How smart people protect themselves during a recession

A recession is not the end of the world as some would have you think. When a rescission occurs, the economy retracts. At some point after that, it expands again. Understanding this, what is the best time to start a business or to pile on the effort to grow an existing one?

Most new small and home business growth occurs during a recession.

Expansion doesn’t happen because of tax refund checks. It happens due to the flow of money in the market place. When it gets hoarded in a sector like stocks or real estate, the flow is interrupted and that’s where the problems start.

In other words, hoarding during a recession (or any other time) is not going to prevent or end a recession. It will actually make it worse. I don’t mean you should go out and blow your money in hopes of saving the economy. What I do mean is that if you want to build wealth and if you want to do it now, you need to understand that money needs to flow in a smart way and you also need to know how to leverage your money and your precious time in order to see your money grow.

I’m reminded of the parable of the talents. The third servant buried what was given to him because he was afraid of putting it to risk. But those talents really belong to The Master anyway so that servant was being unfaithful to his gifts. The first servant, on the other hand, put that money at risk (in a smart way, I assume) and saw that money grow. He he brought those returns back to The Master, he was praised for being faithful with what was given him.

Food for thought, eh?

Ok, so what if you don’t have a business to expand? Do you have the money sitting around to open a chain of sandwich shops? Starting a business from scratch is expensive too. Especially if you haven’t developed the skills necessary for being successful in business.

Top business authors and leaders like Robert Kiyosaki, Jack Canfield, Robert Allen, Warren Buffet and even Donald Trump all say that the best way for any person to get started on the road to wealth is through network marketing.

“(Network Marketing) is the best kept secret in the business world.”

Fortune magazine

“Dollar for dollar, (Network Marketing) is the best investment I’ve ever made.”

Warren Buffet

It would be great if more people actually understood what network marketing is instead of filling in the gaps with opinions from those who have no idea either.

So what is network marketing anyway?

To answer this, let’s look at how products and services are distributed.

1.) Retail: This generally means “a store.” They advertise, you go there and buy.

2.) Direct Selling: Most people think of this as “door to door” selling and yes many people out there still sell knives, vacuums and encyclopedias by knocking on doors. Direct selling also includes mail order catalogs and large scale sales. I used to work at a company that made over 90% of its money through direct selling. Some of those sales were to big companies and I personally know people who received commission checks in the millions. That takes the development of a lot of skill and sometimes nerves of steel.

3.) Network Marketing: The biggest mistake people make is in the thinking that Network Marketing is about selling. It’s not. In Network Marketing, distributors are also customers. So let’s say that a company has 100,000 active distributors. Each one is consuming a small amount of product and when you multiply that by 100,000 people, a lot of product is moving. As long as you work with a company that is distributing something you want for yourself (like high-quality dietary supplements) and is in a market that is in high demand, you won’t end up with a garage full on inventory. In fact, if you work with a modern Network Marketing company, you should have no more product on hand than what you’re using and you should never be delivering a single product to another person.

Now, some people ignorantly think Network Marketing is a “pyramid.” They’re not bad people because they’re ignorant. That simply means they don’t know any better.

Here’s how you tell the difference between a Network Marketing company and a pyramid.

Network Marketing companies also distribute a product or service through this business model. Pyramids get you to buy in by paying money but no product or service is ever distributed.

By the way, this definition is also on the FTC Web site and is taught in a class on Network Marketing taught at the University of Illinois.

By understanding that Network Marketing is not direct selling, we can then understand that making a lot of money comes from building an organization of people doing the same thing you’re doing. It does not come from just selling the product.

How do you build an organization? By teaching other people to do what you’ve learned how to do. Yep, it’s that simple. Most people make it way too hard, but for those willing to learn it’s a very rewarding system because you get products that you wanted anyway and you get paid to help other people benefit from them as well.

6 Comments

  1. Ivan Pagan on October 5, 2008 at 2:33 pm

    Thank you for the article Dave! You hit the nail right on the head when it comes to the network marketing. I truly believe that it is “The best kept secret” I have a nice organization that are all motivated and on the verge to financial freedom (some of has reach it already) and I say network marketing is one of the best vehicles to achieve wealth.

    I’m in the Energy Business providing it cheaper for residents then their old incumbents guaranteed! and its wonderful because we all make residual income from 100′ and 1000’s of people saving money on the home utilities. I love it!

    Thanks once again Dave! I’m sending this article to my whole down line to inspire them. Hope you don’t mind 😉

    Kudos.
    Ivan Pagan
    I.prolific@gmail.com

  2. Ivan Pagan on October 7, 2008 at 12:21 am

    If any one wants to learn more about the magnitude of the deregulation of Energy visit
    http://www.ProlificNetwork.com and see how you can earn unlimited residual income for life.

  3. Charlie on October 31, 2008 at 9:22 am

    Thank you so much. Network marketing is my ticket to financial freedom!

    I recently got involved in a brand new network marketing company. It just launched in Orlando, FL a few weeks ago. It has everything that it takes to be the “up and coming”, according to Direct Selling News in July 2008.

    If you want to change your income fast go to http://www.pillot.lifemax.net to find out how this company is going to literally change the health and the wealth of the world.

  4. Suckers on February 10, 2009 at 4:48 am

    you will get your moneys worth!!! when they rob you of time an $!!! you’re buying a kick in yer own ass!!! Go start a real business!!!

    peace

    • Dave Saunders on February 12, 2009 at 9:51 am

      Funny comment @suckers It’s true that there are many options for starting a business during a recession. Network Marketing is only one of them and is usually the best opportunity at the lowest cost for most people.

      Because many are focused on getting “ripped off” and driven by their fear of failure, they’ll be unsuccessful in ANY type of business. Success in business is less than 10% IQ and over 90% EQ (Emotional Intelligence).

      People starting ANY business, regardless of the state of the economy, need to learn how to create a business mindset. This is something which isn’t taught in schools so educate yourself and take some action!

      “Nothing happens, unless something moves.” -Albert Einstein

  5. Angie on June 3, 2011 at 3:06 am

    You described network marketing very well. This is exactly what I do, so I leverage my time and teach others to do the same! Wonderful concept!!! 
    The concept is no different than a franchise without the high start-up costs. 
    Dave, thank you for sharing.  Angie Donohue

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