MLM and Inclusive Growth by Josiah Go

Many people aspire to have personal freedom and financial independence or want to be an entrepreneur but do not have huge capital. The route is typically via trading (buy and sell), opening a small neighborhood store or eatery, getting a franchise kiosk, or becoming a multi-level marketing (MLM) distributor.

MLM, also known as network marketing, is a modern direct sales compensation plan where distributors are paid on their personal sales and sales of their recruits, thereby improving their income source from the effort of others as well, liberalizing what used to be available only to employed sales managers and sales supervisors. MLM is not the same as pyramiding, an illegal business method, where compensation is derived from either simple recruitment (without sales) or complex recruitment (balancing a pair of recruits, as in a binary plan, not allowed by the Consumer Code of the Philippines and Department of Trade and Industry’s Administrative Order No.8).

I am a firm believer of MLM because I have personally seen how it offers income and is a career equalizer to the likes of Cristy Santos, a college dropout; Isabel Gaytano, a former supermarket merchandiser who has now passed the age preferred by employers; Rico Bulatao, a former OFW now reunited with his family; and Lerma Nepomuceno, a former bankrupt entrepreneur now given a second chance to reverse her family fortune. They have experienced growth for themselves and their families without having to be ‘prisoners’ of manning small stores, being employed forever, or being forced to be stay-at-home retirees. There is inclusive growth to the lost, the last, and the least.

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Inclusive growth – Isabel Gaytano (former supermarket merchandiser), Lerma Nepomuceno (former bankrupt now successful MLM entrepreneur), Ric Nepomuceno (former waiter). Standing is Pete Gaytano with the author

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The author with Cristy Santos (a college undergrad now successful MLM distributor), Rico Bulatao (former OFW) and wife Tess Bulatao

 

MLM has also attracted many professionals and fresh graduates as they have seen how the system can benefit them to create a better future for themselves beyond employment. It is also called People’s Franchise because it offers a road path to success without high capital that is needed in traditional franchising. Independent distributors focus on selling, sponsoring other people to sell, as well as conducting related activities like training, managing, and motivating downlines, while company handles all others like sourcing, delivery, service and commission payout– making MLM much easier than starting your own business. Rarer, MLM companies like Waters Philippines, even offer credit and collection services for its water purifiers and other wellness products in order for its distributors to expand their customer base to those who value affordability.

As to choosing an MLM company, ensure you focus with a company who is an official member of the Direct Selling Association of the Philippines (DSAP). Avoid companies who are using bad binary plan where they ask members to balance their recruits (this not allowed under the Consumer Code of the Philippines and DTI’s Administrative Order No.8, as mentioned above). Avoid companies who are asking members to invest heavily by buying positions or business centers, a de facto unlicensed investment not allowed by the Securities and Exchange Commission.

(Josiah Go is chairman of marketing training and advocacy firm Mansmith and Fielders Inc. Follow his blog www.josiahgo.com. Day 8 Business Academy for SMEs is offering a FREE MLM intro course  free to families of OFW. Others can also attend. Pls email info@day8.org for details.)

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