Income Disclosure Statement
I’ve talked a lot about income disclosure statements, over the years. I’ve talk about them in general and I’ve talked about them for particular companies. When I do a review of a network marketing company, I try to get a copy of their income disclosure statement.
My last review of an MLM was for a company called Juice Plus. If you didn’t read it, here is a link.
I was unable to find a copy of their income disclosure statement, online, for the article. I made a call to someone in the business, to see if they could get a copy of it for me. To my surprise, she didn’t know what an income disclosure statement was.
I tried to explain to her what it was and she was like … “why would you want that?”
Let me take the time to explain exactly what an income disclosure statement is.
It is my understanding that due to the trials that Amway went through, in the 1970s, that all network marketing companies are required, by law, to publish and make available a document that shows what percentage of current distributors are at each level of the company’s compensation plan.
It also gives a range of incomes that are being made at each level and the average at those levels.
This came about because, although Amway is perfectly legal in what they do, they were misleading prospects about how much money could be made at each of their levels.
Virtually no one in the company was making the kind of money that Amway was claiming that they made at their levels.
The MLM companies are allowed to exclude certain people from their computations.
If you belonged to the company years ago and quit, you are not counted in their figures. If you are currently a member and you are only there to buy the products at the distributor’s cost, then you aren’t counted either. I don’t know for sure, but I would think that 50% or maybe even more of current distributors are there to buy the products at a discount.
I’m not saying that those who are doing that are bad people and I am not saying that you shouldn’t want those types of people in your group. In fact it is just the opposite. They will continue to buy the products, for years to come. That helps your volumes!
The only people who figure into their numbers are current distributors who are getting a check each month. Then you are considered to be an “active distributor.”
If you read any company’s income disclosure statement, you will probably see very similar numbers. The top 3-4 levels will show less than 1% of active members have achieved those levels.
Where you will see the biggest group, on an income disclosure statement, is at the bottom level. Most of them will show that 95% or more are making nothing or very little.
The big question is, should you care about your company’s income disclosure statement?
I can give you a very definitive answer of yes and no.
The time for caring would’ve been before you signed up. If you are already in a company then it is probably just as well that you don’t know that information. Unless you are just plain curious.
If you aren’t in a network marketing company, but you are thinking about signing up with one, you should ask to see the income disclosure statement. Just to make sure that the company is willing to give you that information. Almost all income disclosure statements say the same thing. Just confirm that the numbers are not way out of line. If the numbers are out of line and they seem too good to be true … well, they probably are.
If the numbers are in line with the industry norm, then by all means, take a shot at network marketing.
You have a better chance of reaching the top level of an MLM company than you have in hitting the lottery!
“You can do it Duffy Moon. You can do it!”
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