State of the Industry
 

« Previous Article
Next Article »

A Networking Population Explosion

The Four Greatest Fears of Starting Your Own Business

The Academy of Network Marketing?

The Code of the Business

Your Time Is Now

The Village is Back

Hot Times Ahead                                   

WHEN RECESSION HITS THE ECONOMY, NETWORK MARKETING BOOMS

If you're in network marketing, there's good news, and there's bad news - and the great news is that, for you, they're both good news.

In good economic times, people are less interested in career alternatives but they can easily afford to buy more consumer goods. In bad times, they crave new business opportunities. Today, we could soon be facing global recession - and tremendous worldwide opportunities for you.

The U.S. economy is cracking apart due to mortgage meltdowns that are causing great concern worldwide. Fears are that an American economic dive will hurt the entire world economy.

U.S. and worldwide, people are beginning to worry. Once they start worrying, they quit spending money. This "psychology of fear" fuels bigger recessions. I'm not saying there is going to be a depression, which is much worse than a recession. What I am predicting, based on surveys conducted by our company (which have proved exceedingly accurate over the past 20 years), is higher unemployment and underemployment - people forced to work for less money than their qualifications would warrant.

Our Countercyclical Business  

General economic theory holds that there tends to be a recession about every eight years. The entire history of the modern United States reflects this boom-and-bust cycle. Consistently, network marketing has grown during the "down" periods. PER CNBC CURRENT VIDEO click here

The oldest network marketing company we can track is the marine-vegetable (seaweed) supplement company, Wachter's, which started in 1937 near the bottom of the Great Depression. Nutrilite took off in 1945 during the economic decline immediately following World War II. Shaklee and Neolife fared well in the post-Korean War slump. Amway got a good start building with the slump in 1958. Mary Kay started with the downturn in the 1960s. This theory held true in 1992 when Alliance, Kaire, Life Plus, and a number of other companies started up and boomed (then later failed due to legal problems, partnership disputes, and  mismanagement after the recession). Others like NuSkin went into hyper growth due to the same recession and became billion dollar companies.

In the chart below note that during the depth of the recession indicated by the blue dotted line retail sales by major retail outlets took a dive.  Direct sales (90% are MLM) the solid yellow line jumped as store front retailing dived.

Source: DSA and MLM Watchdog

Understanding the relationship between low-cost entrepreneurship and economics is important. During the past few years, the world economic boom has made people complacent. In the U.S., the jobless rate dropped to all-time lows of less than five percent. People had to be sick, lame, or lazy not to get a job. Hamburger flippers got higher-paying jobs, such as assembling computers, and their incomes rose. Rather than looking for an alternative to a job or seeking extra income, these folks sat around and watched television.

When recession hits, those with any intelligence are going to scramble to find alternative sources of income. In their frantic searches, they are going to find that the best alternative is network marketing.

We followed the increase in growth of several major network marketing companies operating during the recession of 1973-75. Companies that were not doing badly when the recession started, they had a fair amount of growth. However, when the recession came, they took off like rockets!

During the early 2000's recession, MLM company growth rates jumped higher than they were before the recession. See the chart below at 2002 (November 2001 was the benchmark) and look at the following growth.  This was due to two reasons: (1) Fear leads people to new income sources and they WORK the opportunity, not watch TV.  (2) The doubt of the recession lingers in the minds of people so there is an "aftereffect". (3) During the recession the company grew a  "freverant" distributor base, recruiting more new people that lead to exponential growth.

Source: Alexa.com

Another factor that will fuel the growth in network marketing is that many Baby Boomers have put their life savings into the stock market. With the market's recent upward spiral, many Baby Boomers have resumed their high-flying, fast-spending ways and have meager savings except for stocks. With the inevitable, cyclical decline of the stock market, they will see their retirement plan funds lose 25 to 50 percent in value. Panic will follow. Baby Boomers with sense will be looking for secondary ways to build a residual retirement income.

Grab your hat and prepare for the next boom in network marketing. If you are a newcomer, study the industry closely (and quickly). If you are an old-timer, get out your contact lists for the last two or three years. In a recession, they will be solid gold! All you have to do is get out there and help people out of their economic duress.

Now is the best time to grow your network marketing business. Whether you are a veteran or a beginning network marketer, the future is bright. Soon consumers will be looking for the best quality at the best prices. Where do they find it? In the quality products offered by network marketing companies.

Recession causes people to open their minds to gaining alternative sources of income. If they are still employed, they are worrying about the possibility of losing their jobs or having them downgraded. If they are unemployed, they are seeking ways to build their income without spending large amounts of money to start another business.

Network marketing is the ultimate "recession-proofing" for your economic life.

About Rod Cook B.s., M.A., M.B.A.: Rod is recognized as the major academic researcher in the MLM - Network Marketing world. His majors include many hours in epidemiology and statistics that give him research tools no others in the MLM Arena have.  Rod keeps a list of  over 1500 MLM companies on his MLM Company World Directory and this alone is a research tool no other really has.  As the MLM WatchDog, Rod can pick up a telephone and call any company owner in the world and get a true reading on what their sales are.  His reputation for honesty, integrity, and "telling it like it is" makes him an icon in any business to include franchising and business brokering.  Rod says, "I have made over a million dollars a year during recessions!  I love a recession!

« Home

NML - Key words: recession, economy, MLM, Network Marketing, U.S., world recession, MLM Boom, recession proofing, end.