One of the silly and bogus things my upline taught us was that the Amway opportunity was fair. That it was a completely level playing field. On the surface, that sounds right because "everyone starts at zero". While everyone does start at zero, the compensation plan is unfair to those who "do the work" and in my opinion, should be revamped so lower level IBOs make more money. It would probably help with IBO retention and maybe, some higher level leaders wouldn't have to work so hard to keep replacing people who quit. If half or more IBOs quit each year, how can you build the business and a foundation for "residual income"?
If you are a new IBO, then you might not be really familiar with the Amway compensation plan. Amway pays out about 30+ percent of their gross as bonuses. Thus if you move 100 PV in goods, or about $300 in sales, then Amway pays out about $100 in bonuses. You as a new 100 PV IBO, would receive 3%m or about $10 and your uplines, some of whom don't even know you exist, will split up the remaining $90 in bonuses. It truly is not a case of doing the work and getting paid. You are doing the work so upline gets paid. To add insult to injury, upline wants you to purchase training materials that tries to convince you that this is a good deal.
And something very significant to think about. In what other sales profession are you compensated so low (3%)? I can only think of real estate, but in real estate, your sales are likely in the hundreds of thousands of dollars. In just about any other sales related profession, you get a much higher cut than 3%. Yes, your bonus or comission can be higher if you move more volume, but then you are likely receiving more money because you are now exploiting more people doing 100 PV who get only $10 back.
Even after you consider the unfair compensation, you must factor in the cost of tools. Most uplines promote tools (cds, voicemail, functions) as vital to an IBO's success. Some uplines push the tools harder than others. But the tools purchases will often be the primary cause of IBO financial losses because the cost of tools will normally exceed an IBO's bonus. It is very common in the US for monthly tool purchases to exceed $200 a month on average, and very very few IBOs will ever reach a high enough level in the Amway compensation plan to earn enough just to break even. Also, the tools apparently do not work. There is no unbiased evidence to suggest that tools have any causal relationship to IBO success.
With Amway's spotty reputation and the unfair compensation plan, IBO retention is spotty. Many IBOs sign up and do little or nothing, and many IBOs don't even last a full year before they quit. What happens is IBOs begin to figure out that recruiting downline is next to impossible and therefore, generating more volume is nearly impossible, even for individuals with skills. If you are a new IBO or a prospect, I encourage you to sit down and really look at the math and factor in the cost of tools. There are many ways to earn a dollar, I just don't feel that Amway is an efficient way to do that.
On 100 pv business..IBO gets 6% and upline gets the differential only if he is at 9% level or above level..so let me clear this first for you. Second thing is if do nothing u get nothing.. it is as simple as any kind of JOB, Profession, Self Employment or any other Business.
ReplyDeleteSecond thing is..he has (upline) shared an idea for another source of Income through direct selling in your part time. So if he is also earning through our turnover (which is totally myth), then he owns it and same is meaningless for you.
Regards
ABO/IBO at 9% level
And if you're at 3%, 6% or 9%, Amway and you upline makes the most money.
ReplyDeleteAnd even if you're at 9%, you are still losing money because of the voicemail, CDs, books and functions.
I have an Amway business. I run about 2100 PV per month +/-. So I'm at 15% on the Performance bonus schedule. I have 10 front line sponsorships. Of those: 7 are at 3%, and 3 are at 6%. After I subtract out the money I spend every month for business support materials, travel, functions, food, and other tax deductible costs of doing business (which is about $250) I keep about $400 a month. I have been lazily kicking this thing around for about 3 years now. We have been in the black since we went 1,000 PV. Which is where I tell my group, that as business builders, they should expect to be in the black. For those in my group that are not building the business (and not purchasing business support materials) I send them my thanks and ask them what they did with their weekend, and how their children are doing, and if there's anything else I can do for them.
ReplyDeleteI still want to grow my business so that my wife doesn't have to work. She will be able to step away from her job after we run about a year's worth of Platinum volume and pay off some debt. Love Amway products, love my up-line, love the passive income, love the association, love the positive attitudes, love the hope I see in people when they realize that they can step into the S quadrant, and eventually the B quadrant. That's what my experience has meant to me. For me it's all about forging great relationships in life. In this respect, I'm very satisfied with my results so far.
At 1000 PV with decent width parameters, your business should be making about $300 per month from Amway. But then you business support materials cost about $200 a month (more if you are a couple) and then the cost of buying Amway products results in a negative cash flow due to your involvement in Amway.
ReplyDeleteHi Gonkulator.
ReplyDeleteThanks for the good example in nice readible English. After 3 years you have build what you think of as a nice business. Congratulations on being in the black.
This is the part I don't get.You seem proud of the $400. Obviously any extra is good, but if you work it only 15 hours a week, let's say 60 per month, the $400 that you get after expenses come to $6.67 per hour. Good thing you work for yourself, because it's illegal to pay someone else that little. If you work only 10 hours a week including everything then you earn $10 per hour. It's not passive income, just because someone else made the actual sales. Passive income is when the effective hourly rate goes off the charts. That happens when owner involvement (hours) approaches zero. Now if you include income after expenses to date (from when you started) vs expenses to date, the picture will be even bleaker.
You seem articulate, motivated and you obviously know how to lead people. Man to man: With between $6 and $10 per hour after 3 years of building, I think you can do better elsewhere.
It's good that you at least seem to enjoy it, there are other authentic business opportunities and jobs out there which can be very fullfilling and (financially and otherwise) rewarding.
Be honest with yourself. Stand back from the hype and evaluate the effort to reward ratio rationally. Rate per hour after expenses as a good metric. There is the current (which we focussed on) as well as the truer "to date" picture, which takes historical time and capital investments into account. If you grow it to $20 per hour after 5 years I still think you could have done much better. Often this is where people self justify with the "good friends" and "better person" stuff, or the stick approach of not being a quitter.
Even extra energy spent at your real job may yield better return on investment. It may even (as in my case) if you want to, lead to starting your own authentic business in your line of work. Good luck and please evaluate honestly, with regard to your initial goals.
Hey kwaaikat
ReplyDeleteThat is linear thinking. No intelligent person in the opportunity expects a return that is equivalent to their rate per hour with salary, until a foundation is laid. The idea is to, over time, replace your water buckets with a pipeline. Linear thinkers don't know they are linear thinkers. They get two weeks pay for two weeks work for 40-45 years. Nothing wrong with this, but an entrepreneur lays a foundation that will allow them to be paid over and over for the same work.
The owner of the company you build wealth for understands this. He/she is leveraging your time to create their wealth. They, in all likelihood had to repay a significant amount of borrowing before they were profitable.
Yet another brain washed Ambot parroting the exact same nonsence I heard when I was in the cult 25 years ago. They really think they are entrepreneurs with their own business when they are really partaking in an expensive social club. The only ones getting rich are the big pins selling functions and tools and there have even been bankruptcies in their ranks. How many smart business people that weren't brainwashed would participate in a business with almost a 100% failure rate?
DeleteAnonymous at 1:50 --
ReplyDeleteYou said, "That is linear thinking. No intelligent person in the opportunity expects a return that is equivalent to their rate per hour with salary, until a foundation is laid."
What? You are using some weird and unintelligible jargon here.
As a business owner, I can confirm that every business is different, but the mindset is usually the same. You start a business and have an initial expense, then, while the business is running, you have a continuous cost known as overhead, and you have a planned amount of time in which you can "take a loss" until you have broken even and eventually turn a profit. If you take too many losses too early, then you close, and if you take losses for too long, then you close. There is no special "foundation", and this idea of "linear thinking" is something everyone uses because nobody has a multi-dimensional thought when it comes to a timeline. That, in itself, makes no sense.
You said, "The idea is to, over time, replace your water buckets with a pipeline. Linear thinkers don't know they are linear thinkers."
"Buckets" and "pipelines"? More talk about "linear thinkers"? No wonder you are so confused. Can you point to any of these terms being used in a business textbook let alone an actual business? This nonsensical jargon is more of that programmed BS rhetoric espoused by prosperity cult leaders.
You are installing a new language in the attempt to obfuscate facts and confuse potential readers. This is a basic psychological tactic to create false authority on a subject in which you know nothing. If you can't explain what you are trying to say in plain English, then something is critically wrong.
You said, "They get two weeks pay for two weeks work for 40-45 years. Nothing wrong with this, but an entrepreneur lays a foundation that will allow them to be paid over and over for the same work."
If anyone can help decipher this, then please let me know. Honestly, this statement sounds like it should mean something, but it really doesn't mean anything as an entrepreneur (which I'm guessing you substituted for business owner) gets paid in the same confines of time as anyone else. I'm not sure how an entrepreneur could get paid for more than two weeks work in two weeks. That literally is otherworldly. You sound like something from science fiction.
Anonymous said, "The owner of the company you build wealth for understands this. He/she is leveraging your time to create their wealth. They, in all likelihood had to repay a significant amount of borrowing before they were profitable."
Ugh, this same "The CEO is taking advantage of employees" line. Look, a business owner has inherent risks that employees don't have, and they are responsible for everything the business produces. An employee can literally show up, do their job, get paid a salary, and go home. They are not liable for their work or other employees work, they are not liable for the business transactions, they don't pay overhead, they don't worry about the ebbs and tides in the marketplace, they don't have to do anything managerial. Why do you people think that an employee is somehow as valuable, if not more valuable, than the owner?
Also, you are NOT a business owner when you work for Amway. You are a poorly paid commissioned salesperson that falls under the category of a contractor. You don't own ANYTHING except the products they make you buy to qualify for commissions. That's it. You are not in charge of the people below you, you are not the responsibility of the people above you. You are just a person spending money while looking for more suckers to spend money as well.
""You said, "They get two weeks pay for two weeks work for 40-45 years. Nothing wrong with this, but an entrepreneur lays a foundation that will allow them to be paid over and over for the same work.""
ReplyDeleteHe's trying to say residual income in an obfuscated way. But it's a myth. There is no lifelong residual income. That's why we can find examples of diamonds resigning or quitting. Nobody in their right mind would quit when they could "walk away" and collect residual income.
Not a single person has been able to show any evidence of someone who built an Amway business and walked away from it while collecting residual income. Nobody in all the years has been able to name even one person who's done it.
He won't come out and say "residual income" because Amway has forbidden its IBOs to use that phrase when recruiting down-line. But the myth still exists in the minds of many Amway freaks.
ReplyDelete