Friday, March 13, 2015

Businesses Don't Profit For 5 Years?

One of the things I heard as an IBO and I believe is still said in some Amway meetings is that conventional businesses do not profit for up to five years. That's bogus. Conventional businesses make a profit as soon as they sell their first product. They may not have a net profit right away because of the initial investment into equipment and rental property, but they do profit by selling goods. The same principle would apply to an Amway business except that Amway IBOs have difficulty selling products. If you opened an Amway catalog and compared their prices to local retailers, you would know what I'm talking about.

Despite the small start up costs and the little to no overhead costs, most IBOs never turn a profit. I will acknowledge that many IBOs probably never do a single thing once they sign up. I believe there is an underlying story behind this as well, but I will move on. Out of the more serious IBOs, even in this group, most of them will never make a net profit if they are using tools. Factoring the cost of the website, the voicemail, standing orders, books and functions and cds, IBOs simply get drained of their money a couple hundred of bucks a month at a time. Amway uplines meanwhile, are earning profits on product purchases and someone upline are also earning profits on the tools. The tools carry a higher profit margin so it would make sense that some upline earns ore from tools than from Amway.

Toss in other challenges such as high prices for many products (higher than local retailers) and a spotty reputation from IBO behavior such as tricking people into meetings and you have an opportunity with nearly insurmountable handicaps. Yes, a few rare few and usually charismatic people can overcome these odds, but only one or two out of tens of thousands are able to do so. And even those whe reach the pinnacle of diamond, may not be able to maintain qualification. It's very common for someone to reach the level of emerald or diamond only to backslide and not qualify the following year. So much for residual income and walking the beaches of the world.

So I don't know the detailed statistics about how long it takes for a conventional business to turn a net profit. It may take up to five years. But based on my experiences and some number crunching, I'd have to say that the vast majorty of Amway Business Owners NEVER TURN A PROFIT - EVER, and most of them ending up with net losses when business expenses are factored in.


Anonymous said...

The only reason Scamway works for the few is because it does not work for the overwhelming majority who try it. Since nobody but Amway distributors themselves use that overpriced Scamway junk the only way to make any money peddling it is to either recruit an active downline of about a thousand people (good luck) or sell the tools to the 99% plus who are losing money at it and think buying the tools will change that. If they were to actually to make anything they would see no need to buy the tools.The success of the few in Scamway cannot exist without the losses and misery from the many. Simple math, that's why Scamway shifts the focus from the real numbers to the wildly theoretical ones.

quixtarisacult said...


Many traditional businesses manage some profit in the early years because they amortize their start up costs over a period of time. Starting any kind of business is risky. I've seen a lot of restaurants come and go, many times in the same location. Strict management principals and a good business plan only go so far. The product must sell, and the rent and employees must be paid.

Amway isn't really a business. Even the IRS faced with thousands upon thousands of losing Amway business write offs has determined that Amway 'businessmen' do not present a business plan that has any real chance to turn a profit. Consuming your own inventory (by plan) isn't a business. Amway has recently decided to counter pyramid scheme allegations by simply considering all Amway distributors as customers. Our dear friend IBOFB has been saying for as long as I can recall that Amway distributors are essentially customers. I actually agree with him on this point. (Hopefully I am not struck by lightning?) Amway 'customers' buy from a monopoly. It still remains a 'closed market.' These erstwhile 'customers' believing in future 'redemption' pay exorbitant prices. The hope of redemption and profit comes from the churning investors that hopefully will follow, all willing to pay more in hope that they will someday sit on top of their own segment of the pyramid.

Of course, you know this. What I say is hopefully of some benefit to the inquiring reader who has just been shown the Amway plan, and is trying to decide if it is the right business for him or her.

Anonymous said...

I bet if Lucy from Peanuts set up a counseling stand for Amway cast offs and their latch key kids she'd make a fortune inside of 5 minutes.

Joecool said...

Your comments are spot on. That's why Amway in my opinion, is a product based pyramid scheme. The law might say they are legal but the way it is run by some leaders is a flat out scam/pyramid.

Joecool said...

That's why Amway should have been shut down in 1979. They skated that inquiry and millions have lost billions since then.

Anonymous said...

Late to the party but I'm going to say I am agreeing with almost all of the comments as someone who has just been recruited a couple weeks back by WWG I have gone to a couple meetings where the pyramid aspect is discussed.
Here is how they lay it out to you:
Who's the CEO of Amazon or Microsoft they are at the top of the company they make the most money or own the most stock below them are EVP's let's say avg Large Cap Corp. Has about 15 to 20 9f these guys below them are about 25 to 50mgrs who then manage about 100 people and then we get to the lowly worker bees that number in the 1000s. The logic when drawn up for you is quite a powerful argument, in fact one can argue the true pyramid is the current system we live in as most corporations operate this way. In exchange for building their asset they give you a one time bi-weekly paycheck. There is no arguing these points. All valid points, so the question now becomes, is there a better way to build your own asset and pay yourself? WWG thinks they have a better way using AmWay as the vehicle to do that. I would almost be open to this opportunity if not for a couple of issues I have realized after being shown the overhead operating costs. CommuniKate is a complete rip-off this should be free no fee at all it is nothing more than a glorified voice mail app. Aside from that are the running costs and cost of tools they sell and tickets to the events. As someone who works in Finance and Accounting I cannot justify these running costs to operate and maintain the running costs required to keep the wheels turning. You will be running negative for and very long time in hope that you are able to build out your legs which is very difficult these days. Is AmWay a scam or pyramid scheme, I would say No! It operates to make a profit like any company you cannot call it a pyramid anymore than Apple or Ford is a Pyramid they all sell products we use or consume.
Is it a viable way to build passive income? I would say for most people no it is not. It may be easier if you have a very good income from your S quadrant or main job and want to slowly build the asset over time but the running costs are prohibitive for starving college kids or people looking for short term business startup to profitability. Better off saving that money pay down your debt by becoming very strict on your budget and no living way below your comfort level and means, take that money you would spend every month paying WWDB or WWG and just sign up for AmWay if you like their products am buy from your own store and kids much as you will andkdssctually use. This is the key to making that work. You don't need WWG to accomplish this unless you just don't trust yourself to follow through. The other option would be to start your own small Web based business if you have some unique skill or craft that you can offer with little to no overhead while you keep your regular job to support yourself.
If anyone needs specifics or needs advice I'm happy to share further as Asa courtesy, I don't represent any MLM or mentor groups but I know business and I know how to get sound the needless waste if you do want to pursue this Avenue