Click on the following link to review these new guidelines:
 http://www.gordonhester.com/resources/ftc-guidelines-12-28-09.asp

I know that many of my subscribers are leaders and successful distributors in the Direct Selling/Network Marketing industry.  For years this industry has been going through an increased regulatory movement.  In April 2006, the Federal Trade Commission (FTC) released a sweeping proposed change in its FTC Business Opportunity Rule.  This was a major concern to the Network Marketing industry because the proposed changes would have had a significant negative impact on this industry.  During the following two year period, the FTC received more than 17,000 comments on its proposed rule with the majority coming from companies, representatives and distributors in the Network Marketing business.  The end result was that on March 18, 2008, the FTC responded favorably to the voice of the Network Marketing industry and modified the Proposed Business Opportunity Rule to exempt Network Marketing Companies.

Despite the victory outlined above, the FTC did change its Guidelines on Testimonials and Endorsements effective December 1, 2009.  I have attached a copy of an article from the recent Direct Selling News that was written by Jeremy D. Tunis who is the Direct Selling Association attorney and Manager of Global Regulatory Affairs.  The basics changes are as follows:

1.       The FTC essentially requires that any claim or representation that is different than “what the average consumer  should expect” should have a disclaimer.

2.       The FTC directs companies to have competent and reliable scientific evidence to substantiate any advertising or endorsement that claims a product is effective for a particular purpose.

3.       The FTC tightened the rules as it relates to endorser’s (which I believe includes distributors) where the endorser and company can be held liable for statements made by endorsers.

There was also an interesting section of this article that discussed “earnings claims”.  The DSA and regulators seem to share a similar position on this matter – if you are making an earnings claim or earnings potential claim that does not represent results that are “typical and average”, you need to include a disclaimer to state that fact.  For those of you who generate incomes with your company that is over the average, or utilize testimonials of other leaders whose income story does not represent the “average distributor”, you might want to consider including a disclaimer along with those stories.  Please note that the issue is NOT whether the income story/testimonial is true.  It is about whether the income story/testimonial represents the norm.

So what does all this mean to me?  First, I think this adds legitimacy to the Network Marketing industry.  It shows that the FTC recognizes the industry as a legitimate business model and that it continues to make efforts to improve the industry on a regulatory front.  Second, it gives us a basic picture of where the industry is going in the future from a regulatory front.  The industry wants consumers to have information that (1) creates realistic expectations, and (2) allows them to have the appropriate information to determine if a product, service or opportunity in the Network Marketing business model is right for the consumer.  In essence, the regulatory environment is moving toward taking salesmanship and misrepresentation out of the Network Marketing industry and moving toward providing accurate information to consumers so they can make good choices.  I think this type of a movement is critical to “clean up” the image of the Network Marketing business model, so I see any movement in that direction as a positive.  Finally, I think the regulatory climate is moving toward requiring scientific proof for product claims with a general principle of “science over salesmanship”.  While this might create challenges for companies and distributors who don’t have scientific research to support their products (regardless of the reason), it is going to REWARD those companies and distributor that have PROVED that their product has merit to the end consumer.

In closing, I see these types of guidelines and changes as a major positive.  I have always felt that the biggest downfall of the Network Marketing industry is “over promise, under deliver”.  While many companies do not represent that statement, I find too often they are the exception vs. the norm for this industry.  I do believe the regulatory bodies, DSA, and Network Marketing companies share a similar belief that these types of changes are positive for this industry.  They will help to clean up the image of Network Marketing and provide long-term stability to this business model.

Wishing you all a happy and prosperous 2010!

Greetings Friends…

I want to take a moment to wish you all a wonderful holiday season!  For me this season has always been about family, friends, and the spirit of giving.  I am so thankful for each of you, and it is my hope that this New Year will bring you great peace, joy, happiness, and of course…success!  Thank you for your support and friendship.  I look forward to all that 2010 has in store for us!

  The Key to Surviving and Thriving in an Economic Winter

   (Lesson #2 – Why Focusing on Income is the Best Way)

 One of the lessons I have learned in life is to focus on what you can control because any energy you give to what is out of your control only hurts the momentum process.  Does that mean you ignore what is out of your control?  Absolutely not!  The lesson is that you must have awareness of factors you control AND those you do not control in order to make good decisions.

In school I was trained in industrial engineering and accounting.  Those disciplines taught me to focus my energy on efficiency and expenses.  However, one day when I was working on my personal budgets, I asked myself an interesting question – what would happen if I focused my attention toward making more money vs. trying to control what I was making?  That question had a profound impact on changing my thinking and focus.  The day I realized that focusing on income was the FASTEST WAY to drive the wealth accumulation process, my financial momentum went into overdrive.

Why am I sharing this story with you?  Because I think right now might be the most important time in history to implement this type of thinking if you want to survive and thrive in an economic winter.  Let me explain why.

For the most part you have the ability to control both income and expenses.  However, there are expenses that are beyond our control.  Equally, there are factors in our economy and world that will impact both income and expenses even though we control those areas to some degree.  Here is an IMPORTANT REALIZATION that is critical to understand if you desire financial momentum — no matter how tight you squeeze your money, the world out there is going to squeeze it tighter. 

Let’s take a look at a couple examples of how expenses that are out of your control will impact your finances.

Taxes – Historically speaking, we currently have a very low tax rate.  Of course we pay taxes in various ways (Federal tax, social security, property taxes, sales taxes, etc.).  There is one common element to all these taxes – they are controlled by government.  Given the economic state of affairs at all levels of government these days, the logical conclusion is that taxes are going to be higher in all areas.  Just look at Federal taxes as an example.  We currently have the largest deficit in the history of our country.  Before the Lehman Brothers collapse, it took the Federal Reserve nearly 14 years to double the cash and reserves of the nation’s banks.  However, after the collapse, it took the Fed just 112 days – barely four months – to double the monetary rate.  Before the Depression, taxes were 25%.  By 1944, Federal Income tax peaked at 94%.  So ask yourself this question.  Given the current state of Federal, State and Local Governments, do you think taxes are going higher or lower in the future?  I think the only logical conclusion is that taxes are not just going higher, they are going much higher.

Fees – To me, fees are just another form of taxes.  In reality, taxes and fees are how the government raises income.  However, I have noticed over the last year that everywhere I turn fees are increasing.  While it is normal for fees to move with inflation, it is my opinion that fees are moving at a much higher rate.  Even worse, we are starting to see fees that never existed in the past.  The last time I was in California I saw a report on TV about a “crash tax” where you basically get charged for emergency services to come to a crash scene.  Remember, with the exception of the Federal Government that has the ability to print money, all governments need to live within their means.  Given that expenses have already been cut, the next phase will be increasing both fees and taxes. 

There are many other examples of how the expenses we cannot control will be increasing.  The simple truth is that more taxes and fees are required for governments, businesses and society to survive.  Remember what I said at the beginning of this blog; awareness is a key to good decision making.  The way to survive and thrive in an economic winter is to accept a few basic realities:

1. You can only manage your money to a degree.
2. What you cannot manage or control (taxes, fees, inflation, etc.) will become the largest part of your expenses in the future.
3. The best way to sustain financial momentum is to focus on income creation.

I will leave you with one final thought.  You MUST start the process of creating income BEFORE the expense train gains steam.  You need to be proactive in focusing on income creation now because the longer you wait, the higher the probability that this economic winter will be a painful one for you.  In the end it is important to remember that even in an economic winter, you can win and you can win BIG!!!!  You just need to start the process now and focus your efforts in the right place – on making more money.  

Next Lesson:  My next blog in this series will explain strategies on ways to maximize income.  Knowledge has value when it is put into action.  I will examine some basic strategies that you can implement in an effort to speed up your financial momentum.

The Key to Surviving and Thriving in an Economic Winter

(Lesson #1 – Understanding the Process of Wealth) 

Let me begin by saying that it is my belief that we are in a long economic winter which will be different than any of us have faced in our lifetimes.  At the core we will see the greatest global de-leveraging in the history of society.  My goal is not to debate or explain my conclusions in this blog.  If you think differently, then I respect your opinions and whatever choices you feel are best for your future.  However, history teaches us a very important lesson – adversity and chaos are often a catalyst to opportunity.  We just need to understand how to play the game. 

The question I’d like to address is this:  How do I win the game in an Economic Winter?  In particular, how do I win the economic game?  This blog is only part one in answering those questions.  First, to win any game, you need to understand how it works, so let’s begin by looking at how we accumulate wealth.

Step #1 – We have to have a source (or sources) of income.  It is hard to pay the bills when you don’t have money coming in.

Step #2 – We have to be able to live under our means.  No matter how much you make in life, you have to spend less.  That is 101 of Wealth Accumulation.

Step #3 – We have to be able to accumulate wealth.  The ultimate goal is to have your investments and assets work for you so that you have more choices and time freedom in life. 

Income - For most people, income is generated from working a job.  For about 28 million Americans, they own their own business.  Then there are the fortunate few who have enough money/investments, and can live from the income produced from those investments.  So what are the primary goals when it comes to income?  First, try to maximize it.  Maybe that is having your own business.  Maybe that is focusing your time better on activities that drive income.  Maybe that is getting paid better for your value in the marketplace.  The strategies vary but the main goal is to make more money regardless of your strategy.  Second, try to take control of your own destiny.  To many, a bad economy is often a sad reminder of the consequences of dependency (whether on a job or a relationship).  Any strategy that gives you more control of the income creation process will likely provide financial momentum. 

Living Below One’s Means - In my opinion, this is a simple concept to understand but apparently a hard one to practice in real life.  Very few people live under their means.  Before 2008, the average American consumer spent 6% more than they earned for the six prior years.  In just one year that changed to the average American saving 3%.  Why such a big swing?  The reality and severity of the economy caused change in consumer behavior.  For the first time in years, consumers are now trying to live under their means.  They are moving away from debt (de-leveraging).  For many this is a very painful process because the debts of the past have become an anchor to surviving in today’s economy and thriving in the future.  Some believe that consumers will eventually return to living over their means.  I tend to believe that this economic downturn is different, and we will see a paradigm shift in consumer behavior. I also believe this is a global change, not just a shift in American behavior.  

Wealth Accumulation – I have lost track of how many failures I have seen in this area of the process.  First, people fail to understand the core principle of Accumulating Wealth – Risk Management.  Here is a simple way to understand risk management.  If you avoid mistakes, the rest takes care of itself.  In other words, you don’t want to dig a hole that is too big to dig out of in the future.  Second, people fail to learn that your two biggest risks in the wealth accumulation process are (1) a lack of education and (2) people.  Almost without exception, every investment mistake I have seen in life was due to a poor relationship selection.   Equally, those choices were made because (1) the investor didn’t have enough knowledge to understand the character and value of the investment professional, and/or (2) greed took priority over risk management.

The simple path to accumulating wealth can be summarized as follows:  Maximize income, live below your means, and avoid mistakes so your money can support the income process (and elevate lifestyle) over time.  Understanding this process is important as I expand upon the concept of Surviving and Thriving in an Economic Winter. 

Next Lesson: The Key to surviving and thriving in the future is CREATING MORE INCOME.  My next blog will explain how I came to this conclusion.  It will look at the limitations of budgeting as a means to drive the wealth accumulation process.  It will discuss how things out of your control (taxes, fees, inflation, etc.) will create the biggest money grab in the history of society.  In the end, it will help you understand that if you really want to create financial momentum, your best chance is to drive the income process. 

Until Next time, keep moving forward.

Dear Friends,

Today the world lost one of its great stewards for Personal Development, Jim Rohn.  I know many of you learned from Jim and are fans of his teachings.  Those teachings made a profound difference in my life.  While today was a very sad day for the legions of Jim Rohn fans and friends, it is also a reminder that we were blessed to have had him as part of our lives.  One of Jim’s quotes reads as follows:

“The Big Challenge is to become all that you have the possibility of becoming.  You cannot believe what it does for the human spirit to maximize your human potential and stretch yourself to the limit.”

Jim is a perfect example of that quote.  His efforts left the world a better place.  I hope Jim left this earth realizing the difference he made to so many, and with peace in his heart knowing he lived his life to its full potential.  RIP Jim.  I hope your family, friends and fans find love and peace in your memories and contributions.

You can click on the following link to Jim’s website to read about him and post on his website.

http://tribute.jimrohn.com/“>

With a sad heart,

Gordon Hester