Tuesday, April 29, 2008

MLM Downline Retention -The Holy Grail?

Copyright 2008, by Karen Hurd Enterprises, Inc.

Retention. It's the magic word in network marketing, maybe a more important issue than prospecting. It's the Holy Grail of network marketing. For the majority of MLM distributors, retention is elusive. High drop rates are discouraging. It's the easiest business in the world to start, and the easiest to quit.

Retaining your downline in network marketing has a significant impact on your income and your time. It costs more to sponsor a new distributor or customer than to maintain one. No one wants a revolving door business. Many, however, are resigned to the revolving door aspect of MLM. You've heard "throw mud on the wall and see what sticks". That approach is a response to the revolving door - recruit them faster than they leave in order to build big.

Retention in your downline is 5 things:

1)Who the people ARE
2)The quality of the company/service/products/comp plan
3)Your sponsoring process - based on hype and speedy sign ups, or are you looking for real business partners?
4)Your training system - does it teach your team how to avoid pitfalls? Does it teach them how to sort through candidates while maintaining their self-esteem?
Does it teach them how to work with people? How to target their marketing?
5)Your leadership style

You can change #2 by changing companies. You can change #3 and #4 by evaluating your results and making necessary changes. You have the most control over #5 by working on yourself. You can do NOTHING about #1 except to identify who you're working with -not by their words, but by their actions. MLM attracts a lot of people who really want at-home JOBS not businesses. So you can't retain the "I -really-wanted-a-job types. There are people who do not have any perserverence for this, no matter how simple/easy you make it, and you can't retain them either. There are those who do it when they feel like it, and not when they don't. You have precious little control over that. You can only work with with those who are willing to be coached and who are willing to do the stuff. You can only identify them by their actions.

I have tried to work with the uncoachable, done therapy with the unmotivated. I let them go now. NO they are not "losers" as some would call them. They have a different path, that's all. And the path of my business is not for them. The sooner I can identify them, the more fun my biz is, because I'm not trying to turn frogs into Princes. I let the frogs be frogs if they want.

I DO have some things in place to quickly identify the most likely candidates, and a process for closure for those who wish to back out. I am more rigorous in sorting my potential partners before they join.

Remember only 10% of the population will do a business. 3% of the population are self-starters. So you might want to look at who you are approaching. Not everyone who needs money or lifestyle will do multi-level marketing. Retention begins with your prospecting and sponsoring style.

About the Author:
Karen Miner Hurd has owned a home business since 1988 when she
retired from her Public Relations career to stay home with her
children. Her secret passion is Foxtrot books. To learn more about
her current business venture, so you can work at home visit:
The Freedom Project

Wednesday, April 23, 2008

Who Owns Your Network Marketing Business?

Who “owns” your team of independent contractors, your army of volunteers?
Your downline belongs TO YOU first, not the company you rep for. Some would consider these comments heresy. It’s a complicated idea fraught with all sorts of potential landmines. I'm bound to get emails from nervous uplines. What if my downline decides it doesn’t “belong” to me ? Does this kind of thinking lead to chaos in the organization?

At some point in one’s career in MLM, one realizes that one has taken on full-responsibility for one’s future. Business ownership is more than just a way to get tax-breaks. Leadership is more than encouraging higher volumes or giving out awards and holding rah-rah meetings. Leadership becomes setting a direction for your organization that matches your business vision and philosophy. It may mean acting independently of your vendor, (but within the framework and contractual obligations you have with your vendor when you enrolled). Your decisions and your direction are geared for the overall health and longevity of the team, not your personal convenience.

Early in my network marketing career, my leadership style was more like a “boss” than a mentor. It was immature and short sighted. I saw myself only as a rep for the company “in charge” of other reps. I allowed the company to set my agenda and depended on the company for motivation. When the company started making poor business decisions, and the uniqueness of the product was lost and became a commodity, I realized that I needed to make a change. However, I had tied my organization's loyalty to the company more than me. So when I came to my current company only 3 wanted to follow. Lesson learned.

I'm keenly aware that in MLM our incomes are intertwined with each other. What I have noticed about those who have built huge (10,000+ organizations) is that they perceive themselves, rightly I believe, as independent marketing organizations that are in a joint venture with a given vendor until such time as it is no longer a mutually beneficial to them or their organization. The best of them treat their top leaders as a “Board of Directors” who participates in choosing the direction and policies of the organization at large.

Do not take my comments as advocating company-jumping. I think “company-jumping” and frequent system changes is unethical and irresponsible. But there are times when it is a sound business decision. If the market share and product mix in my company was not keeping up with trends, or they were showing poor management, or bad ethical choices, I'd read the writing on the wall and take my business and downline else where!

If you are a downline, you need to respect your upline. You model this because your downline needs to respect your leadership. If you don’t like your immediate upline, or they are a poor leader, then go around them to your upline’s upline. Provide solid leadership for your team. Work with your vendor and your upline to create a successful system and joint venture.

Do I ever intend to leave my company? No. But before it was purchased by Roger Barnett, I started reading between the management lines and knew that something wasn’t right, and I started investigating other options for myself and my team. I will not allow myself, nor by extension my team, to be left hanging because some corporation decides to close its MLM doors. (Fortunately Roger's purchase of Shaklee turned out to be a tremendous advantage to all of us).

When you join a network marketing company, you don’t join the corporation itself; you join a marketing team affiliated with the corporation. It’s a partnership, not a marriage. Responsible senior leadership in network marketing must be able to see beyond the company/vendor. You must be able to set a successful direction for your team. To me, that's part of leadership and leverage.

About the Author:
Karen Miner Hurd has owned a home business since 1988 when she
retired from her Public Relations career to stay home with her
children. Her secret passion is Foxtrot books. To learn more about
her current business venture, so you can work at home visit:
The Freedom Project

Tuesday, April 15, 2008

It’s Tax Day!

If you’re a network marketer in the U.S., April 15 is actually a day to celebrate because you get tax deductions that most Americans (and Canadians) have access to but never use- home business deductions! The tax deductions from your MLM home business can save you and your family thousands of dollars per year. That extra money can be used for investment, debt reductions, charity, vacations, or new capital for your business.

It can be fairly easy to record your deductions. “Greens/analytical” types will probably have the most accurate records. When I was first learning about the tax deductions, I felt intimidated like everyone else. There are plenty of myths, rumors and IRS horror stories to keep millions of people from taking those deductions that are rightfully theirs.

When should you file your taxes in your home business? FROM DAY ONE. Your network marketing or affiliate company will send you a 1099 when your bonuses paid to you by them, exceed $500. That threshold changes, and it’s their job to track it. Even if you didn’t get a 1099, file anyway!! You can claim a number of expenses and post a loss. The loss reduces the taxable level of the family income, oftentimes lowering your tax bracket. How often you can post a loss varies. Never hesitate to post a loss. All you need to do is post a modest profit one year, and you can again post “losses”. Please check with your tax preparer.

Here are some things you can do to claim your deductions. And of course here’s my legal disclaimer - do not take this as legal tax advice. Please consult your tax preparer or accountant.

1) Keep every receipt you can. Without proper documentation you can’t take a deduction. So save everything until you learn which deductions work in your situation. Since I’m a “Blue”, and record keeping isn’t something I have patience for, I stuffed all of my receipts into a monthly envelope, like “April”. If I thought the receipt would fade, I made a photocopy (or you could scan it into your computer).

2) Use an accounting program for homeowners like Money, or Quicken. We chose banks that specifically would download all of our bank transactions into my Money program, saving me the trouble of entering them. I would categorize them immediately everyday, into the proper deductions (like advertising, supplies, computer expenses). At the end of the year, all I had to do, was run a single report on tax categories and voila! My stuff was done.

3) In the beginning, I trained myself to think in categories. Any activity or purchase that could promote my business, no matter how vague (remember, save every receipt), I would put in that category. I would let my accountant or tax preparer tell me if it couldn’t be used. After I learned which categories I could use, I then learned the specifics. Now, it’s second nature!

4) Learn some basic money principals for your business. You don’t have to be an expert, but you do want to be aware of the finances! I learned some things from Sandy Botkin, from a book called, Keep Your Hard Earned Money, and from my accountant. The magazine Networking Times also has several resources including Sandy Botkins’ materials.

5) If you do your taxes yourself, DO NOT use one of the tax software programs. They are notorious for not allowing you all of your deductions. Even the IRS is not legally responsible for its own tax advice. ( Really stupid, isn’t it?) Most distributors/affiliates will file a Schedule C for independent contractors. Some will choose to incorporate as an S-Corp. Incorporating your business requires a CPA, and may not be suitable for your situation, so make sure that you get professional advice on that. As an S-Corp, I became entitled to a greater array of deductions, and some extra paper work :-(. 90% of the time, a Schedule C is all you need.

The following are some of the categories and basic deductions that most people can take. Remember, this is just a starting point, and not legal tax advice:

Advertising: this can include, samples, purchased advertising, business cards, Your company's products that you give as gifts, *any* promotional item or giveaway, clothing that you buy with the your logo, or clothing you have your domain name printed on, websites, autoresponders, networking, etc.

Product testing: This includes any of your cmpnay's product that you purchase for the first time. My accountant deducts all of my Cinch and Enfuselle products, since my weight loss and skin advertise my business for me. We include any required personal volume required to qualify for a bonus, here.

Car: Mileage (get a $2 mileage log from Office Max), car repairs, etc.

ALL of my cell phone expenses since I have a land line, a portion of the electrical and heating costs (fro my home office), internet.

supplies, ink, upgrades, paper, etc.

Food:Any groceries I buy for meetings, or entertaining potential prospects or people who could refer buisness to me. So, I write off lots of friends’ visits to my house.

Training:Anything related to personal development, including spiritual development, company trainings, learning about topics related to products your company sells, business, or anything that can be related to my business in any way.

Since looking healthy is important to a my primary business, I can write off health club memberships. You can also write off any club memberships since you can meet prospects or referral sources there. The IRS at this time doesn’t require that you actually DID get business from there, but that you tried to get business.

Don't be afraid of the dreaded audit. Hire a good tax preparer or CPA who is familiar with network marketing. Take advantage of this gift that your home business affords you to maximize your income.


Karen Miner Hurd has been legally reducing her taxes since before cell phones. She lives in Virginia Beach, VA with her husband, 5 children, and a very sleepy cat. Her passions include Bible study and helping families create healthier futures. Learn more at http://www.gohealthygo.com