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Network Marketing: A Good Business in the Philippines?

Condition of Employment in the Philippines

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Our current unemployment rate according to National Statistics Office stands at 6.4% or roughly 2.6 million jobless Pinoys. Underemployed people in the country is at 17.8% meaning a lot of employees in the country are just coping with their low paying job just to survive. Many Filipinos rely on credit cards and loans to sustain their basic needs and provide for education for their children. With the current situation in our country, are there other ways to earn more money in the legal, moral and ethical way possible? 

Start a Business!

Business enables us to earn more than the fixed monthly income in employment. A business can give you residual income like what the business tycoons Henry Sy and Lucio Tan are enjoying. For now, let us look on three (3) business opportunities in the Philippines. 

Building a Traditional Business

Normally, a traditional business may require a huge chunk of capital. The risk involved is high depending on the nature of business. If you have a product, the main concern is its marketability and its edge over the competitors. The capital for these businesses mostly covers the raw materials, equipments for the manufacturing and salary to pay the workers.

For businesses like restaurants, most of the capital goes to the equipments, utensils, appliances, and the place whether rented or owned. If you have workers, you will need to prepare for their monthly salaries.

You are also required by law to register it to SEC or DTI as corporation, partnership, or single-proprietorship. You will need to get permit from your Mayor, Barangay, and get your Business TIN (Tax Identification Number) for your taxes. 

ROI

Statistics reveal that for all the businesses opened in the Philippines, almost 90% of those new companies never reached five years. I experienced this on my first two jobs. My companies shut down within their first year of operation because of the Global Recession and failed business transactions.

On the other hand, we have seen businesses that started from capital you wouldn’t imagine possible. I remember a successful ice business started from selling flavored iced candies. I know you may have watched some of the success stories featured on TV programs such as “My Puhunan”. A business from scratch is not bad but what separates the successful from the busts?

Traditional business requires a lot of passion. Many people jump from one business to another just to find the “hot” business today. According to Bo Sanchez, a preacher, motivational speaker, best-selling author, and businessman; for you to be successful in business, it must be on something that you really want to do. What is your passion?

It can be something you treat as a hobby like creative writing, illustration, sports, gaming or simply your household chores like cooking or doing laundry. A business from services angle can start small like working first as a freelancer then expanding your clients through referrals. 

Buying a Franchise?

A franchise is a form of business where-in the brand and business model is sold for a fee for a certain period of time.

There are a lot of franchises that have sprouted in the country. Most of them are located on all public places like malls, schools, and train stations. These franchises are mostly in the food industry like Jollibee and Mc Donald’s and some are stores like 7-11.

Their start-up costs depend on the popularity of the company. For big franchises like Jollibee, you will need to pay around 60 million to give you the license to carry the big happy bee. For others like the Siomai House or 7-11, the franchise fee ranges from 6 to 7 digits in PhP. 

Advantages and Disadvantages of Franchise

The advantage of a franchise is there is a system already in place. That is what makes the franchise successful over the years. Unlike traditional businesses where you built the system from scratch, franchises have everything they needed to operate in place. They also have a well-known brand and product which you will not need to think about. They take care of the marketing and upgrades. All you need to do is take care of the business taxes, permits, salaries to workers, and other expenses similar to traditional businesses.

One disadvantage of owning a franchise business is the location. I have known some of people who started franchises before have shut down their business because it didn’t earn what is supposed to. A common reason is location and it is a very critical factor for the success of any business. Some owners were out-gunned by other competitors with similar but better products or services. 

Network Marketing Anyone?

Network Marketing or Multi-level Marketing (MLM) is another form business where the product or service is being distributed from different channels through a specific business model or system. This business is one of the growing businesses around the world with overall associates reaching 90 million. That is enough to form a country!

Why MLM?

Many motivational speakers and best-selling authors in businesses recommend Network Marketing because of the built-in system and quality products. Why quality? It is because the company doesn’t need to pay advertisements and middle men to distribute their products. These are being done by associates who use and share the products to their families and friends.

Another is the low start-up cost. Start-up cost in Network Marketing depends on the amount of the products being bought at a discounted price. It can be between 4-5 digits in PhP. The associates can retail their products at a certain amount. If a certain individual wants the products, he or she can avail the lifetime membership to enjoy the products in long-term or buy from an associate or distributor.

Unlike franchises and traditional businesses, the business taxes, rent, salaries, and other business expenses for the manufacturing of products are shouldered by the mother company. The associates don’t need to worry those and can focus on building their business. Trainings are free and sponsored by the company.

Network Marketing also allows every associate to build a passive income from repeat orders from their customers, retailers, and business builders. It also allows associates to build their businesses with other people forming a team.

Believe it or not, most of the top income earners around the world came from MLM companies before.

How Do Associates Earn?

Associates earn a percentage for every product bought in the company by people under her account. Network Marketing has different compensation plans like Unilevel, Binary, Multi-level, and Stair-Step Breakaway. The most common is binary where in you have two organizations or sales group to manage. You earn based on the matched group sales volumes of each.

Aside from the monetary earnings, associates can avail free and luxurious travel incentives around the world. Their account can be transferred to their future offspring just like in traditional businesses.

Pyramiding Schemes

Network Marketing is commonly associated with the pyramiding schemes in the country with a lot of people being victimized by these scammers. The Department of Trade and Industry has defined the difference between a legit Network Marketing and a Pyramiding Scheme. Mostly pyramiding schemes solicit a certain amount of money to people with the promise of their so-called investment can double or triple in months. This is like sophisticated “PALUWAGAN” where the people on top earn the money of the people at the bottom.

If you’re deciding on doing Network Marketing, keep in mind that it is not an easy money scheme. Network Marketing is like other businesses that requires passion and hard work. It will be hard to build in the beginning but it will be worth it at the end.

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