"You have opened my eyes to many facts that you completely spelled out for me. Including the break down of the 6-4-2 plan, and how if you do not incorporate a large percentage, and focus on a large percentage, on retail. You will only remain in the red unless you sponsor and teach many others how to go in the red too." IBO Site Visitor
THE 6-4-2 Business Plan
Typical "Show The Plan" presentations present the AmQuix Sales and Marketing Plan. The Sales and Marketing plan is just that, a sales plan. When you start a business you need a sales plan but more importantly, you need a business plan. This page details the 6-4-2 Business Profitability Plan. A business plan shows the complete financial plan before it ever gets started. Any lender will require a business plan before they loan you money. Why not work out a "business plan" for your AmQuix business before you invest your own money and time? Amway and Quixtar utilize the same sales and marketing plan. The plan below illustrates the power of duplication for generating sales. It also shows the power of duplication for generating business expenses and losses as well. Some lines of sponsorship use other models besides the 6-4-2. Unless average IBO sales exceed average IBO expenses by about four times, no matter what model you use, the majority of IBOs will have the same profitability problems as those employing the 6-4-2 model. |
Einstein points out to an Amway distributor the obvious profitability problems in the Amway Plan when overhead costs are included. |
Step 1: YOU
The Amway/Quixtar "Sales and Marketing" Plan | |
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$ 230 BV "An average immediate profit of about 30% comes from buying at discount
and selling at retail. 100PV earns you a 3% performance bonus on the
Business Volume (BV)". |
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The 6-4-2 Business and Profitability Plan | |
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The first deception of the "plan" is the immediate profit. This either assumes you will be retailing product at "Suggested Retail Price" to your friends, or you are consuming product for yourself at lower prices than you could buy those products for in discount stores. My studies showed I would have paid 40% more purchasing from "my own business". Plan presentations never include typical overhead expenses of an IBO. I will assume the distributor has $3,200/year ($267/month) in expenses. $3,200 is conservative for a married couple building the business. $ 230 BV $267 Distributorship overhead costs | |
Your Total losses at Step 1: $3,120/year ($4,224/yr including product premiums) | |
Does your financial situation allow you to spend $3,120 the first year you are in business? Don't quit your job just yet, you need it to finance the losses of your AmQuix distributorship. They will however coach you and teach you how to reprioritize your spending so that you can come up with the necessary funds to buy tapes and go to motivational seminars.
Step 2: Duplicate Yourself, You Sponsor 6
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The Amway/Quixtar "Sales and Marketing" Plan |
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Show six of your friends how to buy from their own store. Your net Performance Bonus is $102.90. Your immediate profit is $69. Both "incomes" total $171.90 Each personally sponsored IBO gets $7. Total monthly PV = 700 Total BV = $1610, gross bonuses are $144.90 |
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The 6-4-2 Business and Profitability Plan |
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You $ 92 product price premiums
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Your downline duplicates what you do $ 92 product price premiums + 7 Performance Bonus X 6 Distributors $2,112/month Business losses |
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Total group losses at Step 2: $1,724 ($2,368.1/month with product premiums) $2,956 loss/year/distributor on average not including product premiums |
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At this level you have a $256/month loss, and you have "taught" your downline how to lose over $1,700/month on "their own" businesses too. Your downline is losing 6 time more money than you are. If your conscience can live with such an absurd proposition then, I guess the business is for you. If the business were truly helping people and a great way to make money how come this small group in total can't make a net profit. It would seem by only recruiting other people to lose money, will you eventually make money.
Step 3: Duplicate Yourself: Help 6 sponsor 4 others
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The Amway/Quixtar "Sales and Marketing" Plan |
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Help your six people each teach four people how to buy from their own store. Your Performance Bonus is $887.40. Your "immediate profit" is $69. Both incomes total $956.40/month 30 Downline distributors get a total of $414 Total monthly PV =3100 Total BV = $7230, gross bonuses are $1300. |
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The 6-4-2 Business and Profitability Plan |
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You $ 92 product price premiums $886 Performance Bonus |
Your downline duplicates what you do $ 92 product price premiums X 30 Distributors $10,770 out of pocket costs + $414 Performance Bonuses $10,356/month Total losses |
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Total group losses at Step 3: $6,977 ($9,829 with product premiums) |
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Assume only 41% are active, and no product premiums, the losses are still $3,475 /month $3,389 average loss/year/active distributor not including product premiums |
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At this level you have a $527/month profit, but you have "taught" your downline how to lose almost $7,000/month on their businesses. Your downline is losing 19 time more money than you take out of the business. I hope your conscience can live with this. Mine couldn't. Still, on average, everyone is losing money, and spending more to promote their businesses than they take in as income.
Step 4: Duplicate Yourself: Help those 4 sponsor 2
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The Amway/Quixtar "Sales and Marketing" Plan |
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Help teach those 4 sponsored to teach two others to buy from their own store. Your Performance Bonus is $1,851.50. Your Immediate profit is $69. Both incomes total $1,782.50. 77 Downline distributors get $2,691. Total monthly PV =7900 Total BV = $18,170. |
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The 6-4-2 Business and Profitability Plan |
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You $ 92 product price premiums
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Your downline duplicates what you do $ 92 product price premiums X 78 Distributors $28,002 out of pocket costs + $2,691 Performance Bonuses $25,311 Total losses |
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Total group losses at Step 4: $16,550 ($23,818 with product premium losses) |
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Assume only 41% are active, and no product premiums, group losses amount to $7,046/month $2,642 average loss/year/active distributor not including product premiums |
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At this level you have a $1,500/month profit, but you have "taught" your downline how to lose almost $16,500/month on their businesses. Your downline is losing 17 time more money than you take out of the business. Despite bringing more people into the business, everyone on average is still losing money. You have taught your downline to reproduce your losses at the beginning according to plan.
Diamond Distributor
Duplicate Yourself: Help 6 Become Direct Distributors
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The Amway/Quixtar "Sales and Marketing" Plan |
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Teach your six people how to become direct distributors, teaching others how to buy from their own store. 4% leadership bonus on 6 Direct distributors @18,170 BV=$726/DD, $4361. Your down line plus Immediate profit $2,463. $6,824/month |
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The 6-4-2 Business and Profitability Plan |
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You $ 92 product price premiums $4,361 Leadership Bonus |
Your downline duplicates what you do $ 92 product price premiums X ((6x79) + 78)=552Distributors $198,168 out of pocket costs $ 2,691 Performance bonus $ 168,219 Total losses |
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Total group losses at Diamond: $111,489 ($162,365 with product premium losses) |
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Assume only 41% are active, and no product premiums the group losses will be $24,532/month. $1,295 average loss/year/active distributor not including product premiums |
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Congratulations! You have achieved the "Holy Grail of Amway", Diamond distributor. At this level you have a $5,854/month profit, but you have "taught" your downline how to lose $111,000/month on their businesses. Ain't it great! Your downline is now losing 29 time more money than you are taking out of the business. Who cares what your conscience says, you are making good money now. By now you are getting a large kick back from tape and seminar sales as well.
As you can see there is never a time when Amway distributors as a whole make money from Amway via the "buy from your own distributorship business model" even if only 41% active.
If distributors retailed more products or had a higher percentage of consuming, non-building, IBOs, then there will be a point when people would make money on average. The breakeven would be somewhere around 4-100PV/month customers for each building distributor to break even on average.
