of the Tax Reduction Institute.

So, how does one select an appropriate business model, particularly if one is only looking to run his or her business part-time?
Even more so, how does one grow a business part-time which can ultimately be nurtured to provide an income stream which may replace, or even exceed, the income which is earned from a current full-time job? The short video below profiles a number of individuals who have done just that by using the same corporate partner that I have in building such a residual income stream.

As with any undertaking of value, this industry is not unique from others in the sense that a learning curve is involved with acquiring new skills. This aspect is accompanied by its own set of challenges, frustrations, and hard work––just as with any other endeavor which yields great rewards. The resulting financial, interpersonal, and self-development benefits which are achieved through this process, however, are second to none.

May you experience prosperity in all aspects of your life as you encourage others to share in the same.