When NOT to Buy Another Business

Sunday, January 4th, 2009 | Reinvesting | 2 Comments

January 4, 2009 by Brett Nordin

I have a friend (you know who you are) who bounces from one Network Marketing company to the next…following “the next big thing”.

It’s a common case of the blind leading the blind.

Blind Followers Waste Time and Money

In the process of setting-up the businesses and learning how to market and sell each one, I’m estimating he spends 40 hours before he makes a single sale.

He’s joined 5 businesses in the past 2 years and may have a few hundred bucks in profit to show for it. I estimate he’s making $5.00 per hour in Network Marketing.

The last time we spoke, he shared ANOTHER business opportunity with me.

[Be aware that I’ve been trying to coach this friend for the past 2 years on how to really get rich in Network Marketing. What I’ve told him has nothing to do with buying more businesses. Buying another business and expecting the same results is, by definition, pure insanity.]

Hey, I get it. It’s easy to get caught in the hype of a new business. I made the same mistakes early in my career. It usually appeals to the ‘something for nothing’ mentality and it’s a deadly lure.

Here’s why.

It’s usually an emotional buying decision and we skip the FIRST RATIONAL STEP:

We need a growing list of prospects and distributors that know, like and trust us.

If we don’t have a big, strong list of prospects, who is going to buy from us?

A list is like money in the bank. No one can take a list away from you. If you develop and nurture a relationship with everyone on your list, even a small list can be worth millions.

Here are some simple equations you can apply to your business model:

1.      No List = No Sales

2.      Bigger List = More Sales

3.      A list of distributors is worth 10X more than a list of prospects

Let’s apply the “Bigger List = More Sales” equation in a simple example.

Assume a pre-launch business opportunity converts 5% of prospects into distributors:

·        My friend has a list of 50 people.

·        I have a list of 5000 people.

·        My friend will sponsor 3 people into the new business (pretty typical for him)

·        I sponsor 250 people into the business

MORAL OF THE STORY:

Do not buy another business until you have a system in place for growing a list of prospects.

Spend your time and money building and growing the list before you consider reinvesting in a new business.

For more information on how to build a list of prospects and when to buy a new business, visit: http://www.brettnordin.com

Tags: brett nordin, list building, mlm, network marketing, Reinvesting, roi