Slickdrums Chronicles

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HOW TO BE A MILLIONAIRE
.. plus have fun!

What I share below is an excerpt from the Malaysian daily, The Star. It reveals the secret to being a millionaire. What is not revealed is the specific vehicle. For that, investigate, ask, get facts (and don't rely on just goose-pimples dreaming about getting rich the next month), seek the vehicle that teaches life principles more than just spewing out the dollars.


Network distribution: The new sales channel
by J. Phang

DOWNSIZING, rightsizing, restructuring and destructuring - the past decade has seen companies and even whole industries consolidating themselves to create the right organisational structure that would operate successfully in a highly turbulent business environment.

Trying to become 'lean and mean,' every cost item was put under the microscope. If it could not be done cheaper in-house, companies were ever willing to outsource that particular function. Areas like the preparation of payroll, accounting, customer support, event management, or information technology services were prime functions that were outsourced.

Companies are now looking closely at what their core competencies are, and are focusing on becoming really good in those areas.

Those that continue to pride themselves on being capable of performing all these functions on their own may be doing it out of corporate ego, rather than business expediency.

Even in banking, where information technology is central to operations, some are outsourcing this function. Bumiputra Commerce Bank, for example, has outsourced its computer operations.

Outsourcing would enable banks to concentrate on their core business, which is banking. Coming out with more competitive rates, better financial products and better customer service adds more to the bottomline than maximising computer investment.


Where are the customers
The past few years have seen many manufacturers achieving ISO quality standards that are acceptable globally.

The common problem faced by most businesses now is not in 'producing the product,' but in marketing it. Reaching the consumer is not an easy task for businesses these days.

Modern day consumers are continuously being bombarded with sales through all forms of media: TV commercials, e-mail and spam, SMS, billboards and other conventional print advertisements.

This has led to a 'cocooning' effect on consumers. They withdraw into a protective shell or cocoon to escape the relentless sales bombardment.

The latest threat to businesses is the SARS outbreak, which changed the social habits of the population and emptied the shopping malls of their regular customers.

An effective way to reach customers would be to go back to the warm personal touch of 'relationship marketing.'

Network distribution
Whenever there are turbulent changes, there will also be threats accompanied by great opportunities.

The network marketing industry will be one of those that will directly benefit from these changes. Network marketing is about selling products through established links of personal contacts.

Network marketing - formerly known as multilevel marketing and often mistaken as pyramid schemes by the schemers and the naive - is today emerging as the most powerful method and the most appealing enterprise model in the new economy.

It's an approach to sales so powerful that traditional companies, struggling to find new ways to reach a fragmented market while containing the high costs of fulltime sales forces and national advertising campaigns, are now borrowing network distribution's best features to apply to their operations.

Already a traditional business like CitiBank is using some network marketing platform to increase the use of its credit cards, and some local banks are also beginning to experiment with this powerful sales system.

WWW: Win, win, win
Unlike the traditional retail method of setting up shop and employing staff, network marketing is in essence 'word-of-mouth' marketing. Think of how fast the recent rumours of SARS outbreaks spread through word of mouth and through SMS, and you can better understand the potency of this new method of sales.

Every new product or update is spread through a network of contacts very rapidly - maybe even faster than a sales memo travelling through the bureaucracy of traditional sales departments.

More important is that network members know each other, therefore the trust is already there to complete a business transaction.

The motivating factor in network marketing is where members of the network are rewarded financially for their contribution towards achieving the sale. It is a win-win-win situation all along the value chain.

The overheads that are saved from rental, salaries, and electricity charges are diverted to paying the network marketing team. This creates a highly effective system where there are hardly any operation costs involved.

Moreover the network team brings the products across the country, penetrating market areas that are too small to set up branch offices.

Market intelligence
Knowing market details is getting more important in the area of sales. Many retail chains have already launched some form of loyalty card system to understand their customers better.

This again reflects the unique nature of the knowledge-based economy: It is information that drives sales and the economy.

In the network distribution model, it is normal to find that the very consumers themselves are members of the network team. This will ensure a rapid feedback of consumer preferences back to the manufacturer.

A new role for Malaysia
In a globalised environment, most local manufacturers admit that although they have the quality, they could never compete with China on the cost factor.

China has become the manufacturing backyard of the world, and that is a real threat to us. However, with all its manufacturing capability, how will China market its products to all the niche markets of the world? How well does it understand cultural preferences?

Malaysia could be the marketing backyard of the world - this could be a real opportunity for us.

Network distribution is a powerful sales model for the new economy. However, it is surrounded by misconceptions. It has the structure and characteristics that could suit the K-Economy, but like most things, it is the public mindset that prevents widescale adoption.

Traditional business vs new economy opportunities
Most people have some time or another dreamt of having their own business. The routes that you may take could be:

1) Build your own business - the traditional way.

2) Purchase a franchise business - stop reinventing the wheel.

3) Network marketing business - minimum capital, maximum returns.

A Traditional Business requires the owner to attend to everything - from finance and sales, to human resource management and even cleaning the floor. A traditional entrepreneur require at least some knowledge in all the business functions before he can run the business effectively.

Many of the common problems faced by traditional businesses are employee problems, overhead expenses, regulations and taxes, and economic uncertainties.

A Franchise Business gives an entrepreneur a headstart. All business processes are tried and tested. The whole business model and operation procedures are set. Even the brand name has been established.

All the entrepreneur needs to do is to follow on the heels of success.

However, the capital cost of starting such businesses is even higher when the franchise fee is added onto the investment. At the same time it faces the same common problems as traditional businesses - employee problems, overhead expenses, regulations and taxes, and economic uncertainties.

There are successes in traditional businesses. However entrepreneurs must constantly innovate and be watchful of the changing environment. There are fixed costs to be met and successful entrepreneurs tend to work even longer hours than their employees to maintain success. The business success may even cause the breakup of families and relationships, and stress and health problems.

Alternatives to joblessness
The rapid changes in the business environment have brought about a need for companies to restructure to be more competitive.

Like a retrenched employee once exclaimed, 'Call it what you may: Downsize, rightsize, reengineering, restructure – it still means I am fired.' Many of these retrenched workers will find it more difficult to find new employment because companies will now only retain knowledge workers who are skilful with technology and in many other functional areas.

They will soon discover that they will have to be entrepreneurs to survive, and this is where the organisational structure of a network business will appeal to many.

Network marketing business
The network business model provides the following features that traditional business models do not provide:

·LOW capital cost to start up (Less than RM100 as a Certified Business Owner);

·ZERO overheads, as many network entrepreneurs operate in a mobile manner and use their home as a base;

·PASSIVE income element combined with earned income;

·CULTURE of mutual support groups as opposed to office politics;

·RISK-FREE environment as network entrepreneurs do not carry a heavy fixed cost; and

·TIME freedom as well financial independence.

In the early days, many avoided being associated with the network marketing industry. However. network entrepreneurs will be encouraged to know that the new economy is forcing traditional employees to give the concept of '9 to 5' employment a relook. The shift from traditional workers to knowledge-based workers will marginalise many people. Network entrepreneurs will find more people considering a network-based business.

In the next few years, market forces will reposition the network marketing career as a 'first-choice' option instead of a 'last-choice' alternative.