IBOs And Taxes?

 I came across this blog and while I've seen similar posts by Amway business owners, this one was interesting because of the detail and the passion the blog author has. In a nutshell, he lost money in Amway but calls it success because after he received his tax refund, he's now claiming to have a net profit. It's amazing what these Amway/WWDB leaders can get people to believe.

https://transparencyofadreamer.wordp...sing-in-amway/

Below are excerpts. The blog owner claims to have made a net gain due to a tax refund. He doesn't explain how he arrived at that refund but apparently his losses in Amway lowered his tax liability for whatever income tax was already withheld from either his paycheck (job) or from paying estimated taxes in advance for a business or some other venture. It's quite scary and illustrates how some people can hang on in Amway for so long even when suffering losses. The IBO's are programmed to "think" they actually made money!

Based on what they have taught me, even though I barely had any increase in my overall organization (ie: I was pathetically lazy, didn’t put any work in and barely increased the size of organization – #sadface) I STILL DID NOT LOSE MONEY!

2013 total Cost Run Down:
Communikate: $443.40
Digital Delivery: $300.00
Premier Membership: $599.40
Major Functions: $595.00
Major Function Hotels: $750.00
Business Support Materials: $240.00
Total Business Cost: $2927.80

Lets bring it all together here, folks.

Total Amway Payout in 2013: $2112.36
Total Cost To Run Business: -$2927.80
= $-815.44

Just like I said last year – “Oh No! I’ve been scammed! I’ve lost money! My upline lied to me! I didn’t put in any work to sponsor anyone this last year and its everyone’s fault but mine! The business doesn’t work! What a total scam!!!”

Hold on now Mr. Negative – Due to running my own business in a country that incentivises business owners to run their own business I received tax benefits that entitled me to a refund for the 2013 year in the amount of $2409.76. Lets do this again, shall we?

Total Amway Payout in 2013: $2112.36
Total Cost To Run Business: -$2927.80
Total Tax Refund For 2013: $2409.76
= $1594.32

So, as I wrap up I hope I made my point very clear – you will not lose money running your own Amway Business powered by World Wide Dreambuilders…. IF you are diligent with your finances, if you don’t blow your budget your coach sets with you. You WILL lose money running your own Amway Business powered by ANY training system IF you don’t have a budget, if you don’t ask for help to set a budget, if you ignore your budget etc.

If your potential sponsor is affiliated with WWDB and is doing what they are taught, you should be educated on some of the numbers I shared above in regards to cost for access to your training and mentorship system.

A Viable Business?

 Over the years I have been debating with Amway supporters, I cannot see what is so great about the Amway opportunity. Are some of these Amway defenders that stupid or dense that they truly believe that a business where one out of a few hundred people might make a profit and most of the remaining IBOs will lose money is a good opportunity? I'm not talking about people who sign up and "do nothing". Many IBOs sign up and put in a great deal of time, effort and money, only to find out that the system simply does not work (especially in the US) and they make a business decision to quit and/or to do something else.

Of course there are some people who make money in Amway. If nobody made money, then the opportunity would cease to exist. But it is basically exploitation of the downline that accounts for upline success. Amway's admission that sales to non-IBOs are low, confirms this. Thus, certain upline make their income from their downline's PV volume, and on tool purchases. I mean even a lottery has winners. Even Ponzi schemes and other questionable opportunities have some winners. This is not to suggest that Amway in not legal. Amway is perfectly legal, but the way the opportunity is set up, those who profit, primarily do so at the expense of their trusted downline.

There are no groups that I know of where all the IBOs can win and earn a profit. I would guess that there might be a few rogue groups who only focus on retail sales, and while these groups can be profitable as a group, they are few and far between. This is because most IBOs fall under an LOS such as WWDB, BWW, LTD or N21, and these groups all seemingly focus on recruiting of new IBOs. Yes, they may sprinkle in some suggestions about selling goods, but generally speaking, their "training" materials consist of motivation speeches, feel good stories (whether true or not), and the theme of never quitting while continuing to purchase more tools.

Some upline have the nerve to start teaching downline that their Amway business is not about making money, but to save your marriage, make you a nicer person, or some other diversion to make you forget that you are losing money month after month after month. Some groups even mix in religion and politics into their functions and meetings. As far as I can see, the typical business building IBO signs up, gets some of the tools and attends a few functions, and finds that the products are hard to sell because they are not priced competitively with other retailers, and that a damaged reputation is nearly impossible to overcome. These IBOs realize they are not going anywhere, and they walk away, chalking up the losses as a life lesson. But apparently, many uplines who lied and deceived in the past are continuing to do so today, often just revising history for their benefit (i.e. lying about making any profit on tools).

Many IBOs, prospects, information seekers and critics read this blog. My question is very simple. What is so great about the Amway opportunity? For most, it is just a bad use of time and money. While some may exist, I don't know of a single person who "did the work once" and sat back collecting barrels of Amway money while sipping Mai Tais on the beaches of Jamaica. I see crown ambassadors working as hard today as they did many years ago. Diamonds losing homes to foreclosures, a prominent diamond in bankruptcy proceedings, and a hoard of WWDB diamonds apparently selling off mansions that they allegedly paid for in cash. (It is quite possible that their lifestyles are simply not sustainable).

Where is the benefit in the business for the typical IBO? Just as there are some diamonds, there are lottery winners. Displaying a lottery winner doesn't make it prudent to spend your money on lottery tickets. Displaying a diamond's lifestyle doesn't make Amway a good opportunity. While Amway is a business and not a game of chance, the results of either, sadly are eerily similar - that is a few winners and millions of non-winners.

What is so great about the Amway opportunity? I don't see it.

Be Accountable?

 Part of what Joecool perceives as the problem with the Amway opportunity is the utter lack of accountability of upline leaders. They may tell you to trust them, to submit to them and simply copy or duplicate what they have done, and they imply that you will get the same results. Many downlines over the years have put in blood sweat and tears into the business only to suffer massive losses following the system. Upline will then place the blame on the downline. Citing that they either did not try hard enough or they didn't put in enough time and effort, or they didn't do things just right. Despite a shockingly low success rate of system IBOs, nobody seems to fault the system and upline as being flawed. And nobody seems to question whether upline is at fault. It's a game of blaming the victim.

In my observations, I would say that many financial systems are similar. Whether it be BWW, N21, WWDB, real estate gurus or other systems, the success rate is low. Many systems that advertise on television will have a disclaimer that a success testimony is a rare or unique experience. I believe it is similar to the systems in Amway. Dedication or continued spending on the system is not the problem. The problem is often the system itself. It can work for some exceptional people. These people were likely to succeed in other venues anyway. The problem is that is does not work for the majority of people.

The bigger problem, is that for many many years, some uplines have lived high on the hog off of the dedicated tool purchases of their downline. All the while, quesitonable or bad advice was given to the faithful downline. Advice such as quitting a job to attend a function, skipping financial obligations such as the rent or electric bills to buy more tools. One upline even said your family can skip a meal because the standing order may contain the one thing you needed to hear to make your business grow. I have personally seen couples lose their homes and go bankrupt because they followed upline advice. Upline to "has their best interest at heart". Granted, the couple has some culpability in these decisions, but uplines who give this advice seem to get a pass.

Where is the accountability? Some of these uplines who give and gave bad advice, are still active today, and some are still giving bad advice to their downlines. Advice that profits upline and drains downline. Even with valid complaints, it appears that many uplines avoid any accountability. For some, perhaps there is poetic justice, such as diamonds having their homes foreclosed. But as many uplines have nobody to hold them accountable, do you really want to do business with these folks? Would you invest your retirement money with a broker who could not be held accountable? Would you have your car repaired by a shop whose mechanics could not be held accountable? I believe the answer is not to these questions, yet many people are asked to trust and follow the advice of an upline who is not held accountable for their advice.

The system is credited for the few successes that are visible, but the individual is held accountable for any shortcomings or failures. IBOs, I encourage you to hold your upline leaders accountable for the advice they give you. If they won't answer tough questions or take responsibility, then one should wonder why the upline should be given your trust.

Alternatives?

 One of the humorous things that IBOs often bring up is that someone who sees Amway in a critical eye should bring up viable alternatives. I mean if someone prevents you from falling over a cliff, they should have warned you and given you alternatives right? If I recognized you getting conned by a conman, I should find viable financial investments for you before warning you of the potential scam you are about to walk into? It sounds completely ridiculous, but Amway IBOs have actually made those comments on this blog and some other Amway related websites.

Well, let's explore a few anyway just for fun. How about you stay home and do nothing? For most IBOs, you would be better off financially than committing your time and resources into Amway's products and their ineffective training materials and functions. If you are really dedicated to tools, sending your upline a check for $50 monthly and not buying Amway goods or related training materials would make you better off.

A second job where you actually receive a paycheck is a better alternative. While there's no hype and hopes of getting rich in 2-5 years, you can do much for your future by saving a portion of that paycheck each month. If you are young, this especially applies to you. But anyone can help their future by saving and investing. Even someone who pan handles is more likely to have more net cash than most Amway IBOs. The vast majority of business building IBOs actually have a net loss because of the expenses they incur with training materials such as cds and seminars.

Sure, some people do make money in Amway and some make a lot of money. The problem is they make money by exploiting their downlines and those hopeful downlines basically have no hope. In other words, you profit by selling false hope and false dreams. Basically, you can gain wealth in Amway by being a conman. Can you live with yourself in order to profit at any cost? They sell you on Amway as a financial vehicle, but they turn around and tell you that cds, books and functions are the key to success and then make significant profits from those materials whether even if you make nothing or suffer huge business losses.

I haven't even gone into the amount of time lost chasing prospects and attending functions. Your time might be the most valuable commodity that is lost chasing the 2-5 year dream. Ask yourself this question. Where are these diamonds who did the 2-5 year plan living in luxury and doing nothing? I don't know of any/ Do you?

Climbing A Pyramid?

 Let me start out by saying that Amway, at least to the letter of the law, appears to be a perfectly legal company. Therefore, I am not saying or implying that Amway is illegal. But I believe that the way Amway businesses are run, are like pyramids. In most groups, you will have the lowest level IBOs efforts and tool purchases being responsible for the upline bonuses and tools income. Many many IBOs are fooled into thinking that the ability to surpass your upline or that you don't get paid to recruit downline makes this a good deal. Think about it for a bit. Aren't most Amway gatherings about motivation and recruiting?

Unless you have a very very rare group where actual product sales to non-IBOs is sufficient to cover the costs of running your business, functions and all, then it is true that the lower-level IBO's jobs are the primary source of income for the uplines. How many groups are like that where selling is nearly exclusively to retail customers and not downline? None that I have ever seen or know of. In fact, how often do IBOs even sell enough products to cover their expenses for even one month out of the year? The groups that teach "buy from yourself" end up doing the most financial damage to their groups because the downline's expenses are then covered exclusively from the downline's jobs, bank accounts, or drive the downline into debt. 

I've seen and discussed group structures in forums many times and I can only conclude that tool sales easily wipe out what little profits/bonuses some of the downlines might receive. Only when an IBO is able to sponsor enough downline to absorb the losses for them will they finally break even or make a little profit. I would guess that the 4000 PV level or platinum is where a dedicated CORE IBO would break even and possibly start to make a small profit.  On the other hand, a hard CORE dedicated IBO can still lose money at 4000 or at platinum.    But we also know that most platinum groups have 100 or more IBOs in order to generate 7500 PV. Thus, we can also conclude that less than 1% of IBOs make a net profit. The only way IBOs can earn a net profit at a lower level is to avoid purchasing tools and to avoid paying for functions. Those who get involved in a system such as WWDB or N21 almost guarantee that they will have a net loss. 

Sure, my job may have a pyramid structure with the CEO making the most money. But the difference is that in a company, even the lowest paid employee still receives a paycheck and has money at the end of the month. The same claim cannot be made by IBOs. For these reasons, I believe Amway to be a product pyramid. IBOs and information seekers are free to participate, but I challenge them to sit down and really analyze their ability to make a net profit. In most cases, the analysis won't be favorable. If you are in the US in particular, you may have great difficulty in even being able to discuss "Amway" without getting strange looks your way from others. Good luck in whatever you decide

Get Out Of Debt BS?

 One thing that many Amway/WWDB IBOs like to tout is how their upline teaches them to get out of debt. While on the surface that sounds like an awesome thing to do, it's not what WWDB mentors are actually doing. They want to give the appearance that they have your best interest in mind and that they want you to succeed. At least that's what they want you to think. Sadly, many IBOs get sucked into believing this. I will go on to explain why this is and to give prospects and information seekers some food for thought.

If you have an open mind, you will see my point. Prior to someone joining Amway, they most likely didn't buy any Amway products and certainly didn't focus on spending about $200 to $300 monthly on buying household products, especially if they are single people. So how is buying more stuff than you used to, supposed to help you get out of debt? All you are really doing is sacrificing things you used to enjoy spending on Amway stuff. If you actually made a net profit from your Amway business, that might be okay. But most IBOs are making nothing or losing money while being taught to never quit or that success is right around the corner.

If your upline or mentor is teaching you to get out of debt, are they also advising you to invest any "extra" money into investments? Are they teaching you to plan for the future, in case the Amway business doesn't pan out? Are they advising you to save money? More than likely, the answer is "no".

Your upline will be advising you to use any money you have available to invest in tools and functions. WWDB premiere club, download audios (at a charge), standing orders book of the month and attend all functions. You will be advised to do this even if your business has not made a cent in profit. But you say your sponsor or upline loans you tools and pays for your functions? That might be true, but guess what? Once you sponsor someone, you will be the one loaning tools (that you paid for) and/or paying for your downline's functions because with a downline, you are now a "real business owner". It's amazing how so many people get fools into believing that upline wants you out of debt for your own good. Upline wants to out of debt for upline's good. For that reason, you might be told to get to the next big function at any cost, no matter what. That your business will be set back months or years if you miss it. The reality is missing a big function might be your wisest financial decision.

Your upline may want you out of debt, but they more than likely have their own interest at heart and not yours. Look at it objectively and ask your trusted friends who are not in Amway what they believe. This is advice from someone who has no reason to lead anyone astray. I experienced this and fell for the trick as a young and hopeful dreamer. Now I am hopeful that my experience can prevent others from falling into the trap that I fell into.

Don't Quit?

 Never quit!  That's what some uplines will teach new Amway IBOs. They will make anecdotal comparisons about sports champions never quitting. For example, Tiger Woods will never quit in a golf tournament. While this may be true, the golf tournament will end and Tiger will play another day in another tournament. A football player may not quit, but the game will end and they will play another game on another day. The same thing happens in many sports. It's silly to compare a sport to a business in this manner.  Not to mention in sports, the players are worried about income and expenses during a live game or tournament.

When someone says never quit, they mean don't stop trying, but it doesn't necessarily mean never quit Amway or never quit the tools systems. Many business owners at one time, have found themselves in a losing position. At times a business owner may have to make a business decision to close his current business due to lack of business, rent/lease is too high, etc. It doesn't mean that the owner is a quitter. This very same owner may open a new and very different business. That new and different business might be very prosperous.   Don't quit trying is not the same as not quitting a losing business or a losing proposition.

It appears to me, that some uplines use the catch phrase of never quit, and puts a negative label on those who quit Amway, as a means to apply subtle pressure to IBOs. I believe it is because an IBO who quits will not continue to be a customer of their lucrative tools systems. More likely an upline could care less if you succeed or not, as long as you continue to purchase tools. It's why they want people to never quit. Do they assess your business or is this a blanket statement to a large audience?   In my own experience, it was just a blanket statement without individual analysis  of each IBO's business.

IBOs and prospects need to take a critical look at their businesses. Take a look at your income versus your expenditures. Are you netting a profit or are you seeing losses month after month? Another vital factor is whether you are suffering a loss almost exclusively because of the expenses associated with the standing orders and functions? Some uplines will encourage IBOs to ignore facts, or they will try to install hope with talk about success being around the corner, but these teachings are more likely self serving, to get IBOs to continue to buy tools, whether or not it is in the best interest of that IBO. You are an independent business owner and as such, need to make your own decision about taking on expenses if you do not have enough revenue to cover those expenses. 

This message is to provide an insight into the strategy that some uplines employ, simply to keep you in business longer for their (the upline) personal gain.