The following is an interview that I did in October of 2004.

I asked Fred Johnston of small business forum, Making The Run, to answer a few questions about the way he builds his business. Mr. Johnston was so thorough that I did not need to ask any follow up questions. I will be posting his answers in three parts due to length. I want to thank Mr. Johnston for taking the time to provide a thoughtful repsonse. If you are a reader of MLMBlog, you know where I stand with regards to my opinions about Quixtar and it says something about Mr. Johnston that he would trust me enough to do this interview. I may not agree with everything that Mr. Johnston says, but you will find that we likely agree more than we disagree.

MLMBlog: I understand that you are building a Quixtar business without "plugging into" one of the traditional motivational groups such as Britt, Yager, WWDB, or TOD, will you briefly explain how you build your business?

Fred Johnston: Yes, but I want to first define Direct Sales.

Direct Sales is an industry where about 90% of the successful companies have a multi level commission plan where you make money selling products and services (not recruiting or selling training systems – even though some of these companies have SIDE business (the AMOs) where people have taken advantage of the tool selling schemes — more in a second). Historically you can clearly see which plans work, and which plans don’t. In a nut shell, you need to build SALES volume to be successful in Direct Sales. You need to keep your overhead LOW to make profits and decrease attrition in the organizations. You will make about 10% wholesale, and 30% gross retail on most core line products (same as you do in any industry).

What the training a tool schemes have done industry wide is make Direct Sales a very inefficient business model. You can clearly see from attrition numbers and the cost of ‘joining’ many of these matrix and binary pyramid schemes have driven the costs up so high that even if someone joins and does not want to build a business, they can’t afford to be a customer. This is why most of these MLM schemes go under – eventually (I’m talking about legitimate companies, not the lotions and potions).

The best systems are those that create sales volume (wholesale (downline) and retail (outside of the network)). The days of ‘selling the dream’ are over. People are smart because of the Internet.
Hopefully you are not caught up and hooked into the dream. Don’t get me wrong, the dream is very important — but you can’t sell a legitimate business opportunity selling the dream and expect it to last (as everyone in Direct Sales has figured out).

Part two of the three part interview will delve into the Amway/Quixtar Motivations Systems and Mr. Johnston’s perspective on their history and current perspective on the business model employed by these systems.

You can contact Fred Johnston at: freddmf@makingtherun.com