Avoiding Bad Decisions

This article will be "relatively" brief, but can save you untold loss in terms of time and money. Every day we all make decisions. Some are consequential and have lasting and significant impact, while others may not impact our lives greatly at all. This article will provide you with an incredibly simple set of rules for quickly reducing some of the most significant decisions that you will ever make down to their simplest terms, and the lowest common denominator. Please understand that this article is not about money advice in the context of traditional investing. For that there are many excellent money magazines, books, and radio and TV programs you can turn for advice. Two of the best, and least expensive, are featured in the Resources section on ABCIncome.com: The Richest Man In Babylon How To Have Your Best Year Ever! Here's a link if you would like to learn more about either of the above two resources: http://www.abcincome.com/successresources.html Instead, this article is about decisions that people make that they THINK are inconsequential, but that will actually have a far greater impact on your life than you might have ever realized. This is especially true when it comes to decisions that you make in regard to MLM (network marketing) businesses. That's because network marketing businesses have a reputation for costing little money to get into, and are perceived to involve little risk. In general that's true. However, shortly we'll take a look at how people end up spending and losing too much money because they don't consider the, "big picture." Here are a few quick rules that will serve you well regardless of the type of decision you are likely to be making: Rule #1 If your goal is to make money and improve your financial position, in general you should try to keep to a minimum any expenditures that do NOT make you money. And, by all means, avoid if at all possible going into debt for purchases that will not make you money. It is beyond the scope of this article to get into the debate of whether or not and when debt is ok, and the merits of debt free living, other than to say that there are few debt free people who wouldn't say that it is a far better feeling than being in debt. However, if you are going to incur debt, at least try to restrict such purchases to those investments which will make you money, such as a properly chosen home, and "wise" business decisions, etc. Putting the latest, greatest big screen TV or gadget on your credit card (unless you are getting a store discount and paying off the balance immediately) is NOT an example of debt that will make you money. It's just debt that will keep you in debt. On the other hand, putting a "reasonable" amount on your credit card to finance a new or existing MLM or home business might not be all bad, especially if you can be reasonably certain that it will pay off by returning your investment and making you money. Even then, however, it's still best if you can afford to pay off the balance when it's due. Rule #2 Try not to pass up opportunities to make "wise" investments into your future. "Wise" being defined as investments and expenditures that make you money. Passing up good opportunities can have just as significant an impact on your life as making bad decisions and unwise expenditures. After all, the people who get ahead in life are the ones who look for good opportunities, and act appropriately. Rule #3 A good rule of thumb to help you with Rule #2 is to always consider the ratio of risk to the size of your investment or expenditure. For instance, if you are considering investing $10,000.00 into your home business, but your projected profit is very uncertain and spread out over a period of many months or years, that's a decision that would require very careful analysis in order to determine whether it might be worth it. On the other hand, if you were considering an investment of $419.00 that was guaranteed to make you at least $3,000.00 in the next four weeks or your money back, assuming that the source was fairly credible, and assuming you could afford $419.00, it should be a "no-brainer" for you to make such a decision. In fact, the above is a real example. A few months ago I invested into my business by spending $419.00 on a marketing technique featured on ABCIncome.com that was guaranteed to make at least $3,000.00 in four weeks. Even though I didn't make $3,000.00 in four weeks I never bothered to try to claim the guarantee and get a refund. That's because the marketing technique that I spent only $419.00 on made me over $20,000.00 over the next 8 weeks! Here's the point: If you spent $10,000.00 and a year later you still weren't sure if you were going to make any money, that might or might not have been a good decision. It was probably a bad decision. However, if you DIDN'T spend $419.00 on something guaranteed to make you $3,000.00 in four weeks (but that instead made over $20,000.00), then you made a BAD decision by NOT doing so. So remember, not a rule, but a point: Not acting on good opportunities and failing to make good decisions can be just as bad as spending poorly and making bad decisions. In the above example anyone who did not spend the $419.00 ended up at least $3,000.00 to $20,000.00 poorer because not only was the expenditure guaranteed, so there was really no way to go wrong, but by not doing so that person's bank account is minus $3,000.00 to $20,000.00 that they could have had otherwise. Rule #4 ALWAYS GROW YOUR BUSINESS OUT OF PROFIT! Except for minimal and reasonable debt as explained above, always grow your business out of profit and you will seldom if ever have to worry about getting hurt financially. Obviously if you are just starting a new business, or if you've been in a business for a while and haven't made any money, you may incur some debt before you start making a profit. However, once you start making a profit then you should aim for the goal of as soon as possible growing your business out of its own profits. Many people make the mistake of not investing BACK INTO their businesses and their future. The worst mistake that many make is to make a nice sum of money and then to go out right away and spend it on something that doesn't follow Rule #1. Using my own example from above, I could have taken the $20,000.00+ that I made and gone out and purchased the latest, greatest, flat-screen, big-screen, HDTV and home entertainment system. Instead, however, I reinvested almost all of it back into my business so that I could make even more money. Naturally at some point you will want to take some of your profits and spend them on whatever the things are that you enjoy in life. You certainly don't have to reinvest all of your money back into your business. However, as a rule of thumb, you should consider reinvesting a MINIMUM of 20 percent of your profits back into your business to help you grow your business. Naturally, the more you invest the more you are likely to make, and the faster you are likely to make it. And, if you aren't making any profits, and especially if you keep spending large sums of money trying to, STOP! People contact me all the time who have spent as much as $10,000.00 to $40,000.00 or more trying to make their home businesses work, but they've made little or no money in return. If you are doing that too, STOP! Remember that one of the supposed advantages of a home business, and especially network marketing, is that you can, if you make the right decisions, get started, grow your business, and become profitable, while spending relatively small sums of money, and incurring relatively little risk. Rule #5 Another point similar to Rule #3 above is to avoid spending too much on your initial expenditures to start or grow a home business. Again, a home business, and especially network marketing, "should" involve minimal startup and maintenance costs. However, people routinely spend as much as $2,500.00 to $10,000.00 just to "start" their new MLM business. Unsuspecting people usually get trapped into such high expenditure, high risk, scenarios when they get involved in opportunities that involve a high dollar buy-in or up-front commitment for further expenditures. For instance, one MLM that I know of that was extremely popular a few years ago requires an up-front investment of $4,000.00. And that $4,000.00 pays for little more than the signup fee. That's ridiculous and unjustified, which is proven by the fact that I have yet to find a single person who is making any money in that company, let alone anyone who has made their $4,000.00 back. Again, as mentioned in Rule #3, always weigh the size of the investment or expenditure to the potential profit, as well as the potential risk for loss. With most MLM companies you might get some kind of representative's kit or an initial starter pack of that company's product when you first sign up. However, in few cases does anything in MLM justify an initial startup cost of more than a few hundred to $1,000.00. Besides companies that try to trap you into a large up-front cost (that probably can't be justified), avoid plans that make you commit to large monthly product purchases (defined as more product than you reasonably need), and/or large dollar amounts of leads. I routinely hear of people spending as much as $600 a week on leads, and yet they haven't made a dime. Again, remember the rules above. There's nothing wrong with spending $600.00 a week on leads IF you are making more than $600.00 a week in return (which means that you are growing your business out of profit). If not, STOP! If you are not in profit, and you are like most people, spending the above sums of money and not making anything in return, please STOP, and don't waste any more of your money! Rule #6 AVOID INVENTORY! This item is mentioned last because it really shouldn't have to be mentioned at all. In today's computerized Internet age people have grown accustomed to ordering products directly on the Internet, or calling an 800 number, and having their products shipped directly to their home. Despite that, it still never ceases to amaze me the number of people who get trapped into signing up with a company that encourages or requires its representatives to buy a certain amount of inventory in order to represent that company. I still hear from people who have $5,000.00 worth of unsold water purifiers in their basement, or $5,000.00 worth of unsold air purifiers in their garage, or thousands of dollars of unsold health, beauty, or nutritional products in their house. It is true that there are many types of perfectly legitimate businesses that do require inventory, such as an auto parts store, or even a restaurant (they inventory food). However, those businesses are usually in a whole different league than the typical home business person, who probably has little or no experience, and probably can't afford such expenditures. So, unless you absolutely know what you are doing and are positive that you will be profitable, avoid opportunities that require you to inventory products. It simply isn't necessary anymore when any reputable MLM company can simply have the product shipped directly to your customer's doorstep.