Thursday, May 13, 2010

What Is The Value Of Your Amway Business?

Many many people see the Amway plan, sign up in the hopes that Amway income will help them fulfill their dreams and that they will walk away from their jobs and collect lifelong residual income while walking the beaches of the world while living in the lap of luxury. Sadly, most IBOs will never make a profit or even sponsor a single downline. These IBOs may continue in the business for a while but will eventually quit when they see the writing on the wall. Unfortunately, many IBOs suffer a financial loss before they realize what's happening and walk away.

But wait, you're an "independent business owner". So instead of quitting, why not sell your Amway business? I wonder if any IBOs actually think about what their business is worth. I mean a diamond could either walk away and collect income, or sell their business and live happily ever after right? Here's some food for thought. Why are there any instances of diamonds quitting or resigning from Amway? Why would they just quit when they could either walk away and collect an income "forever" or sell the business? Maybe there is no residual income. Afterall, when two thirds of IBOs never even last a year, it's hard to keep that volume moving month after month.

I believe diamonds quit and resign because their business is worth very little or nothing. And most Amway businesses do not even generate a net profit. For IBOs who are seriously pondering on this very important message, try looking up this topic in Amway's rules. There are very complicated steps to be taken when selling your AMway business as each person upline must be offered ownership (To the best of my understanding). This process can go on for a long time and the attrition of your business could render it worthless before you can find a buyer, if you have a buyer at all. Also, if you quit, the downline in your group would be surrendered to the immediate upline anyway. So why would your upline want to buy your business?

Also, as an Amway business owner, what do you own? You don't own your downline, although their volume runs through your business. You don't have staffing and you probably don't have equipment or a rental property or any bonafide assests. You may or may not have some inventory but you are not required to hold any.

So IBOs, I ask you. What is your business worth? What is the value of your business? Little to nothing?


Anonymous said...

It's effectively just a J-O-B as much as IBOs might not like hearing it. And frankly, there's nothing *wrong* with a job. A 'business' would really be something where you could completely replace yourself by having someone else follow instructions and systems you set up. The upline BSM organizations are a *business* (which, ironically, employs people by giving them J-O-Bs!)

Anonymous said...


Joecool said...

I agree. An Amway IBO is basically a commissioned sales person. The only difference is the ability to sponsor downline and have their volume run through your business. But people get fooled into thinking they are actually independent.

Anonymous said...

If one is just planning to build the business from scratch all the way to diamond, I wanted to do the math of what the net present value of such a project may be. So, here are some assumptions.

Year 1-5: Lose 10,000$ per year
Year 6-7: Break even at Platinum
Year 8-9: 24000$ per year at Q12
Year 10-11: 60000 per year at Emarald
Year 12-20: 200000 per year at Diamond

I am not accounting for increase in income over the years. It is safe to make the assumption because the increase not faster than inflation. And, so in terms of real income (net inflation) it is constant. Since pursuing the business is a risky operation (chances of going diamond are pretty slim), I use a discount rate of 15%.

So, put these numbers in an excel sheet, and you are going to get 213,998$. Round it up and it comes to 200K.

So, even if you accomplish the dream, this dream project is only worth 200K today.

I did the same calculation for an average engineer. Here are the assumptions:

Year 1-5: 60000 Entry Level Engineer
Year 6-10: 80000 Staff Level Engineer
Year 11-20: 100000 Senior Level Engineer
Pursuing such a career path is much less riskier than the income projections shown above for the business. So, I discount using 5%. Do the math and it is worth 1,000,517$ as of today.

That is 5x more valuable than pursuing diamond. I am not even counting for all the opportunity cost of not spending time with kids etc.

Anonymous said...

What's with the math?! What are you trying to prove? Is it that you had good grades in school? Frankly, I don't get your point. This business is not about sitting down and doing math but about doing work by getting off your ass and sweat. Besides, what's with this stupid statement of pursuing a career path being less riskier than going diamond? I know people who have had great careers 10, 20, 25 years and one day they were fired so all that math went from whatever ++ dollars to 0. Happy now? I would rather go diamond and make ++ dollars than rely on a career path to ambiguity. Also, if you were a real father, you would build your business to offer more in return to your kids and wife. If you don't, too bad. You'll the be the impotent and the sap that you're today.

Joecool said...

At least people who worked 20-25 years got paid during those years and were able to sustain themselves, and likely gained marketable skills that they can apply to other areas of employment. Most IBOs don't make enough to pay for their voicemail. What skills can an IBO transfer to another arena? The ability to deciev others?

Anonymous said...

Also, if you were a real father, you would build your business to offer more in return to your kids and wife. If you don't, too bad. You'll the be the impotent and the sap that you're today.

That's a despicable thing to say to someone. I suppose every man in your family leading up to you, has been a degenerate father? I think your arrogance is only surpassed by your ignorance.

What’s really sad is that while you accuse this man of being a poor father; you spend your life lying to chase a fantasy; and not just lying to the victims you manage to scam by your proposal, but to yourself, and more importantly to your own family. Who's the deplorable father really?

Anonymous said...

Hello, I would honestly like to buy your Amway business. If you have a down line structure that is 12% or above, I will pay you for your business. You might be spending monthly expenses on your Amway business and not gaining any profit, but I will give you a couple of thousand dollars depending on your structure and percentage. This is a sincere and honest business exchange offering.


Joecool said...

George, you're lying. LOL