Numbers… Win or Lose by Them

I am often fascinated by people who can’t seem to see the forest for the trees (please excuse the platitude). The president of an insurance company told me the secret of why they are so successful. They have done such a good job selling for a large insurance carrier that they worked out a deal where the carrier now transfers all new prospect calls to his company and those leads are like free money. However, another part of that deal is; the insurance company provides a kickback of 35% to the carrier as payment for the leads. It is a win/win and everyone loves it… except for a few agents who think they are being taken advantage of my having to give up 35% commission on every sale. The agents who sell the leads from the insurance carrier have a greater than 50% sales ratio. The end result is many agents will make $50k to $100k during open enrollment.

The agents who want to keep their commission also complain about paying 20% of their commission to the FMO… who provides leads, phone and office space to the agent and they only pay for a lead if they sell it. The agents on this plan make $30k to $80k depending on how many extra hours per week they’ll work and how experienced they are.

Then there are those who decide they don’t want to give any of their commissions away so they end up working on their own from home. They refuse to pay for leads so they instead pay for advertising and wait for the phone to ring. After a few months they come to the conclusion that insurance is a terrible industry and the only people who make money at it are con artists and thieves. They lose their business and go to work for Home Depot.

Guess what? It costs money to do business! There is no getting around it. It costs money or time to get business and if you are hoping you can do it with time that happens to be the long path to success. Even large companies will put 30% to 50% of their profits toward marketing/sales because that is where the business comes from. I once asked a business group, “If I can make you $1 million in profit next year, would you pay me $10 million. A few said, “Where do I send the check.” But most said that would be immoral or such a deal wouldn’t even make sense because they own the business so they should make the most money. I then asked them how close to a million dollars profit will they make next year without my help. There was engendered that deer in the headlights look.

Have you ever wondered how many billions of dollars Bill Gates had to spend to be worth $80-$100 billion? Probably not but I bet it was at least 30% of his potential commission. Something you may not be aware of: If you are the brain child of the next great trend and go through the efforts and spending of thousands of dollars on building a prototype and patenting your idea; when you finally find a company willing to manufacture and market it, do you have any idea what your royalty will be? 3%-6%, that’s it. If you write the great American novel and a publisher picks it up, do you know how much you will be paid for each $29.95 book sold? About 50 cents to a dollar. If this is true, how do authors, inventors and Bill Gates’ get rich? Because they know if they went house to house to sell their book for $29.95, so they could retain all the commission, they may sell 2 or 3 per day and have a hard time making ends meet. If they give up $29.00 per book they could earn hundreds of thousands to millions of dollars because of the effort of hundreds to thousands of people selling it as opposed to them selling it house to house.

Starting out? Maybe you do need to go house to house for a little while but you had better try to get out of that mode as quickly as possible because it is very limited. As soon as you can start paying others to tell the world about you and your service, the faster you will make money. So here is another way to look at it: Would you rather make 100% of $1,000 or make 10% of $100,000? (For those who are not sure of the math that is $10,000).

So far we have been talking only about the money portion of the equation but what about your time? How much is your worth? Well, if you spent 6 hours knocking on doors and sold two books at $29.95 per book, your time is worth $10 per hour. If you spent 200 hours writing, editing and getting a publisher to pick it up and sell your book at 50 cents each but they sold a half million books, that would be $250,000 to you at $1,250 per hour.

When someone is offering to save you time or help you make more money than you could ever dream of achieving on your own or without their help, don’t be a stupid, selfish, ignorant dork! They know they are worthless if their efforts don’t make you an elevated amount of money so accept their offer, be grateful and when they make you rich, give them a big hug and a kiss (it is permissible to ask the guy to shave before the kiss) or at least a great big thank you. You will only make, on your own, a fraction of what you will accomplish if you can get others to assist in your success; and that will be but a fraction of what you could accomplish if you can get thousands or millions of people to assist in your success.