Tag: Income Disclosure Statement
My Daily Choice aka Hempworx Income Disclosure Analysis
Income disclosure statements can help you to evaluate the Hempworx business opportunity. An income disclosure analysis is just one piece of a big puzzle.
Costs and Expenses
The My Daily Choice (aka Hempworx) disclosure statement gives a list of expected expenses and the results of a survey. This is useful in looking at what participants look at in terms of profit/loss.
The expenses an Affiliate can be several hundred or thousand dollars annually. You should factor in estimated expenses when projecting potential profits. Such operating expenses could include advertising and promotional expenses, product samples, training, travel, telephone and Internet costs, business equipment, and miscellaneous expenses. Based on a survey conducted by the company in 2018, the average annual expenses an affiliate incurred were $1,608.
My Daily Choice 2018 Income Disclosure
By the company’s own disclosures this leaves a big difference between the average income and the average expenses. Average annual income for all Affiliates was $580.08 and the medium income was $0. Even using the averages, this results in a loss of $1,028.92
What does average mean?
The table in the income disclosure shows the maximum, minimum, and average monthly and annual income. However, for each rank, the difference between minimum and maximum is big. Builders earn from $0.40 to more than $3k monthly, with an average of $10.22. There is no information like percentiles, and how many affiliates this data represents. It is impossible to know how many affiliates receive the ‘average’ amount.
To better understand what these numbers mean, let’s look at one possibility. For example, if there are only 2 distributors and one is making the maximum ($3k) and one is making the minimum ($0.40) the “average” would be about $1.5k. In order to get to the average (about $10) with only 1 person making $3k there would need to be ~310 people earning $0.40. This means a lot of people are earning less than average commissions.
The wide ranges make the averages pretty misleading. However, these ranges also help us understand most people are making a lot less than the average.
Who is making money?
98.5% of affiliates are ranks which make on average less than $100 per month. This means these affiliates have average annual earnings significantly less than the average expenses MyDailyChoice (aka Hempworx) reported in the disclosures ($1608). As a result, these affiliates are spending more than they are making. Finally, most affiliates get a lot less. Buidlers and Directors earn less than $30 per month on average. .
A significant group of affiliates get no income at all and that’s not an average. MyDailyChoice reports that more than 24 thousand affiliates made “no income at all” during the year the report covers.
These disclosures include a lot of information about the number of affiliates but the statistics do not include affiliates not eligible to earn downline commissions. This means the statistics are reported for affiliates who have achieved a business volume requirement. It doesn’t say how many people don’t reach this level of success.
Annual versus monthly averages
We discovered that all of the annual averages are 12x the monthly averages. The annual number should not be the monthly number times twelve. People will change ranks throughout the year, leave, and join the program. You can even see this in the “time to each rank” row. This means either the annual average earnings or the monthly average earnings is calculated incorrectly and is not accurate. As a result, it’s not possible to determine which is inaccurate with the data given.
Conclusions
It’s helpful that MyDailyChoice includes information about survey information about average expenses. More accurate information would be based on actual expenses rather than affiliates estimating and saying their expenses in a survey. However, this information helps us to understand that even with these estimates it is very difficult to sell enough with MyDailyChoice (aka Hempworx) to pay off expenses and earn a profit. On average, very few affiliates are able to earn profits. The disclosures also indicate it takes months or even years to reach the ranks where profit is more likely. Because of this, there may be many unprofitable months or even years for even the most successful affiliates.
Due to the expenses and small percentage of affiliates who make significant earnings, it seems that MyDailyChoice or Hempworx is not a great business opportunity for most people.
OnTheLevel is not affiliated with MyDailyChoice. Please contact us with feedback or corrections any time! We’d love to hear from you.
Sources: https://www.mydailychoice.com/htdocs/MDC_IDS_2018.pdf https://mydailychoice.com/htdocs/CompensationPlan.pdf https://www.mydailychoice.com/corp/opportunity
Young Living Income Disclosure Statement
Income disclosure statements also known as earnings disclosure statements help to understand the business opportunity selling Young Living. In 2017 Young Living released an income disclosure statement about the commissions and bonuses earned by Young Living members. Usually, when people think about a good business […]
dōTERRA 2017 Earning Disclosure Statement
No affiliation with dōTERRA. Please contact us with corrections or questions.
Source: https://media.doterra.com/us/en/flyers/opportunity-and-earning-disclosure-summary.pdf
Income disclosure statements also known as earnings disclosure statements help explain how much money people make selling DoTerra. They also explain which levels make money.
The statement doesn’t reference any of the costs associated with selling DoTerra. These costs include things like shipping, packaging, marketing, and the advocate’s time. The earnings discussed here seem to be the commissions paid by DoTerra and do not include the costs of doing business. To get a better idea of profit you should be sure to subtract any costs for the year.
Who is making money?
The disclosure statement includes that most advocates (a little over 63% of all advocates) do not make money selling DoTerra.
Entry-level wellness advocates account the bulk (76%) of the company’s advocates. Only 16% of those entry-level advocates make any money at all. The advocates who did make money, on average made on average $376/year. This average doesn’t take into account the people who lost money (remember to subtract those costs!) or broke even.
The next level, builders, account for 23% of all U.S. advocates. Leaders make up around 1%. These levels account for the most profitable ranks and DoTerra describes them as requiring significant part or full time investment. Very few advocates reach these ranks.
| Rank | % Advocates | Estimated Monthly Earnings* |
Average Annual Earnings
|
| Entry-Level (No Profit) | 63.84% | $0 | $0 |
| Entry-Level (Profitable) | 12.16% | $31 | $375 |
| Manager Builder | 9.66% | $63 | $752 |
| Director Builder | 5.75% | $104 | $1,250 |
| Executive Builder | 2.76% | $153 | $1,837 |
| Elite Builder | 3.91% | $364 | $4,370 |
| Premier Builder | 0.92% | $938 | $11,260 |
| Silver | 0.62% | $2,296 | $27,557 |
| Gold | 0.21% | $4,876 | $58,509 |
| Platinum | 0.07% | $9,414 | $112,965 |
| Diamond | 0.07% | $16,814 | $201,764 |
| Blue Diamond | 0.02% | $38,630 | $463,555 |
| Presidential Diamond | 0.01% | $104,966 | $1,259,587 |
*Calculated by divided annual across 12 months
Conclusions
Most people (>63%) don’t make any money and are probably losing money when you consider costs. These are the people who join to sell, not just for discount products.
For those that do make money, they are getting a small amount of money. $375 in one year is $31.25 per month. When you consider expenses and how much time and work is required– there is unlikely to be much profit even at the higher ranks.
Notes on the Disclosure Statement
It’s good that doTerra releases an earning disclosure statement. However, it is not easy to understand and is missing a lot of information that other disclosure statements provide. For example it does not include:
- Any information on the number of advocates at each rank
- Ranges or medians for the annual earnings
- Information on how the earnings are calculated and what they mean
- Average costs and expenses, specific time investment
- Time to reach ranks
The way the numbers are presented are pretty confusing (in a way that is a bit misleading). The percentages are percentages of other numbers which makes them hard to compare without doing some math with a spreadsheet. These are great questions to ask when considering dōTERRA.
Who’s Making Money With LuLaRoe?
Who is getting paid and how? Details!
Consultants (bottom level) pay up front costs to sell products and get initial inventory. They then try to sell that inventory (and more) to get back the initial money they spent, and make more. They make less money if the products sell for less money.
Sponsors (next level) are eligible to make up to 5% of the orders by the consultants they sponsor (the consultants they recruited to sell Lularoe), BUT in order to receive the bonus sponsors must purchase 175 pieces during the month for which that bonus is calculated.
Most people are at these two levels
LuLaRoe provides an income disclosure statement[1] which shows the percentage of consultants at the different levels in the company (see pie chart). Using this we can start to get a handle on the number of people rising to higher ranks. Reportedly LuLaRoe added around 33,000 consultants in a year[2]. This would mean we could estimate around 6 would be mentors, and less than 200 would be trainers.
And many more complicated levels At each level higher the compensation gets more complicated. Each higher level is even more difficult to reach, requires even more inventory purchase by consultants in the downlines, and as we know from the disclosures very few consultants reach those levels. However, it’s at these highest levels where the biggest bonuses are paid.
Digging into the Income Disclosure Statement
The income disclosure statement from LuLaRoe’s website tells us a bit more about bonuses. However it only tells part of the story. This statement does not include any information about earnings or losses based on selling the products. It also doesn’t account for any expenses. Therefore, while these are called bonuses, really consultants could earn a bonus but still end up losing money in the end because of expenses or unsold inventory.
Most people earn no bonuses
This means they most rely on the sale of the product to earn back the money they have spent to purchase inventory, cover expenses, etc. This can be difficult because of a variety of factors and can result in consultants ultimately losing money.
Bonus structure encourages buying and stockpiling
In order for everyone involved at the various levels to make more money, everyone — consultants, trainers, and coaches need to buy more wholesale inventory and encourage others to buy more inventory even when the inventory they already have is not selling.
Consultants (bottom level) are required to purchase a substantial amount of inventory to get started. Sponsors (next level) must purchase additional inventory to get their bonuses. In order for trainers (higher levels) to earn bonuses on their downline — both trainers AND their downline must buy more wholesale inventory.
This can lead to people feeling like they should buy more one month in order to get their bonus, thinking they will be able to sell it later. This can lead to a really bad cycle. Too much inventory and a lack of sales leads to debt, a feeling that you must buy to get bonuses and maintain status with the company to get out of debt, only to have it start again next month.
LuLaRoe doesn’t publish it’s compensation plan on it’s website, but it is available from LuLaRoe consultants who will share it as part of recruitment. Here are two examples:
lulashoppe.com/lularoe-compensation-plan
llrteamuplift.com/lularoe-compensation-plan
See Also: Is LuLaRoe a Pyramid Scheme?