"Active" IBOs & Their Income
In my last post, I compared the cost of business education through the WWDB mentoring system vs. the education costs of some random career paths available on a part-time basis online via randomly selected universities.
I received the following comment from reader Ty Tribble (former IBO, currently in a business model designed specifically to compete against Quixtar affiliated IBOs):
I could use the Quixtar compensation plan to calculate the income of a specific business structure as easily as any person, but I do not have access to financial detail of all WWDB private businesses. Since both the goals and the structure of each business vary per independent business owner, it is difficult to average income the way one can with a full time employment salary of a specific vocation. Pulling arbitrary business structures out of my hat would likely suit neither of us...
Nor would comparing that arbitrary business structure to the national average salary listed for an intermediate programmer ($57,817 per salary.com)
Because in doing so, there's an unstated assumption applied here: That possessing one of these degrees earns a person a certain income per year in a specific field. Actually, the assumption runs deeper than that-- It assumes that a person who had invested in the education examples given succeeded in meeting the following criteria:
- Applied and was accepted in a position for the field of their degree
- Maintained a work habit necessary to retain their employment
- Ability to work continues uninterrupted by injury, illness or death
- Employer continues intent and ability to retain employee
The reason it's important to specify those criteria is because, in order to be intellectually honest in our comparison, we must apply the same criteria to the results of both types of training I've sampled. (I'm operating under the highest assumption that intellectually honest query is the pure intent behind Ty's question, regardless of his affiliations).
So, how supportable are the above assumptions?
Continuing with the field of choice selected as an example in my previous post (Computer Science) let's look at some statistics:
This study tracks those with a bachelor's degree in, among others, Computer Science, who graduated in 1992-93 and followed up on their employment status in 1997.
Within the study period, 3 percent had sought higher education (i.e. incurred additional training expenses) so we're down to 97% without even looking at the criteria above. Actually, that's the highest percentage who did not seek further education compared to other fields of study, so the selected field is one of the most conservative examples available verses other fields.
So, now to the criteria: Only 57.9% of the remaining 97% ended up working in their field of study, or 56.2% of the total. I'll be generous and also include the 12.9% working in engineering/software engineers/architecture, which brings us up to 70.8% of 97%, or a total 68.7%. So between 56.2% to 68.7% are actually earning a wage in the field of their study. Not bad, but certainly not a guarantee.
What about unemployment rates? 39.4% of the 97% of computer science degree holders had experienced unemployment since graduation. The study doesn't break the unemployment down by field of work, but I don't think it's too far of a stretch to assume that this average would make only 60.6% of the 56.2% to 68.7% who did not experience unemployment.
That cuts it down to only 34.1% to 41.6% of computer science graduates that we can say with any confidence that are earning the average $57,817 salary listed above.
Remember that the Computer Science degree holders fared among the best of their fellow bachelors degree holders (Humanities degree holders, my condolences.) Note that this is non-renewable (non-residual) income requiring the repetition of full-time effort yearly in order for the salary to continue yearly. Keep in mind also, this study was done in the economic buildup before the tech market correction of 2000-2001 and before IT Services related jobs began to be outsourced to India and other Southeast Asian countries in significant numbers.
Now, the FTC-reviewed figure you'll hear quoted in a WWDB business plan for a Founders Platinum-- qualified 12 out of 12 months-- is $60,000 residual. I don't know what figures have been reviewed for other organizations.
I'm sure, however, that Ty is clever enough to know the FTC reviewed documents regarding the Independent Business Ownership Plan and is prepared to cite them against any figures I might name otherwise. But there's an inherent leap (or should I say, derailing) of logic therein which does not apply the same criteria as I've applied above. So let me discuss the statistics of which Ty, as a frequenter of critic sites, is likely already aware.
Critics are quite gleeful to quote these statistics (commenters have done so on this blog in previous posts) but what they fail to disclose is the criteria behind the statistics.
Why do they fail to disclose them? Why does their interest in disclosure only go so far?
Let's look at those criteria, and perhaps their reasons will become clear. (Source: WSA4400 10.11.04)
-One out of every 218 "Active" IBOs qualified actually achieved 7500 PV (required for the level known as Platinum) in at least one month of the year surveyed.
That equates to 0.46% or less than 1/2 a percent. Sounds pretty bad at first glance, doesn't it? "Wow Anon," you may be saying, "34.1 to 41.6% sure sounds better than 0.46%! I'd better go with a computer science degree!"
I'd be inclined to agree with you IF an "Active" programmer was defined by the same criteria as an "Active" IBO.
So what was the activity level of these 218 IBOs which only produced one (1) solitary 7500 PV achiever from among them?
Based on the independent survey, these were IBOs who:
- attempted to make a retail sale (regardless of success or failure for that sale)
- OR presented the Independent Business Ownership Plan (regardless of whether that plan resulted in sponsorship)
- OR received bonus money,
- OR attended a company or IBO meeting
in the year surveyed.
This is certainly NOT the same criteria as applied to the computer science degree holder above. So let's level the criteria, shall we?
Let's assume our computer science degree-holding programmer is an independent contractor who:
- attempted to write a piece of code for a client (regardless of whether the code worked)
- OR pitched their services to a prospective client (regardless of whether the pitch resulted in an awarded contract)
- OR received any payment for programming services
- OR attended an industry-related meeting
and they only had to do any ONE of the above once within a year's time to be considered "active."
Under those criteria, what are the percentage chances that our "active" computer programmer is earning $57,817? Better than 1:218 odds? I don't see any justification for that expectation.
Now the reason I assumed our subject was a contractor should be obvious-- in a full-time employment situation, our subject would not be employed long under those criteria. Our subject would more likely be fiddling with code at a hobby level in their free time aside from their full-time service industry or laborer job (in which 2.2% and 3.3% of our computer science bachelors degree holders ended up employed, respectively.)
See how worthless those statistics are, once the criteria is revealed?
Why wouldn't critics disclose that fact? Hmm.. Perhaps intellectual honesty is not their goal after all? (I'm shocked, utterly shocked.) Perhaps they realize that full disclosure would engage common sense on the part of the reader. Common sense is not compatible with the aims of shameless invective.
Is it clear now why the Average Monthly Gross Income for "Active" IBOs in the survey period was $115? Could we state with any certainty that our "Active" Programmer under the same criteria would gross more than $115/month? Hardly.
In conclusion, we have no statistics for IBOs which applied the same criteria as would be expected for full-time salaried employees of specific vocations. If there were statistics based upon criteria which required even a quarter of the activity level of full-time salaried employment, we would have something more comparable to work with. However, since salaried employment does not allow the flexibility of a Quixtar-affiliated independent business, we also have no statistics for salaries of specific vocations which apply the same criteria as "Active" IBOs.
Thirdly, we have no statistics which apply based on LOS affiliation, so we cannot say with any certainty whether the income of WWDB IBOs specifically are within the same average as the above-noted worthless "Active" IBO statistic.
So the short answer to Ty's comment is no... I won't engage in speculation of figures for which neither of us have meaningful statistics.
But thanks for playing.
Technorati Tags: Home Based Business, Internet Marketing, Internet Business, Quixtar, WWDB, private franchise
I received the following comment from reader Ty Tribble (former IBO, currently in a business model designed specifically to compete against Quixtar affiliated IBOs):
Are you going to compare average incomes of WWDB vs a college graduate of these establishments next?
I'm guessing, no.
I could use the Quixtar compensation plan to calculate the income of a specific business structure as easily as any person, but I do not have access to financial detail of all WWDB private businesses. Since both the goals and the structure of each business vary per independent business owner, it is difficult to average income the way one can with a full time employment salary of a specific vocation. Pulling arbitrary business structures out of my hat would likely suit neither of us...
Nor would comparing that arbitrary business structure to the national average salary listed for an intermediate programmer ($57,817 per salary.com)
Because in doing so, there's an unstated assumption applied here: That possessing one of these degrees earns a person a certain income per year in a specific field. Actually, the assumption runs deeper than that-- It assumes that a person who had invested in the education examples given succeeded in meeting the following criteria:
- Applied and was accepted in a position for the field of their degree
- Maintained a work habit necessary to retain their employment
- Ability to work continues uninterrupted by injury, illness or death
- Employer continues intent and ability to retain employee
The reason it's important to specify those criteria is because, in order to be intellectually honest in our comparison, we must apply the same criteria to the results of both types of training I've sampled. (I'm operating under the highest assumption that intellectually honest query is the pure intent behind Ty's question, regardless of his affiliations).
So, how supportable are the above assumptions?
Continuing with the field of choice selected as an example in my previous post (Computer Science) let's look at some statistics:
This study tracks those with a bachelor's degree in, among others, Computer Science, who graduated in 1992-93 and followed up on their employment status in 1997.
Within the study period, 3 percent had sought higher education (i.e. incurred additional training expenses) so we're down to 97% without even looking at the criteria above. Actually, that's the highest percentage who did not seek further education compared to other fields of study, so the selected field is one of the most conservative examples available verses other fields.
So, now to the criteria: Only 57.9% of the remaining 97% ended up working in their field of study, or 56.2% of the total. I'll be generous and also include the 12.9% working in engineering/software engineers/architecture, which brings us up to 70.8% of 97%, or a total 68.7%. So between 56.2% to 68.7% are actually earning a wage in the field of their study. Not bad, but certainly not a guarantee.
What about unemployment rates? 39.4% of the 97% of computer science degree holders had experienced unemployment since graduation. The study doesn't break the unemployment down by field of work, but I don't think it's too far of a stretch to assume that this average would make only 60.6% of the 56.2% to 68.7% who did not experience unemployment.
That cuts it down to only 34.1% to 41.6% of computer science graduates that we can say with any confidence that are earning the average $57,817 salary listed above.
Remember that the Computer Science degree holders fared among the best of their fellow bachelors degree holders (Humanities degree holders, my condolences.) Note that this is non-renewable (non-residual) income requiring the repetition of full-time effort yearly in order for the salary to continue yearly. Keep in mind also, this study was done in the economic buildup before the tech market correction of 2000-2001 and before IT Services related jobs began to be outsourced to India and other Southeast Asian countries in significant numbers.
Now, the FTC-reviewed figure you'll hear quoted in a WWDB business plan for a Founders Platinum-- qualified 12 out of 12 months-- is $60,000 residual. I don't know what figures have been reviewed for other organizations.
I'm sure, however, that Ty is clever enough to know the FTC reviewed documents regarding the Independent Business Ownership Plan and is prepared to cite them against any figures I might name otherwise. But there's an inherent leap (or should I say, derailing) of logic therein which does not apply the same criteria as I've applied above. So let me discuss the statistics of which Ty, as a frequenter of critic sites, is likely already aware.
Critics are quite gleeful to quote these statistics (commenters have done so on this blog in previous posts) but what they fail to disclose is the criteria behind the statistics.
Why do they fail to disclose them? Why does their interest in disclosure only go so far?
Let's look at those criteria, and perhaps their reasons will become clear. (Source: WSA4400 10.11.04)
-One out of every 218 "Active" IBOs qualified actually achieved 7500 PV (required for the level known as Platinum) in at least one month of the year surveyed.
That equates to 0.46% or less than 1/2 a percent. Sounds pretty bad at first glance, doesn't it? "Wow Anon," you may be saying, "34.1 to 41.6% sure sounds better than 0.46%! I'd better go with a computer science degree!"
I'd be inclined to agree with you IF an "Active" programmer was defined by the same criteria as an "Active" IBO.
So what was the activity level of these 218 IBOs which only produced one (1) solitary 7500 PV achiever from among them?
Based on the independent survey, these were IBOs who:
- attempted to make a retail sale (regardless of success or failure for that sale)
- OR presented the Independent Business Ownership Plan (regardless of whether that plan resulted in sponsorship)
- OR received bonus money,
- OR attended a company or IBO meeting
in the year surveyed.
This is certainly NOT the same criteria as applied to the computer science degree holder above. So let's level the criteria, shall we?
Let's assume our computer science degree-holding programmer is an independent contractor who:
- attempted to write a piece of code for a client (regardless of whether the code worked)
- OR pitched their services to a prospective client (regardless of whether the pitch resulted in an awarded contract)
- OR received any payment for programming services
- OR attended an industry-related meeting
and they only had to do any ONE of the above once within a year's time to be considered "active."
Under those criteria, what are the percentage chances that our "active" computer programmer is earning $57,817? Better than 1:218 odds? I don't see any justification for that expectation.
Now the reason I assumed our subject was a contractor should be obvious-- in a full-time employment situation, our subject would not be employed long under those criteria. Our subject would more likely be fiddling with code at a hobby level in their free time aside from their full-time service industry or laborer job (in which 2.2% and 3.3% of our computer science bachelors degree holders ended up employed, respectively.)
See how worthless those statistics are, once the criteria is revealed?
Why wouldn't critics disclose that fact? Hmm.. Perhaps intellectual honesty is not their goal after all? (I'm shocked, utterly shocked.) Perhaps they realize that full disclosure would engage common sense on the part of the reader. Common sense is not compatible with the aims of shameless invective.
Is it clear now why the Average Monthly Gross Income for "Active" IBOs in the survey period was $115? Could we state with any certainty that our "Active" Programmer under the same criteria would gross more than $115/month? Hardly.
In conclusion, we have no statistics for IBOs which applied the same criteria as would be expected for full-time salaried employees of specific vocations. If there were statistics based upon criteria which required even a quarter of the activity level of full-time salaried employment, we would have something more comparable to work with. However, since salaried employment does not allow the flexibility of a Quixtar-affiliated independent business, we also have no statistics for salaries of specific vocations which apply the same criteria as "Active" IBOs.
Thirdly, we have no statistics which apply based on LOS affiliation, so we cannot say with any certainty whether the income of WWDB IBOs specifically are within the same average as the above-noted worthless "Active" IBO statistic.
So the short answer to Ty's comment is no... I won't engage in speculation of figures for which neither of us have meaningful statistics.
But thanks for playing.
Technorati Tags: Home Based Business, Internet Marketing, Internet Business, Quixtar, WWDB, private franchise
posted by anonibo at 06:35
2 Comments:
diogenes: Some very good points. All you've said is accurate. I think we're actually saying a lot of the same thing, in so many different words. Let me clarify a couple of things that you touched on.
First, of course you are correct in stating that an average gross income for IBOs can be calculated as you described.
What I was trying to say is that those averages do not lend themselves easily to comparisons with a specific employment position because the goals of each business vary so greatly per business owner.
Take, for example, my sponsor's mother, who is quite content to sell laundry products to fellow grandmothers at her church. The infamous $115/mo would thrill her, but her interest goes no further. The flexibility of the model lends itself poorly to comparison to full-time salaried employment of a specific field, where both the demands and the returns of the position are fairly standardized.
Secondly, my purpose in comparison was not to show whether one training system was better than another (which is another reason why I chose not to engage in income comparisons). Rather, amidst all the ruckus online about how much money supposedly is going towards training & mentoring systems, I was just offering a sanity check against the cost of the more socially accepted system for training, i.e. college. My point was: Is the cost reasonable in comparison?
Comparison of income results from each was introduced by Ty, and this post was my (lengthy) explanation of some reasons why I would not entertain such comparisons.
Since, as you've said, training costs for IBOs are an ongoing business expense, the cost would need to be actually more reasonable than the large one-time hit one takes for a college education. As it turns out, one could sustain 9 or 10 years of ongoing costs in the WWDB training system before incurring the same expense as 1 year in many college degree programs. (Conceivably, most people in that period of time could pick up enough skills to learn to correctly run their business-- and file their taxes-- in a way that those costs are offset.)
That to me is very reasonable and sustainable. Which was ultimately my point.
Thanks for your feedback!
Ty,
Are you arguing that the mere posession of a college degree earns one the salary intended for the degree?
I have two family members with teaching degrees-- one of which left teaching after a short period because they could not handle the confrontation inherent in holding a high-school teaching position. That person has never earned teaching money since they ceased to apply what the degree qualified them to do. The other has never applied their degree to become a teacher, and therefore has never received a teacher's salary.
Putting forth a reasonable effort in WWDB will lose money in the same way that putting forth a reasonable effort in college will lose money-- both training systems cost money.
The question is whether one will apply the training once received. Most IBOs frankly do not apply their training. Therefore, their ongoing training costs are never realized into a return, just as my sibling's teaching degree has never been applied and realized into a teacher's salary.
Even if one assumed the potential return to be equal (which is giving traditional education extreme latitude) the WWDB system still shines: WWDB is a fraction of the other in cost so it's more easily sustainable, and the application thereof can be pursued in parallel with the training, which means the cost can be offset sooner.
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