During tough economic times there are still opportunities to make money.  In fact, there many examples of fortunes being made during economic slowdowns.  I’ve done several posts centered around this idea (See: 57 Ways to Make Money, Business Ideas from the Underground Economy, and This Isn’t the Time to Run & Hide) and I’m sure you can find more material out there.  But I want to caution you not to let emotions like fear and desperation dictate your actions. If you do, you may find yourself in a worse position than had you did nothing.  To illustrate my point I’m going to recount one of my early attempts at self employment and the mistakes that I made in trying to become rich.

Desperation

Back in my early 20’s I was suffering through my own personal recession. I was out of work for a few months and had no money in the bank.  I was looking for work because I was trying to save up money to go back to school, which was my primary goal at the time. I didn’t have any real skills so I was looking for any job I could find.  I came across a classified ad for a ’sales clerk’ and went down for an interview.  The interview turned out to be a recruitment for a catalogue sales company (think Amway but with crappier stuff) looking for "distributors". Two guys in nice suits made a presentation to about 50 people detailing how we had opportunity to join their company and make hundreds of dollars a week with only 1 week of training and the desire to be rich. They gave us a 5 page sample catalogue and told us to come back in 24 hours with a $25 sign fee from someone we convinced to join their club.  The rationale being anyone motivated enough to go out a "sell" a club membership in 24 hours with no knowledge of the club was motivated enough to become successful. My being desperate made it easy to believe that there was an easy way riches.

Mistake #1: Lack of Preparation. It’s never a good idea to get into any business without preparation. Research, goal setting, gathering resources all go towards getting yourself set up for success. I knew nothing about this company and less about what it would take to succeed in that type of environment. Fortunately, I quickly learned that company wasn’t a good fit for me.

God Bless Mothers

So 24 hours later I’m in a room with about half of the people that was there a day before. The guy who took my check for $25 congratulated me on having the drive to go out and create an opportunity for myself, that showed determination.  In reality, I went home and begged my mother for $25 and even though she knew it was going to waste she gave to me anyway. Guy#1 went on to explained that I was now in enrolled in their "executive" training program and that for the next 5 days I would be given extensive training on how to be successful with their company. I was expected to wear a suit and tie everyday to training.  Being a catholic school graduate I had couple of suits but not enough and I needed a new pair of shoes.  Plus, I was going to need carfare to get to and from training each day.  And as the training went on we were given "homework assignments" that involved going out and getting more people signed up for memberships, that required more traveling.  Where did all of this money come from? Yep, mom. She gave me what I needed to get by because she knew that I wanted to be successful at what I was doing but I didn’t have the money to do it.

Mistake #2: Lack of Capital. Every startup needs capital.  Even if the initial outlay is small there’s bound to be follow up activities that require cash. Hundreds of businesses go under because they under estimate the capital they will need during the start phase. Even a home business being run part time can rack up a sizable price tag.

Dust Collectors

After about 3 days in the classroom our instructors, Guy#1 and Guy#2, told us that we should’ve learned enough about the products to go out and sign up 3 more people.  But to add in a little fun they held contest to see who could sign the most people by the next day. The winner would be elevated to Diamond Distributor status and be assigned 2 distributors that were starting in next week’s class. You see distributors get a percentage off of their members purchases but Diamond Distributors get their cut plus a cut off of any distributors in their downline.  And of course that’s where the real money was made, getting residual income off of your downline.  I went out and tried to sell membership to people in my apartment building who I was friends with. Most said no, one gave me $25 but refused to sign up, and my Grandmother told me she had no use more "dust collectors" in her house.

Mistake #3: Poor Product Choice.  No business will be successful if there isn’t a big enough market for it.  Make sure that there is a high enough demand for your product or service.

I Hate Small Talk

The lady who won the contest signed up 8 people in one night. I was amazed.  I tried to sell memberships to people I had known for at least 12 years and, according to her, she went to a community board meeting that was being held across the street from her boyfriend’s apartment.  She only knew 2 of the 8 people that she sold memberships to that night. Ms Sales Lady stated that she simply started a conversation with each of her prospects and tried to determine if they might be interested in products she offered. If they showed interest, she offered them a membership and convinced them that even if they weren’t ready to buy something it was a good idea to have the membership when time came that they wanted something.  I knocked on neighbors door around 6:30pm and showed them catalogue and told them that they could get anything out of book at a discount if they paid $25 dollars a month indefinitely.

Mistake #4: Lack of Right Skill Set. Don’t try to put the square peg in the round hole. Choosing the right business to get into is like trying to find a romantic companion.  You have to look for something that compliments who you.   If you’re not a salesman then a MLM might not be the right fit for you.

Can’t Fake it

After the training program ended I was assigned to a mentor to help me work on my sales pitch.  My mentor was in the previous training program and he won the contest to get bumped up to Diamond Distributor status. He was nice and energetic. and all about the business. Over the 2 weeks that I worked with him he ate, slept, and breathed membership sign ups.  One night he left a message on my machine at 11:45 explaining how he had a brainstorm on how I could improve my numbers if I learned Spanish and started making presentations in Spanish. He offered to take up Spanish as well to help me learn it quicker. After three weeks of dealing with this company I couldn’t stand the thought of making another presentation. In English or Spanish.

Mistake#5: No Passion. This is the most important thing to your success with any business.  if there is no passion there will be no success. There are people that manage to do well in areas where they aren’t passionate.  They rely on skills and knowledge. But I wouldn’t consider them successful because my definition of success includes happiness and freedom.  And I don’t believe in happiness and freedom without passion.

Hope it helps, leave a comment and let me know if does.