Financially Free?

 When I was an IBO, I often saw my upline diamond driving around town in his used Mercedes dressed in a business suit. I used to think why does he keep working if he can walk away and collect residual income? My sponsor told me that the diamond only works because he cares about his downline and wants to help them. So there are two possible scenarios. The diamond is working to help his downline out of a genuine concern, or possibly he is working because he has to? The only difference now is that the diamond works the night and/or graveyard shift. Because many IBOs are building the business after they complete their day jobs, a diamond has to work nights and weekends to be able to meet and work with them. Some freedom. **We should also note that my former upline diamond dropped down to the emerald level around 2005 and has since re-established his diamond level a few years later. Who knows where he's at today?

Now Amway has stated that the average diamond earns about $150,000 a year.   However, not Amway reports that the average diamond earns $600,000 per year but that is for Q12 diamonds.  My informed guess is that regular diamonds The Norm) still earn about $150,000 a year, maybe a little more or less.  That is a decent income, but after taxes and paying for basic expenses such as medical and dental insurance, the average diamond probably lives a very middle-class lifestyle. Keep in mind that a large portion of a diamond's income comes in the form of an annual bonus, thus a diamond's monthly income may be quite small. Yes, diamonds may have other sources of income such as speaking engagements and income from standing orders and functions. But this income depends on the diamond's continued appearances and efforts. There is no large barrels of cash rolling in with no work.

So is it likely that a diamond is "free"? I would have to conclude that a diamond is not free, and may actually have to spend more time maintaining their group than if the diamond simply had a 9-5 job. For one thing, a diamond needs to maintain a personal group to keep qualifying for bonuses. With a poor retention rate in Amway, I am fairly sure that a diamond spends much time recruiting personally sponsored IBOs to maintain this group. Additionally, a diamond must help his six or more groups of downline platinums to maintain their businesses or face the possibility of falling out of qualification. My former diamond dropped down to the emerald level but has since re-qualified at diamond. A diamond must also dedicate time to reward up and coming movers and shakers, to keep them motivated. I got to spend time with my upline diamond when I was considered a promising up and coming pin. We had "play days" and had the opportunity to "earn time" with the diamond.   Some IBOs went into massive debt to buy their next level because they wanted time with the diamond so badly.  It's really sad.

In order to continue to receive tools income, a diamond must also travel to numerous functions and speaking engagements. Although the tools income allegedly doubles a diamond's income, it also adds a lot of expenses, especially if the diamond and his family travel first class to show off the diamond lifestyle. Sometimes I wonder if diamonds can actually afford to fly first class to all functions?   Do you know what a first-class ticket costs from Hawaii to the mainland US for example?   I can fly coach from Hawaii to California R/T for around $600 but first class would cost about $1500.  Not a big deal for a diamond?   Try paying for a wife and 2 kids plus yourself.   Now you're paying $6000 for airfare to a function not including hotel and other expenses.  Can you afford that with numerous functions each year?   Probably not!

After breaking down projected income and considering projected expenses, I can only conclude that a diamond probably lives a very middle-class lifestyle, and probably works as much as a man with a 9-5 job, except that a diamond works nights and weekends. A good portrait of this is shown in Ruth Carter's book (Amway Motivational Organizations: Behind The Smoke and Mirrors). In the book, the diamond had a net income of over $300,000, but lived in debt, could barely pay his mortgage, and was always on the run from one function to the next.

I believe that diamonds may actually be busier at the diamond level than an average Joe who has a 9-5 J-O-B. The difference is that the diamond works the night shift. Is this the freedom you are seeking?

Are IBOs Simply Commissioned Sales People?

 IBO = Independent business owner. I thought it was cool, but looking back at the bottom line, IBOs are just salesmen for Amway with no fringe benefits and no guaranteed salary. Or a commission only salesman. Salesmen earn their income by selling goods and services and earn a commission. Sadly, many IBOs sell very few items because they have been taught that you make your money by purchasing items from yourself.

On the surface, buying from yourself sounds sensible but you don't truly make a profit by purchasing your own goods, you simply empty your checking account. Any profit you think you have earned has actually come out of your own pockets. In any business, you must have a base of customers in order to have a steady income. If you are purchasing the majority of your goods, you are only making a profit for Amway the corporation, who makes, or in the case of partner stores, distributes the goods. The ones who actually produce the goods are the ones who profit. An IBO is just someone who sells the goods and who distributes them for a commission.

For most "real" business owners, building their business might mean advertising, creating special sales, and increasing the number of customers or by increasing the volume purchased by existing customers. An IBO who is "building the business" is rarely ever trying to attain more retail customers. In fact, some of Amway's regulations make it difficult to attain a mass of customers such as restrictions on advertising. Therefore, most IBOs who are "building" are simply seeking to add downline who will hopefully buy their PV and also attain more downline. In this manner, IBOs are increasing volume, and therefore their commissions by adding people to their downline. Ultimately, the upline is making their money by the efforts of their downline and often, from the jobs of their downline because there are usually not enough customers to sustain any significant level of sales.

In this day of social networking and power advertising, Amway apparently remains a dinosaur. While they do advertise some of their product line on TV, the salesmen or IBOs have little ability to market their products on a large scale. Instead, it is word of mouth, individual to individual. It is highly ineffective. Do you know why it costs hundreds of thousands of dollars for a 30 second commercial in the superbowl? It's because tens of millions of people are watching. What do you think is more effective for increasing sales, a superbowl commercial or word of mouth advertising. Keep in mind that zany IBO behavior has already damaged the Amway name, thus giving you a disadvantage over other opportunities.

In the end, or the bottom line is that an IBO is just a salesman who receives no fringe benefits, and a relatively small commission. It's a great deal for Amway, but is it a great deal for an IBO?

Just The Facts Please?

 So many people get caught up in hype about Amway. Perhaps not from Amway the company, but the Amway groups leaders such as WWDB, N21, or BWW. They may present themselves as the ultra-rich, or you may be shown pictures of wealth such as jets, mansions and nice cars and jewelry. Amway IBOs dress up in suits and business attire. It is all to give prospects the illusion of success when the reality is a stark contrast. I remember as an IBO, seeing all kinds of IBOs driving clunkers to the meetings but dressed up in a nice suit. But the reality was cars on their last legs and (probably) car payments. These nice folks were probably just misled that Amway's opportunity could lead them out of debt, or they could earn enough for their wives to be "job optional" or they might even make enough to walk the beaches of the world while residual income rolls in. The audiences see hope, but it is false hope.  

That fact is that IBOs on average earn a gross income of about $100 a month. Amway says the average income of IBOs is $204. But their small print also says only 46% of IBOs are considered active, and therefore, Amway did not count inactive IBOs. So that representation is not a true "average". I might also add that the $204 is gross income, and IBOs who attend functions and purchase voicemail and cds are more than likely operating at a net loss.  

Amway presenters also like to talk about the money you can save by shopping with Amway. The fact is that you can get a great deal more value (and products) by shopping at Walmart or Costco. Some Amway IBOs will say that Walmart doesn't sell Amway products, and while that is true, Walmart does sell some similar or same products which will almost always be cheaper than obtaining them from an IBO. I can't imagine that laundry soap or shampoo would be cheaper through Amway. In past price comparisons that I posted; you can get up to 4 times more product for the same price. This is very plausible when you factor in the real money added to Amway's cost because of the IBO bonuses that they pay. That's not to say that you can't find a single Amway product that might be competitive, but overall, there is no comparison. If you use a cashback credit card like I do, then you too, can be "paid" for shopping at Walmart or Costco. 

It is also a fact that diamonds are not the carefree uber wealthy people they would lead you to believe they are. As time passes, we see examples of former and current diamonds who spoke of their incomes and in some cases, foreclosures and bankruptcy also revealed through public documents, some background on what a diamond might earn and spend. It is my educated guess that many diamonds, if they try to keep up with the Joneses, are in financial difficulty. Ask your diamond for the facts. In real business, financials are verified, but alas, diamonds and Amway presenters are secretive about their income. Because they don't want you to see the facts? '

You're A Winner!

 One of the things that my Amway upline taught, and I believe is still taught today in various groups is that winners join Amway and losers do not.  Kind of makes me wonder about the "most" who "do nothing" after joining.

I also heard that you're a winner because you were doing something to better your financial future and those who didn't were losers, or broke minded. Of course, the upline who said this had no knowledge about those who were not in Amway. Some of them may already have been financially sound or may have been doing something to better their financial future. I'm not sure why these uplines, who promote "positive", had to resort to calling people losers simply because they did not agree that Amway was the greatest thing since sliced bread.

In many games or sporting events, there will be someone or a team that wins the game and someone or a team that loses the game.  Losing a game doesn't make you a loser and certainly, a team that wins the game would not say the losing team were losers. Can you imagine a pro football team's coach taking the podium after a game and saying his team won because the other team was a bunch or broke minded gutless losers?  That would never happen, yet we see that frequently in the Amway world.  The owner of Amway, Rich DeVos had once said in a recorded message that just because people do not agree with you (paraphrased) about Amway, does not make them losers and that IBOs should not call people losers.

In all of this, people's jobs are also criticized. That a job stands for "just over broke" or "jackass of the boss" and other blurbs. Many IBO's goals and dreams consist of ditching their job so they can sleep all day and live a life of luxury. Ironically, it is most IBO's jobs that continue to produce income so they can pay their bills and feed their family. It is also an IBO's job that funds their Amway and AMO expenses such as product purchases and functions and voicemail, etc. Without having a job, most people could not even join Amway or pay for any tools. Sadly, most IBOs won't make any money in Amway either, or will have to continue to work at their jobs. I do not believe that someone earning an honest living working a job is a loser. Ironically, the folks calling people losers are often not even netting a profit from their Amway business!

Yes, in this business or the sports world, there will be winners and there will be losers. The question is whether you are the one who is allowed to be the judge of who is and who isn't. I would also suggest that IBOs are completely shutting down potential future business by their behavior. What if I went to a store to purchase something but the item was not available on that particular day, so I don't purchase anything and leave. As I leave, the store owner says I am a loser for not buying something there. Will I go back? Very unlikely. If an IBO truly sees themselves as a store owner, all prospects should be seen as potential business, whether future or present. If your upline tells you that people not interested are losers, you should kick him where the sun doesn't shine.

Only winners join Amway? Think again!

Sound Business Advice?

 One of the most stupid teachings I heard as an Amway IBO was that IBOs should buy their own products from their own Amway business and charge themselves the full retail price.  Thus, the difference between the IBO price and the full retail price would be your profit which you can then bank and use that as seed  money to buy tools and function tickets.  For me, that was a WTF moment when I heard it.  I'm pretty certain this is being taught to IBOs even now and while it may sound sensible on paper, it doesn't pass the smell test.  

Some IBOs actually fall for this garbage and actually have repeated that teaching.  If you buy your own stuff, you’re using your own money, thus your money went from one of your bank accounts to another, minus the price of the goods or services you purchased.  That’s not profit.   Well, I guess an IBO can be fooled into thinking that moving money from your savings to checking is profit.  It's utter madness that upline tries to pass this off as sound business advice.  

Say you purchase double x for the IBO price of $50 but the full retail is $85.  In theory you have now made $35 profit.  You’re supposed to use that profit for tools and functions but if the profit just came out of your pocket, what difference does it make?   You could just as easily pay for double x then pay for your functions and tools. By claiming retail profit, now moving money from one account to another becomes taxable income (profits are taxable).   So you are now even more in the hole from a business perspective but upline will teach you that you are successful.  What a crock!

Thus, teaching is actually dangerous because it just adds to an IBO's already negative cash flow.  And to think I actually paid to attend a function where they taught this crap.  The good side is that this was where I started to smell a rat with regards to upline teaching.  This and the submit to upline garbage.  I started to see through the thin veneer of BS that upline was peddling.  

Since I’m certain that diamonds are still pushing tools and functions, I’m sure they must be teaching down line to raise capital in some way.  It’s possible that this paying yourself lies are still ongoing.  It’s my hope that this blog post can help unsuspecting IBOs and prospects to see through the silly upline teaching and avoid financial losses.

Where's The Financial Freedom?

 When I was an Amway IBO, I often saw my upline diamond driving around town in his used Mercedes dressed in a business suit. I used to think why does he keep working if he can walk away and collect residual income? My sponsor told me that the diamond only works because he cares about his downline and wants to help them. So, there are two possible scenarios. The diamond is working to help his downline out of a genuine concern, or possibly he is working because he has to. The only difference now is that the diamond works the night and/or graveyard shift. Because many IBOs are building the business after they complete their day jobs, a diamond has to work nights and weekends to be able to meet and work with them. Some freedom. **We should also note that my former upline diamond dropped down to the emerald level around 2005 and has since re-established his diamond level a few years later. Who knows where he's at today?  A diamond pin is forever just as an Olympic Athlete is considered a gold medal winner years after the Olympics are over.

Now Amway has stated (In their disclosures - not Q12) that the average diamond earns about $150,000 a year.   However, now Amway reports that the average diamond earns $600,000 per year but that is for Q12 diamonds.  My informed guess is that regular diamonds (The Norm) still earn about $150,000 a year, maybe a little more or less.  That is a decent income, but after taxes and paying for basic expenses such as medical and dental insurance, the average diamond probably lives a very middle-class lifestyle. Keep in mind that a large portion of a diamond's income comes in the form of an annual bonus, thus a diamond's monthly income may be quite small. Yes, diamonds may have other sources of income such as speaking engagements and income from standing orders and functions. But this income depends on the diamond's continued appearances and efforts. There is no large barrels of cash rolling in with no work.

So, is it likely that a diamond is "free"? I would have to conclude that a diamond is not free and may actually have to spend more time maintaining their group than if the diamond simply had a 9-5 job. For one thing, a diamond needs to maintain a personal group to keep qualifying for bonuses. With a poor retention rate in Amway, I am fairly sure that a diamond spends much time recruiting personally sponsored IBOs to maintain this group. Additionally, a diamond must help his six or more groups of downline platinums to maintain their businesses or face the possibility of falling out of qualification. My former diamond dropped down to the emerald level but has since re-qualified at diamond. A diamond must also dedicate time to reward up and coming movers and shakers, to keep them motivated. I got to spend time with my upline diamond when I was considered a promising up and coming pin. We had "play days" and had the opportunity to "earn time" with the diamond.   Some IBOs went into massive debt to buy their next level because they wanted time with the diamond so badly.  It's really sad.

In order to continue to receive tools income, a diamond must also travel to numerous functions and speaking engagements. Although the tools income allegedly doubles a diamond's income, it also adds a lot of expenses, especially if the diamond and his family travel first class to show off the diamond lifestyle. Sometimes I wonder if diamonds can actually afford to fly first class to all functions?   Do you know what a first-class ticket costs from Hawaii to the mainland US for example?   I can fly coach from Hawaii to California R/T for around $600 but first class would cost about $1500.  Not a big deal for a diamond?   Try paying for a wife and 2 kids plus yourself.   Now you're paying $6000 for airfare to a function not including hotel and other expenses.  Can you afford that with numerous functions each year?   Probably not!

After breaking down projected income and considering projected expenses, I can only conclude that a diamond probably lives a very middle-class lifestyle, and probably works as much as a man with a 9-5 job, except that a diamond works nights and weekends. A good portrait of this is shown in Ruth Carter's book (Amway Motivational Organizations: Behind The Smoke and Mirrors). In the book, the diamond had a net income of over $300,000, but lived in debt, could barely pay his mortgage, and was always on the run from one function to the next.

I believe that diamonds may actually be busier at the diamond level than an average Joe who has a 9-5 J-O-B. The difference is that the diamond works the night shift. Is this the freedom you are seeking?

Why Not Work Part Time?

 Many people pitch Amway as a simple and easy business, and a somewhat shortcut to riches. It's all over the internet, it's what I saw as an IBO, and I have good reason to believe that many still pitch Amway in this manner. I believe that people want to believe that you can create residual lifelong wealth part time in 2-5 years.  Amway IBOs and prospects may be told "it's not get rich quick", but 2-5 years to quit your job and live off ongoing lifelong residual income sure sounds like the pitch of a get rich quick scam. It is what has contributed to Amway's currently spotty reputation. in my opinion.

A typical IBO (not counting those who do nothing), according to the "plan" will consume and possibly sell some goods on their way to 100 PV, which will earn them about a $10 bonus from Amway. There might be some profit from sales to customers, but there are also expenses involved in running a business. If an IBO is on the system, then their expenses might run from $100 or so to $500 a month, depending on level of commitment (brainwashing). In the end, a flawed system and generally non-competitive pricing and products leads to most IBOs eventually quitting. The vast majority of IBOs on the system will wind up with a net loss, even with a tremendous amount of effort. Seems that effort has no relationship with success in Amway. Based on my experience, deception and lies seem to be a better way to succeed in Amway than by hard work.

But what if someone basically worked a part time job instead of Amway? If someone simply got a 20 hour a week job at $10 an hour (not that difficult), someone could earn about $800 a month gross income, or about $9600 a year. In ten years, even with no raises in salary, that person would have earned close to $100,000 more income. That money, if invested into a diverse portfolio can be the nest egg that would allow someone to retire early, or to retire more comfortably than most. And that salary is guaranteed if you work the hours.  

In Amway, there are no assurances of anything, even if you work 40 hours a week. The only assurance if that you will help your upline earn more than yourself by moving products. If you are on the system, you are basically paying your upline (via tool purchases) for the privilege of boosting your upline's volume. It is why uplines teach you to "never quit" and to be "core". These virtues help assure your upline of profits but does little for the rank-and-file IBOs. I write this blog post just to stimulate thought amongst IBOs and prospects. There are better and easier options than the Amway opportunity. If you are reading this, you are looking at one potential alternative. It's your job to decide.