Amway - IBOs and Personal Responsibility?

In my blogging career, I have seen many IBOs mention that their beloved system is basically foolproof. Follow the system and you will "make it". Uplines nearly guarantee that you will succeed if you follow the system. Many IBOs who did not make it blame themselves for failure.

What I find very ironic is how uplines twist the issue of responsibility. What I mean is some of them will stand on stage, possibly in front of tens of thousands of people and proclaim that IBOs should trust upline and do what upline advises, and that will virtually ensure success. Yet if an IBO fails or does not progress in the business, the IBO is held accountable for any failures.

While the Amway business is not a game of chance, a good analogy would be to promote the lottery and tell lottery customers that you have a sure fire way to increase their chance of winning the lottery. For example, your advice may be to select the month of your birthday as one of the lottery numbers, or use the date of your spouse's birthday as a number. Then when the lottery customer loses, you simple say he failed to pick the right numbers. And of course, if that customer wins the lottery, you cite your wise advice as the reason for winning the lottery. In either case you cannot lose.

It is much the same in Amway. Upline will entice prospects to join by showing them fancy homes and cars, and talking about early retirement. Then when a prospect gets excited about these "possibilities", then upline will try to convert that prospect into a customer of the system. Or they will tell the prospect that they can only succeed by using standing order and attending all functions. They say the system is the only way to go. Then if an IBO fails, they blame the IBO.

It's like upline playing a game of heads I win or tails you lose. Think about it.

Amway - Big Dreams Unfulfilled?

Many IBOs talk about their big dreams and goals. It is something used by uplines to entice prospects into joining. Financial freedom, early retirement, fancy cars, designer clothing and luxurious vacations. These are many of the dreams that starry eyed IBOs have when they join the Amway opportunity. While it is a good thing to have dreams and goals, I find it somewhat cruel to get people to dream of these things when it is highly unlikely that any of them will attain even a tiny fraction of these goals. Sure, some of the tenured folks in Amway may attain some wealth, but overall, as a whole, IBOs suffer losses when the cost of standing order and functions are factored is.

Amway's numbers indiacte that the average income of an active IBO is $115 a month. Factor in an IBO's time and expenses and in many, possible most cases, there will be a net loss. How do you attain your dreams while suffering a net loss of income? It is unfortunate that some uplines will teach IBOs that they are successful even when that IBO is losing money month after month, almost directly attributable to the cost of the system. All the while, someone upline is seeing their financial goals and dreams fulfilled on the backs of their downline in the form of tool purchases.

The rest of the IBOs end up having their dreams unfulfilled. In many cases, they end up worse off, having lost time and money, and in some cases, friends as they may have shunned their friends and family, casting them off as "broke" or "losers", just because they did not see value in joining the Amway opportunity.

So IBOs, honest question. Are you on track to fulfill your dreams? If you are, can you say the same about your downline? If the answer is no, what is your next step? Your upline may tell you that your key to success is to buy more tools. Be wary and analyze your income versus your expenses. If you are told to ignore these facts, be careful, be very careful.

Amway - Failed IBOs?

On a recent blog post, a frequent reader here and author of his own propaganda pro Amway blog, Levi refers to me (Joecool) as a failed ex Amway IBO. He doesn't qualify his statement, nor apparently has he read my story. My highest level in Amway was 4000 PV. At that level, I didn't make any money, primarily because of the costs of the system. Levi himself admits that he isn't making any net profit, at least in his latest version of his story.

But what exactly is a failed IBO? It goes back to the IBO who quits? Maybe we need to examins why IBOs quit? Maybe earning $10 a month while purchasing $300 worth of expensive goods each month gets tiring? Maybe spending an additonal $200 a month learning to purchase expensive goods gets tiring? Maybe losing money whole being called a winner is tiring? It's funny how IBOs will call others failures when they themselves are not making a profit and will refuse to even talk about the details of their business.

Many people in the US are interested in making an extra buck, but unfortunately, the Amway opportunity is not the most efficient way to do that. The average IBO, according to Amway earns $115 a month, and that is after disregarding inactive IBOs. If not, the average IBO actually earns about $70 a month. But let's use $115 a month. IBOs work about 10 - 20 hours a week if they are "doing the work". Assuming they work 10 hours a week, they earn a whopping $2.87 per hour. If they work harder, maybe 20 hours a week, they earn a hearty $1.43 per hour.

Why IBOs think that quitting this opportunity means failure is a mystery to me. Seems that quitting an opportunity like this is a smart financial move. Seems to me that staying in a system where you lose money or "reinvest" all of your profits for a zero net gain is more of a failure than moving onto a better opportunity.

IBOs and prospects need to simply look at their bottom line, and the answer is clear.

Amway - Here You Go IBOs, A Real Profit Loss Statement

A online friend of mine, Gina, sent me her detailed profit/loss statement from her real business. Names were sanitized of course, but here it is IBOs, a real P/L statement. For some of the naysayers who mistakenly accused Gina and I of being the same person, any moderator at the Qblog forum can verify that we are two very different people from very different places. Gina originally visited by blog seeking information about Quixtar as she has/had an IBO for an employee and wanted to learn about this "business". What she eventually found out was how little so many IBOs know about business. Anyway, at "Levi's" request, here is the P/L:


Here it is...Gina's long awaited P/L

YEAR TO DATE
Ordinary Income/Expense
Income
4001 F.R Sales 4,585.18
4002 D. S Sales 2,181,262.78
4003 D.L Sales 384,482.60
4020 Rental Income 405.00
4045 Freight Income 72,751.15
4046 Handling Charge 2,337.15
4099 Sales Returns (376,948.18)
4153 Rebate 473.93
Total Income 2,269,349.61
Cost of Goods Sold
5000 Cost of Goods Sold
5001 F.R Costs 18,894.38
5002 D.S Costs 1,526,418.90
5003 D.L Cost 270,960.60
5043 Freight Costs - Purchases 1,200.00
5045 Freight Costs - Sales 69,848.25
5047 Purchase Discount (36,223.02)
5099 Cost Variance 0.00
5000 Total Cost of Goods Sold 1,851,099.11
Total COGS 1,851,099.11
Gross Profit 418,250.50

Expense
6080 Warranty Exp 2,339.07
6100 Misc. Expenses (13.67)
6105 Amortization 501.00
6110 Advertising Expense 19,496.93
6112 Bad Debt 8,837.24
6115 Bank Service Charges 1,204.74
6116 Foreign Exchange Rate Exp 25.16
6120 Business License & Fee 0.00
6125 Credit Report 289.00
6130 Car/Truck Expense
6132 Gas 5,338.71
6134 Registration & License 272.50
6136 Repairs & Maintenance 783.81
6130 Car/Truck Expense - Other 0.00
6130 Total Car/Truck Expense 6,395.02
1640 Conferences and Seminars 952.98
6150 Contribution 100.00
6160 Depreciation Expense 31,289.00
6170 Dues and Subscriptions 1,229.95
6175 Income Taxes
6180 Insurance
6182 Auto Insurance 664.30
6184 General Liability Ins 4,692.65
6185 Health Insurance 31,909.83
6188 Worker's Compensation 2,857.31
Total Insurance 40,124.09
6210 Maintenance/Janitorial 0.00
6220 Marketing Expense 0.00
6230 Office Suplies 3,081.11
6240 Outside Sales Commissions 0.00
6250 Postage and Shipping 1,843.78
6260 Printing and Reproduction 505.09
6270 Professional Fees 0.00
6272 Accounting Fees 14,100.00
6274 Legal Fees 2,450.52
6270 Total Professional Fees 16,550.52
6275 Contract Labor 792.00
6278 Employee Appreciation 97.30
6285 Property Taxes 10,873.55
6290 Rent 0.00
6293 Equipment Rental 1,101.36
6294 Forklift Service
6300 Repairs and Maintenance 6,705.34
6302 Computer Repairs 620.75
6304 Equipment Repairs 185.43
6300 Total Repairs and Maintenance 7,511.52
6306 Alarm System 650.26
6310 Supplies 2,984.11
6315 Small Furniture, Fixture & Equip 1,469.86
6319 Telephone - Cell phones 548.56
6320 Telephone, Fax, & Internet - Landlines 7,980.03
6321 Tools 0.00
6325 Training
6330 Travel & Entertainment
6334 Meals 1,173.58
6336 Travel 14,030.68
6338 Hotel 482.76
6330 Total Travel & Entertainment 15,687.02
6410 Utilities 13,687.01
6560 Payroll Expenses
6561 Salary 125,108.30
6562 Taxes 10,879.95
6563 Payroll Fees 166.11
6560 Total Payroll Expenses 136,154.36
Total Expense 334,287.95
Net Ordinary Income 83,962.55
Other Income/Expense
Other Income
7000 Other Income (201.69)
7200 Interest Income 111.23
7050 Gain on Sale 0.00
7300 Management Fees
7400 Commissions 184,197.60
Total Other Income 184,107.14
Other Expense
8000 Other Expenses 0.00
8010 Accounts Receivable Adjustments 8,791.14
8020 Inventory Adjustment
8030 Accounts Payable Adjustments
8100 Interest Expense 36,557.07
8110 Return Items 44,998.20
Total Other Expense 90,346.41

Net Other Income 93,760.73

Net Income 177,723.28

Amway - The Fruit On The Tree? What Fruit?

I had a good chuckle recently when some Amway apologists spoke about looking at the "fruit on the tree". One commentator said his parents were broke and he looked to his diamond since the diamond apparently had fruit on the tree. I thought about this concept and I agree, that perhaps we should look at fruit on the tree.

IBOs and Amway prospects, please ask your upline platinum or diamond to show you the fruit on their tree. Ask them to see their (business) financial statements. This is actually a common practice in real business. When a friend of mine sold his business a few years back, he made three year's worth of income tax returns to show prospective buyers.

As far as I know, not one single bigger pin has ever shown their business financials. In fact, if it made certain bigger pins look good, why wouldn't they want to "show their fruit". They certainly don't mind showing off diamond rings, fancy clothes, sports cars and the like. What many IBOs don't understand is that fancy cars and other toys is no evidence of fruit on the tree.

It has been discussed that some diamonds may rent cars or fancy homes and try to imply that they own these items. Some diamonds, possibly many diamonds in the past have lied or embellished the truth about paying for everything in cash, including their homes and cars. They also at times, have given the audience the impression that these luxuries are all purchased with Amway income, and we know that many diamonds have probably had supplemental income from the systems, or other business ventures outside of Amway.

We also know that some diamonds are in debt, but simply try to portray an excessive lifestyle. (See Ruth Carter's Book: Amway Motivational Organizations, Behind the Smoke and Mirrors). Some diamonds may have a substantial income, but it doesn't mean they are financially free and able to live a jetset lifestyle that many portray. It is an illusion, possibly to be able to attract new prospects into the business.

So yes, let us actually see the fruit on the tree. Is there any fruit?

Amway - Building A Business?

When I was an IBO, many people would talk about "building a business". But many folks who spoke about building a business didn't know what that meant. I believe it is because they were taught that building a business meant listening to tapes and attending functions. Or building a business might mean sponsoring others. In my segment of the Amway world, building a business pretty much meant recruiting and showing the plan. Apparently I was mislead and many others were as well.

Building a business, generally speaking means building a customer base. A business moves products and services for a profit. In groups that focus on buying from yourself or prosumer nonsense, generally will struggle because the revenue they generate in their business is coming from their own pockets. Or their jobs are actually supplying the money for their own bonuses. In this model, the only way to profit is to sponsor many downline so the pyramidal compensation plan can work in your favor.

Many IBOs compare themselves to a franchise. Can you imagine a true franchise where your long term success depended on your ability to open other franchises? What if you as the owner and your family accounted for the majority of the sales? Could this franchise survive? More than likely not. Yet this is exactly what many Amway IBOs do and they mistakenly think they will be successful. The only reason why Amway IBOs are able to play out this model longer than a traditional franchise owner is because they do not have to rent office space or hire employees.

If an Amway IBO ran their business like a traditional business, the lack of retail sales to non IBO customers would be immediately apparent when the first month's electric bill or lease payment arrived.

Building a business entails many things. These things may include advertising, marketing of products, and do not necessarily include any training. In its simplest form, the Amway business is about selling and using products, and getting others to do the same as you do. Why do IBOs think such extensive training (standing order and functions) is needed? I challenge IBOs to write up an actual business plan for their Amway business, including projected sales and expenses and see what you come up with. If you think I am just being negative, write up your Amway presentation and show it to a loan officer at a bank. See what they have to say. Seriously.

Amway - Never Quit!

Never quit! That's what some uplines will teach new 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.

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.

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.

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 instill 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.

This message is to provide an insight into the straategy that some uplines will employ.