Traditional Business or Network Marketing?

Hello Friends. Welcome back.

Hope you have gone through the previous postings and agree that to give yourself a realistic chance to achieve your life’s goal you need to be in the right quadrant of Robert Kiyosaki’s Cashflow quadrant we discussed earlier.

Don’t get me wrong, I am not trying to say that money is everything but even to give back to the society or aid a charity or help the under privileged we need money. I promise to deal with this aspect in more detail in a later discussion to avoid digressing from the current chain of thought. 

To be in the right quadrant we either need to be a Businessman or Investor. We can safely assume that ‘Investor’ option is ruled out (sorry if I upset anybody). So the only option is to be a Businessman.

We have a choice of being in Traditional Business or Network Marketing Business.

How easy or how tough it is to be a businessman and be as successful as say, Richard Branson, Steve Jobs or Michael Dell?

Let’s look at the Traditional Business first.

You will agree it is not easy for an average person because it needs:

1.             Capital:  A reasonably large Capital upfront for the office set up, employee salaries, inventory cost etc.  The amount depends upon the nature of the business. You can have a rough idea from the fact that to set up a small corner shop can set you back by a few thousand dollars. 

2.             Advertising Cost: To promote and sustain a new start up for long term, you need to invest in advertising. An advert in the newspaper, a TV ad for few seconds or banners/hoardings can cost you a fortune.

3.             Fixed Costs: Ongoing monthly cost like rent, salary etc can’t be avoided irrespective of business happening or not

4.             Return on Investment: Average year-on-year return in businesses world over is about 15-18%. So to just breakeven it would take more than 5 years. From that point on the ROI depends on the type of business, location, management, competition and a host of other factors.

5.             Time and Effort: To build a successful business one need to be virtually 24x7 in the initial years.

 How different is Network Marketing? 

1.             Capital:  A very low startup cost. In a physical product based company there would be an ongoing cost of buying products every month. There are many online businesses where expense is one time.

2.             Advertising Cost: This is minimal and would be a very insignificant fraction of the cost of the traditional business.

3.             Fixed Costs: Virtually zero fixed costs

4.             Return on Investment: As the investment is not too big the capital is recovered in a much shorter period of time. Running cost being virtually zero, all earning from that point onward is profit.

5.             Time and effort: 10-15 hours per week should be good enough. Have the benefit of working from home and also to choose when to work.

I will leave you with this 10mins video of Burke Hedges Pablo and Bruno in the Parable of a Pipeline. I will let the video do the talking. Till next time. 

Please click on the link below.

Parable of a Pipeline

The Success Mantra: Mental Shift

Hi Friends. Welcome back.

Let me start by addressing the two questions I asked in the previous post.

How easy was it for you to come up with a figure? Seriously we never think in those lines. Believe me if we don’t have a goal we can never achieve it. Our sub-conscious brain is very powerful. It records these auto-suggestion and acts on it.

For example if you have to get up early to take a morning train or flight. Before going to sleep you tell yourself “I have to wake up at 4AM tomorrow” and then proceed to set the alarm as well. But more often than not you wake up before the alarm goes off. This happens to all of us? So who woke you up? That’s the subconscious mind at work. So if you have come up with a figure I would like to congratulate you as you have taken the first step towards achieving your goal.

Coming to the second question, this again is something to which we don’t give much thought and think we have our entire lifetime to achieve what we want without quantifying. This is another reason for people failing to achieve their goals. This figure would vary for each one of you depending on your age and the hours you put in per day.

Let’s take an example to illustrate the above. Let’s assume John has a target of earning USD50 million. Let us assume John works 10 hours a day, 5 days a week. He doesn’t take any holidays so works all the 52 weeks in a year. Assuming he works for 40 years lets multiply 10hrs x 5 days x 52 weeks x 40 years. The result we get is 104000 hours. This is a very realistic figure as we have assumed John does not take any holidays or sick leave for the entire duration of 40 years.

Has this ever occurred to you that in your entire life time you have only about 100000 hours to earn? In our example if John has to earn 50 million he has to earn at the rate of USD 500/hour. How many of us earn at this rate? Does it mean we don’t have the right to dream big?

Absolutely not, everyone has the right to dream big and should dream big.

So achieving our dream as an Employee or Self Employed is next to impossible although I agree there are exceptions but a very small percent.

The solution is to get to the right side of the quadrant.

Easier said than done, you would say. You are absolutely right. So what does it take to get from the left to the right quadrant?

The answer in short is “Mental Shift”. What do I mean by that is we often hold back because of our own mental block. So as first step we need to change the way we think. Let me elaborate.

Right from the day one we started our education/learning process we have been taught “not to make mistakes”.  So right from the childhood we are fed on not making mistakes and not failing. Smallest mistake is punished and failures looked down upon. So this builds a fear psychosis and we are always afraid of committing errors. A safety first attitude dominates our personality. Fear of failure holds us back. So when we set out to do a task we tell our selves “I should not commit any mistakes”. But the subconscious brain does not understand negative suggestions. It only understands the action words “commit” and “mistake”. So invariably we commit mistakes. Instead if we had said “I will complete this task successfully”, the thought process is positive and we succeed.

So we need to educate our self emotionally not to fear committing mistakes. It’s not a crime to commit mistakes. But not learning from mistakes is a crime. It’s smart to learn from others mistakes also but this is not always true. For example you can see lot of kids falling when learning to ride a bicycle but you can’t learn until you yourself have had a fall.

We often say that the successful people have been at the Right Place at the Right Time. Sincerely if each one of us looks back in our lives, we have all been at the Right Place at the Right Time at some point in our lives. So, why only a few have made it big?

That’s because having realized they are at the Right Place at the Right Time they have done the third step right.  The successful people have taken All Out Massive Action. Here again the fear of failure holds us back.

We must have all seen that circus elephant tied to a chain  If it wants it can break free but it never tries. That’s because as a calf it had tried very hard and was not able to break free. So mentally it gave up that it is not possible for me and doesn’t try.(Good observation.Yes you are right, the picture posted above is that of a horse).

We human being are worse in the sense that we have heard of someone failing at something and take that as an excuse not to try it ourselves. The second reason we don’t take action is because of fear of being laughed at. The question is “Why should I give up my dream just because someone is going to laugh at me?”.  I call these people dream stealers who don’t have the courage to take up anything new and at the same time discourage others.

I will let you digest this for the moment. Catch you soon.

Secrets to get Wealthy

Welcome back friends. The very fact that you are reading this shows your seriousness to make a change. I congratulate you on your decision.

Let me start by asking you 2 questions.

       1.       What is that amount X if you had today, you would decide I don’t have to work anymore. Please come up with a specific figure (e.g. 5 million USD, 5 billion USD… )

       2.       How many hours you have in your entire life time to reach your target? (Don’t take 24hrs a day as realistically we work 8-10 hours/day)

While you come up with the answers to the above, let us see what the available earning options are. To address this I will use Robert T. Kiyosaki’s Cashflow Quadrant.

Primarily the world’s legally earning population can be divided into these 4 quadrants.

     1.       Employee: The first quadrant is Employee. Employees are people who trade their time for money and work for businesses/companies not owned by them. These are people who are in jobs and get a fixed salary for a fixed amount of time spent on the job. Occasionally overtime as well. Here one is assured of a secure and constant income every month. But what happens if we are not able to put in anymore time due to reasons beyond our control e.g. God forbid we meet with an accident or have a serious medical condition or due to recession we lose our job. The Income stops

.       

     2.       Self Employed: These are people who work for themselves e.g. Doctors, lawyers, actors etc. Even the small shop owners come in this category although they call themselves businessmen. That’s because even if they keep their shutter down for a few days their income dips. This group of people like the first group exchange their time for money but they work for themselves rather than for others business. Here the pressure is even more as they have to play both the roles of finding work and executing it. If they are not able to find work or work for some reason as stated earlier, their income stops.

    3.       Businessmen: These are people who have built big business and have set processes in place so that even if they are not there physically the business can run on autopilot. Here we are talking of people like Bill Gates, Jack Welch, etc. The thumb rule is they have more than 500 employees on their roles else they are still categorized self-employed.

    4.       Investors: These are people who have enough wealth and use that to make more wealth. People like Warren Buffet.

 90% of the world’s population are in the left quadrant i.e. either employee or self-employed.  The sad part is when we look at the wealth graph. 90% of the population who are on the left quadrant share 10 % of the world’s wealth, whereas the Businessmen and Investor who make 10% of the population enjoy 90% of the wealth.

Ever wondered why?

The people in the right quadrant know a secret. The secret is LEVERAGING.

They leverage on other peoples TIME, EFFORT, SKILL and MONEY.

Knowing the secret of leveraging is it easy for us to cross over from the left to the right quadrant? Not easy you would say and I agree. The first and foremost is we need big money to start a sustainable business. Yes there are exceptional and inspiring rag-to-riches stories but then they are rare.  

So does it mean we don’t stand a chance to go to the right side of the quadrant? Are we doomed to be either employees or self-employees?

I will continue the discussions in my next post.

Yes I have not forgotten the questions I asked in the beginning. These are also addressed in my next post.

See you soon.

Why I decided to move from a 9-to-5 employee to a Business Owner

Hope you had a smooth drive to work and did not get stuck in the traffic. Even if you were stuck or had some rash driver cut across you please stop fuming as it will only increase your blood pressure and is bad for our health.

Instead take a deep breath and relax.

Well it’s easy to advice you would say. You are absolutely right. Till some time back I used to be in the above situation, stuck in the horrendous Bangalore traffic. I would be sitting there cursing and fuming. That led to lot of stress at work and home and also multiple health problems.

Now I am a relaxed person as I have pulled myself out of that chaos and routine 9-5 job which never ended at 5 but would go well beyond. I now lead a life on my terms.

I am sure all of us want to get out of this rat race but peer pressure and compulsions stop us from looking for alternatives. In fact we get so engrossed in the daily grind that we don’t even have the time to think and miss other more rewarding opportunities.

If you would like to know what helped me take the decision to pull out of the rat race, please check out my previous posting or click Smart Media Magazine .

Wishing you all the best in all your endeavours.

In my next posting I will be sharing the secret of success of the wealthy people and how we can make a transition.

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