Often someone will ask me if I’ve heard of a certain company, or if I know how long they’ve been around. But the most interesting question that I am sometimes asked is, “how long do you think they ‘will’ be around?”
That last one is not only an interesting question, but it’s one that really no one can possibly have an answer to.
Just in the weeks prior to this article being written two of the World’s largest corporations, General Motors Corporation, and Ford Motor Company, had their credit ratings downgraded to junk bond status by the industry’s credit and investment rating services such as Standard & Poor’s and Fitch Ratings. And of course many people will remember Chrysler Corporation’s brush with near bankruptcy in the 1980s.
It is only coincidence that two of the largest automakers were in the news when I wrote this article, but certainly many corporate giants in numerous industries have faced tough times, including Kmart, Sears, and most of the major airlines.
Excel Communications became one of the most successful companies in the home business industry, and in American business history, only to later end in bankruptcy due to corporate greed and mismanagement.
Despite examples like those above it is certainly not all doom and gloom. In fact, with the exception of Excel and some of the airlines, such as TWA, every one of the companies mentioned above is still in business.
I started with the examples above to illustrate that no company is immune from ups and downs, regardless of how large or how well established. But that certainly doesn’t mean that you can’t stack the odds in your favor when considering home business opportunities. In fact, some of the criteria that you can use to make your evaluation are incredibly simple. But many people still choose to ignore good advice when it comes to making such decisions.
We could go into more detailed considerations of such things as company management, the lineup of products and services, etc. (all important factors). However, not only can it be difficult to judge such things, but even those and many other factors aren’t as important as the test of time.
Simply choosing a company that has been around for a while (with “a while” being a minimum of 2 to 3 years and preferably 5 or more) will automatically stack the odds in your favor as opposed to people who choose to go with risky startups and pre-launches.
Most “new” businesses fail, and that’s a fact that is now so well documented that it might as well be cast in stone. And, again, we’re not just talking about the home business industry. It’s a statistic that applies to businesses of almost every type. However, once a business is no longer, “new,” after it has proven that it can survive beyond those first critical months and years, its chances for continued success simply continue to increase over time.
There can be no assurance that even a company that has been around for a long time won’t experience bumps in the road, or even major problems, but history clearly shows that the longer the company has been in business, the longer they are likely to be able to continue to survive and be successful.
Of course, there are some who enjoy the potential rewards, and substantially much higher risks, associated with new companies. However, in reality, most people who become involved with such companies only do so because they aren’t aware of the statistics regarding business success and failure. And then also many people become so wrapped up in the hype, emotion, and sometimes even greed (of promised skyrocketing profits due to being in on “the ground floor”) often associated with new companies that they throw all caution aside and jump in anyway.
You don’t have to become as knowledgeable as a business analyst to boost your chances of success tremendously simply by following the one simple rule of picking a company that has been around for a while.
Can you or anyone else guarantee that any particular company will be around 5, 10, or 20 years from now? Absolutely not… Can you stack the odds in your favor and make it much more likely that your company will still be around 5, 10, or 20 years from now simply by avoiding startups and new companies? Absolutely the answer is yes!
The choice is yours.
Showing posts with label home business solutions. Show all posts
Showing posts with label home business solutions. Show all posts
Tuesday, December 13, 2011
How Long Before You Make Money?
With the exception of some not for profit organizations most people go into business in order to produce revenue (income) and profit. Unfortunately, when it comes to a home business, and especially network marketing, many people forget this important point.
In a traditional business, whether a Ma and Pa shop, or a large franchise store like McDonald’s, business owners know to watch their numbers. A business must make a profit in order to survive and, if it doesn’t, adjustments must be made accordingly.
One of the reasons for the high failure rate in small businesses, home businesses, and MLM (network marketing), is because due to the low entry costs and requirements people often don’t treat them like, “real businesses.”
Two things commonly happen:
1) Many people have the attitude that since they didn’t have to invest much to begin with they really don’t have to be too concerned about whether they make money or not, or how soon. Of course, that often ends up being a self-fulfilling prophecy. It’s not just that way with a business, but with many things in life. If you come to own something that cost a great deal or required a lot of effort to acquire you tend to appreciate it more than something of lesser perceived value.
When you consider that network marketing has made some people just as much if not more money than many other traditional kinds of businesses, with incomes of as much as $1 million a month or more being achieved, treating a MLM as if it isn’t a serious or real business is a huge mistake!
2) Because the entry cost can be so low people overlook the cost of not making money, and also have a tendency not to pay attention to how much their other expenses associated with their business (such as trips, conventions, and/or buying extra products or services over and above what you really need) add up over time.
For example, let’s say that you spend $500 to sign up for a new business. Not a lot of money at all, maybe the price of a cup of coffee a day and some change.
Weeks go by, and then months, maybe even years, and you still aren’t making any money. Perhaps you don’t think much of it because, you think to yourself, “I only spent $500 to get started in this business anyway.”
But what are the true cost? Let’s say that in addition to your startup cost you have also been spending $150 each and every month on buying your company’s products and services. (Perfectly ok if you enjoy and use all of the products you buy; not ok if you are buying more than you need simply to qualify for a certain level with your company!) And let’s also assume that you are spending $50 a month on meetings, conventions, or seminars (many people spend much more).
So, even though you really haven’t paid much attention because you only invested $500 to begin with, if your business hasn’t yet started making you money then you are really spending AND LOSING $2,400 a year, in this hypothetical example. And, here again, in reality many people often end up spending much, much more.
Going back to the example at the beginning of this article about a traditional business, like a McDonald’s. Those kinds of businesses often have much higher costs associated with them, such as a store lease or mortgage, equipment leases, payroll, etc. It isn’t uncommon for a traditional business to have to operate for months or years before making a profit.
In contrast -- though networking marketing is NOT designed necessarily to make you a very large amount of money overnight -- you can and should be able to generate an ever increasing residual income for yourself over time, and starting in relatively short order.
Everyone approaches a new home business differently. Some people prefer to roll their sleeves up and dig right in, expecting to start making money almost immediately. While others prefer to first spend time learning more about their new business, and/or obtaining any available training. So it’s acceptable, if you choose, to take a few weeks or even a month to “prepare” for your new business. However, especially if it is your goal to start making money right away, it is entirely realistic with most networking businesses to start earning viable amounts of money within as little as 30 days.
Certainly within 90 days you will want to start seeing some kind of payoff in return for your efforts. And no more than 6 months should go by without positively starting to see income coming in. In fact, ideally, you should try whenever possible to not only earn enough money to cover your original startup costs, but you absolutely should be making a profit (in other words, extra money) within this time.
If after 30 to 90 days, 6 months maximum, you are not making a profit, you should seriously reevaluate!
To summarize:
1) Always remember to track ALL of your directly related business expenses, including how much you spend on leads, products and services, meetings, trips and conventions, training, etc. You must add these expenses to your original startup costs.
2) Subtract how much money you’ve earned from the number above (your total expenses) and this will tell you how much money you’ve made (profit), or how much money you’ve lost and/or are losing.
3) To repeat: If after 30 to 90 days, 6 months maximum, you are not making a profit, you should seriously reevaluate!
Don’t continue down the same path if you are only spending more money than you are making, and not making any profit in return.
Remember, except for a not for profit endeavor, the purpose of being in business is to make money. And in order to make money you have to actually make more money than you spend.
In a traditional business, whether a Ma and Pa shop, or a large franchise store like McDonald’s, business owners know to watch their numbers. A business must make a profit in order to survive and, if it doesn’t, adjustments must be made accordingly.
One of the reasons for the high failure rate in small businesses, home businesses, and MLM (network marketing), is because due to the low entry costs and requirements people often don’t treat them like, “real businesses.”
Two things commonly happen:
1) Many people have the attitude that since they didn’t have to invest much to begin with they really don’t have to be too concerned about whether they make money or not, or how soon. Of course, that often ends up being a self-fulfilling prophecy. It’s not just that way with a business, but with many things in life. If you come to own something that cost a great deal or required a lot of effort to acquire you tend to appreciate it more than something of lesser perceived value.
When you consider that network marketing has made some people just as much if not more money than many other traditional kinds of businesses, with incomes of as much as $1 million a month or more being achieved, treating a MLM as if it isn’t a serious or real business is a huge mistake!
2) Because the entry cost can be so low people overlook the cost of not making money, and also have a tendency not to pay attention to how much their other expenses associated with their business (such as trips, conventions, and/or buying extra products or services over and above what you really need) add up over time.
For example, let’s say that you spend $500 to sign up for a new business. Not a lot of money at all, maybe the price of a cup of coffee a day and some change.
Weeks go by, and then months, maybe even years, and you still aren’t making any money. Perhaps you don’t think much of it because, you think to yourself, “I only spent $500 to get started in this business anyway.”
But what are the true cost? Let’s say that in addition to your startup cost you have also been spending $150 each and every month on buying your company’s products and services. (Perfectly ok if you enjoy and use all of the products you buy; not ok if you are buying more than you need simply to qualify for a certain level with your company!) And let’s also assume that you are spending $50 a month on meetings, conventions, or seminars (many people spend much more).
So, even though you really haven’t paid much attention because you only invested $500 to begin with, if your business hasn’t yet started making you money then you are really spending AND LOSING $2,400 a year, in this hypothetical example. And, here again, in reality many people often end up spending much, much more.
Going back to the example at the beginning of this article about a traditional business, like a McDonald’s. Those kinds of businesses often have much higher costs associated with them, such as a store lease or mortgage, equipment leases, payroll, etc. It isn’t uncommon for a traditional business to have to operate for months or years before making a profit.
In contrast -- though networking marketing is NOT designed necessarily to make you a very large amount of money overnight -- you can and should be able to generate an ever increasing residual income for yourself over time, and starting in relatively short order.
Everyone approaches a new home business differently. Some people prefer to roll their sleeves up and dig right in, expecting to start making money almost immediately. While others prefer to first spend time learning more about their new business, and/or obtaining any available training. So it’s acceptable, if you choose, to take a few weeks or even a month to “prepare” for your new business. However, especially if it is your goal to start making money right away, it is entirely realistic with most networking businesses to start earning viable amounts of money within as little as 30 days.
Certainly within 90 days you will want to start seeing some kind of payoff in return for your efforts. And no more than 6 months should go by without positively starting to see income coming in. In fact, ideally, you should try whenever possible to not only earn enough money to cover your original startup costs, but you absolutely should be making a profit (in other words, extra money) within this time.
If after 30 to 90 days, 6 months maximum, you are not making a profit, you should seriously reevaluate!
To summarize:
1) Always remember to track ALL of your directly related business expenses, including how much you spend on leads, products and services, meetings, trips and conventions, training, etc. You must add these expenses to your original startup costs.
2) Subtract how much money you’ve earned from the number above (your total expenses) and this will tell you how much money you’ve made (profit), or how much money you’ve lost and/or are losing.
3) To repeat: If after 30 to 90 days, 6 months maximum, you are not making a profit, you should seriously reevaluate!
Don’t continue down the same path if you are only spending more money than you are making, and not making any profit in return.
Remember, except for a not for profit endeavor, the purpose of being in business is to make money. And in order to make money you have to actually make more money than you spend.
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