Small Business Tips and the Latest News

Getting Serious About Multi Level Marketing

I had a great discussion this morning with a gentleman who’s a member of a Multi-Level Marketing (MLM) structure. I talked about this in a recent article on my blog, but our discussion was sparked by my complaint about people who aren’t serious about their business. His question was straightforward: What does an MLM person need to actually DO? Those previous articles may have felt a bit philosophical, so let’s get down to concrete actions.

First, you’re going to have two driving business goals:

1. Make money on the product or service you’re selling

2. Sign up other people as your “downline” so that when they sell, you get a slice of their revenue.

In most cases, you get to choose the balance between these two. I know some people who have decided never to develop any kind of “downline” at all and devote their full attention to the product sales. That’s fine, IF the MLM structure permits you to do that, AND you can make enough income off just the other part of the business. Run the numbers and figure out if you’ll be able to succeed.

Second, you have to recognize that your primary job is SELLING. That’s a shock for many people who think that just JOINING the group will provide an income. Not true. And BOTH business goals are primarily selling. So you have to get good at it. Get trained. Set yourself some tough sales goals, and don’t let yourself off the hook. (By the way, this is a primary reason why many people hire a business coach – they’re tired of just PLANNING TO MEET their goals, and want to move to ACTUALLY ACHIEVING their goals.)

Imagine that someone else hired you to sell full-time, 40+ hours a week, and is just going to pay you pure commission. No salary; every penny you earn comes directly from a sale you make. Will your boss be satisfied that you’re working hard enough? That you have the expert sales skills? That you’re developing fifty new relationships a week that can lead to business?

Just because YOU are the boss, you shouldn’t let yourself off the hook. These are real requirements, and you MUST do them to succeed. If you’re unwilling to make that commitment, spend your time and money looking for a job with someone else.

Third, you have to know your products and services, and how they’re used by customers. I’m shocked at how many MLM representatives I see who have just the “brochure” level of understanding. “Here’s my product, here are the features and why you should buy it.”

Sorry, but if you’re going to develop relationships with customers, you have to know your products MUCH deeper than that. Here’s an example. I only drink decaf coffee, and have been approached by a number of representatives wanting to sell me an organic coffee substitute. The company’s so enthusiastic about their product and its health benefits that they haven’t given any clear guidance on its caffeine content. But every rep I’ve talked to, I ask about the caffeine. I’ve gotten all kinds of weird answers:

• “It’s never given ME a buzz, so it must be OK.”

• “I don’t know,” and then walk away.

• “It’s organic so it has no caffeine effects.”

I found exactly ONE person who took my question seriously and did the investigation. It turns out that their drink has about as much caffeine as coffee, and they don’t have a decaf version. Digging further, she found out that the company offers both caffeinated and decaf teas, and gave me some samples to try. It appears that all the other reps I talked to weren’t even aware of the entire line of teas, much less how that can address my caffeine sensitivity.

YOU are the face of your product to the customer. So you have to know it very well, because you’re guiding your customer to their best purchase. Asking for decaf coffee isn’t such a weird request that you can ignore it.

Fourth, you have to create a different strategy for signing up “downline” sales reps. It’s an entirely different process, because the person is buying an entirely different service. You have to find people who are suited to succeed in the business, and you have to sell them a BUSINESS MODEL rather than a product. You’ll be talking to different people, asking them different questions, and developing a different kind of relationship.

The hard part about all of this, honestly, is EXECUTING YOUR PLAN. You’re the boss, you’re the sole employee, and when you fall behind the entire business flags. It’s incredibly easy to never make a living at it, because your boss is a wimp and will let you off the hook. Sorry, if you’re trying to make an income, it’s going to take some hard work. You have to stick with it, day after day, week after week, month after month. It’s not easy, no matter what the MLM materials promised you.

If you’d like to talk to a coach about making this work for you, give me a ring!

Carl Dierschow
Small Fish Business Coaching Fort Collins
www.smallfish.us

I'm Profitable But Have No Money!

I’ve talked to many people whose businesses are struggling with a lack of cash. Even though the company looks profitable on paper, there’s no money to pay the bills. What’s going on here?

It’s not that you’re crazy or cooking the books. Although you certainly should look at the accuracy of your accounting, it’s likely that the problem is simply the TIMING of your cash. Here’s a typical scenario: You stock up your shelves with products, and in a month a customer comes in and purchases that. Sure, you got the markup, but the problem is that you had no money at all between the time you paid your supplier and when your customer paid you. This creates a timing gap, sometimes quite significant. When you look at the monthly or quarterly results, these timing distinctions can disappear.

In a services business, a similar thing occurs. You sign a contract to do some work. Over the next month, you deliver that work, paying your employees and incurring expenses. At the end of the project, you invoice your customer, which he pays the day before it’s due. We have a gap in the TIMING of your money, which is reflected by the balance in your checking account. You’ll get your profit eventually, but may not be able to buy groceries today.

There’s several approaches to fixing this, within some broad categories:

• Delaying your expenses

• Accelerating your revenue stream

• Reducing your expense exposure

• Restructuring your business model

Here’s a few specific ideas within each category:

Delaying your expenses

• Use credit cards, but only to the extent that you can avoid paying any interest

• Renegotiate payment terms with your suppliers

Accelerating your revenue stream

• Shorten your invoice terms, and develop systems which increase the likelihood of customers paying on time

• Reward customers who pay in advance or with cash

Reducing your expense exposure

Restructuring your business model

What are your best techniques for generating and conserving cash?

Carl Dierschow
Small Fish Business Coaching Fort Collins
www.smallfish.us

Why Business Is Like Music

I saw a presentation some years ago by a talented symphony conductor. One of his favorite quote was, “I’ve realized that the conductor is the only person in an orchestra who doesn’t make a sound.”

That’s the difference between leading a business, and working in a business.

An immediate reaction, of course, is that it’s easy to be able to afford the “overhead” of a conductor when you have a 100-piece orchestra. Fair enough. So let’s look at a smaller example.

When I was leading a group of church singers, we had between 5 and 12 people on a regular basis. As the director, I also took a very pragmatic role as one of the singers. I don’t have the talent to sing and play piano at the same time – that’s MUCH harder than it looks – but I sang, directed, and selected the music.

What was critical was to distinguish between these roles.

When I was director, my role was to lead group decisions, create and lead practices, and coordinate with the other music groups in the parish. My role as singer was clearly secondary, to supplement the others in the choir.

In the business world, a leader needs to clearly delineate his different roles – decision maker, strategic planner, salesman, customer relationships, and so on. As the company grows, employees will start taking the lead in delivering value (through marketing, sales, production, customer service, and so on) while the owner must spend more time on direction, decisions, and orchestration.

The challenge is that these leadership tasks may not feel like they’re delivering much value. If you’ve developed your skills in working with customers, it tends to feel less gratifying to spend so much time on trying to get a whole bunch of employees aligned.

The thing you have to remember is that your value in these higher level activities is multiplied by the size of the company. When you are able to motivate 15 employees to work together, your value is AT LEAST 15 times the effort you put into it. When you help five people in sales to be more effective, your value is AT LEAST five times if you just do the sales yourself.

Yes, these activities feel more “back office” than your people on the front line. Maybe you can do parts of their work better than they can. But nobody else can have the multiplying impact that you can. You’re the one who will help all the employees to create beautiful music together.

Carl Dierschow
Small Fish Business Coaching Fort Collins
www.smallfish.us

Is Free Advice Free?

I had a great discussion recently with a person who owns a coffee shop. She put out several queries in some LinkedIn discussion groups, asking for advice on how to bring in more customers. And in fact, a number of people were quite helpful.

Here’s one problem I’ve seen, though. When you’re asking for advice, especially in a public forum, you’re asking people who don’t understand your business very well. They know what you told them, and if they have REAL initiative, perhaps they looked at your website.

The other problem is that the people who are the most helpful are not necessarily those with the most knowledge. Sometimes they’ll have useful background, but often it’s just people who enjoy being seen as some kind of expert. Or maybe they’ve heard that they’ll sell more products if they participate in online discussions, and they’re just trying to build up their own visibility.

That said, I’ve seen numerous cases where people are very giving, with incredibly useful information. So I often do recommend to people that they ask for information online, as a useful way to get ideas and pointers to resources. But watch out for taking advice.

Imagine that you were walking down the street and decided to ask a random person, “I own a coffee shop – do you have any advice on how I can get more customers?” OK, that would be quite weird. But you’re probably not going to think that anything useful will come from this unless you know more about them, they know more about you, and you have an actual conversation. And even then, you might just take their observations from a limited point of view – if they say you should give away free cookies, it may have nothing to do with it being a sound business decision. Maybe they just like cookies.

When you’re connecting online, then, look for:

• Creative ideas
  

• Resources
  

• People you should talk to
  

But it’s YOUR business judgment that’s critical – don’t let someone else run your business!

I run into this fairly often, because people will tell me that they’d like their business coach to make the decision for them. I won’t do that. Instead, I’ll give my clients some tools, perspective and feedback so THEY can make their own best decision. And more important, to act on that decision to propel the business forward.

Carl Dierschow
Small Fish Business Coaching Fort Collins
www.smallfish.us