"We don't make any money before you do"
Quixtar Lines of Sponsorship

Distributor Profit and Loss Sampling for 2004

One has to laugh at the rhetoric used in the business.  The term above is a classic quote in the business quoted by numerous diamonds, yet they are somehow to all blind to the evidence around them.  It would be interesting for a "concerned, ethical(?) diamond to take a poll of their downline to see how extensive the losses are in their organizations.   It seems the only thing the diamonds are good at are helping people lose a lot of money.

At last I have finally come into contact with a tax preparer who has prepared numerous Quixtar distributor tax returns for several years.  In order to preserve the confidentiality of each distributor, the tax preparer summarized the data of the 28 distributors and gave me average data for two groups, couples and singles.    In none of the 28 cases, for silvers and below, did a distributor report a profit.  None of the distributors had received tape or seminar income.  There were no questionable deductions for home office, clothes, or baby sitting.  The expenses listed here are only mileage and those out of pocket expenses that could be proved.  Depending upon the type of vehicle driven, the actual transportation costs might vary from the legally allowed $0.375/mile. 

The couples' gross incomes ranged between $4,375 and $6,000, and the singles' incomes ranged between $1,200 and $2,780.  The couples' net losses were twice those of the singles.   The typical couple had cash losses of $10,452 in 2004.   No doubt many couples cannot afford a net cash outflow of over $10,000/year and after a couple years  they can expect to have an additional $20,000 to $30,000 in debt.   These costs do not include the cost of buying the Quixtar products.  To obtain 150 points per month the distributor must spend an additional $450 - $600/month.

Despite the fact that distributors advertise the convenient home delivery of products and all the money one would save driving to the store, these distributors had mileage expenses that exceeded their Quixtar income.  The singles averaged $2,843 in mileage expenses and had average Quixtar income of just $1,800.  The couples had average mileage expenses of $5,625 and average Quixtar income of just $5,300.  It seems Quixtar can't even pay enough to cover distributor's transportation expenses.

Couples' system costs alone exceeded there Quixtar income by at least 25%. The couples ended up spending three times their Quixtar income to run the business.   The singles spent four times their Quixtar income to run the business.  In total the 28 distributors spent $372,608 in 2004 to have the privilege to distribute products for Quixtar and their upline, yet they had gross income of only $120,400 in gross income.   This group of 28 distributors lost $152,208 with the Quixtar "opportunity".

Income
Average Quixtar 1099 Income
Retail markup
Total Income


Expenses
System - Seminars, open meetings, tapes
Voice Mail
Web Access
Demo Products
Meals
Hotel
Mileage (couples =15,000/yr, singles=7,850/yr)
Total Costs

Average Net Profit/(Loss) reported on tax return

20 Couples
$5,300
$      0
$5,300



$7,000
$  239
$  138
$1,500
$  800
$  450
$5,625
$15,752

($10,452)

8 Singles
$1,800
$       0
$1,800



$2,800
$  120
$  138
$ 450
$ 480
$ 365
$2,843
$7,196

($5,396)

The couples drove an average of 15,000 miles per year.  Assuming they drive 50 miles per hour, the couples are spending an additional 600 hours a year that is uncompensated.   The couples are driving at least 11.5 hours per week.  This almost exceeds the time requirements many people estimate the business on the whole to take, which is commonly promoted to be 8-12 hours per week.

On top of all this business loss, the IBO has to also spend dollars to achieve the minimum required to even get the small bonus meted out to them at levels below platinum.

All distributor's should ask themselves the following questions:

1)  How much money are they reporting as profit on their taxes?
2)  How much time are they spending on the business and what their average wage is.

Remember, the definition of insanity is continuing to do the same thing over and over and expecting different results. 

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Site Visitor Feedback

My wife and I were in the business in the early 90’s. Our net losses over 5 years we’re in the $50,000 neighborhood. And I was very conservative with deductions, knowing the risks and history the business has with the IRS. You’re numbers are dead on, including miles driven.

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I drove 15000 miles in one sometimes two months time. In a vehicle at 5 mpg diesel. I have flown 3200 hrs at 200 mph that's 640,000 miles since 95, that is 3 times around the earth. I signed up 3 personally, I think.
Bruce Anderson - Former Diamond

Scott -

Thanks for sending the tax info. I LOVE this type of data - great for analytical, evidence-seeking minds. I will quote and refer to your site more often. You've collected some great stuff to post on your site. Keep it up.

BWT, you might want to review my site again and make reference to it. In addition to my extensive Utah tax study and other research (see research page), I am posting my evaluations of leading MLM's like Amway/Quixtar, Nu Skin, Herbalife, etc. (see evaluations page). Again, go to www.mlm-thetruth.com - then to the appropriate pages.

Jon M. Taylor, Ph.D., President, Consumer Awareness Institute and Advisor, Pyramid Scheme Alert
www.mlm-thetruth.com

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