Nov 8, 2011

Why MLM companies CLOSE in the Philippines?

Juan joined an MLM company.
It’s his first time to do network marketing.
He gave his best in building the business.
His effort paid off in 8 months.
He started earning P20,000/month.
Then the unthinkable happened.

His company closed.

All of a sudden, his dreams shattered into pieces.
Another company emerged.
This time Juan is confident because he’s one of the pioneers. 
To his surprise, the company only lasted 9 months. He said, 
“di nako magne-network kailanman…”

Pero alam naman natin ang kasabihang.. 
“..once a networker, always a networker…”
Sabi ni Juan, “Cge, I’ll try one more time. Last na talaga to!” And so he joined this new MLM company. It survived for one year.
What happened to those companies? I remember John Maxwell saying “Everything rise and fall in leadership.”
Many companies have great marketing plan.
Others even promise you a P100 million potential monthly income.
Some companies have great quality products.
Many testimonies proved that they were healed from their disease.
But again, why did they close? It boils down to the quality of leadership those companies had.

WARNING: What you are about to read are real life MLM scenarios. 
However, the names and figures are fictitious. 
I’m not singling out any company here. You can use your imagination.

Why MLM companies CLOSE in the Philippines?
Scenario #1.
The company was owned by 4 people.
All of them are experienced networkers.
And so they started the business.
The business was doing good until one of them decided to go “solo” (para ma-solo niya ang profit).
The renegade owner formed his own company. Made some loans in the bank and “pirated” leaders from his “original” company by making outrageous offers. He managed to convince 40% of the leaders to join the bandwagon.
The rest is history.
The “original” company losing its leaders and distributors so fast that they didn’t see it coming. They were compelled to close.

Scenario #2.
There are times when companies are owned by people with no business backgrounds but have good medical backgrounds.
They started the business, tried it and then they realized that they don’t have the stomach (stamina) to handle the business pressure.
And so they opted to close the company and chosen to employ the traditional channels of distribution like drugstores. (Kawawang mga distributors. Sayang yung customers na na-develop nila).

Scenario #3.
Some owners don’t have the intention to last in the business. I mean they know beforehand that they’re going to close and they really have planned it. (it’s like those bank robbers planning to rob a bank. It’s all pre-meditated)
To them, MLM is just a means to dispose their products.
I have this particular downline months ago.
A company offered her to be the “001” of their MLM perfume company. Entry level is below P500.
The company told her the gameplan. (im glad there’s still an ounce of honesty left in that company).
They have thousands of unsold perfumes.
Once all the products are sold out, they’re going to close the company. They have no intention to produce more perfumes. (Poor distributors. They have no idea what misfortune theyre getting into)

Scenario #4.
Companies outsource their products somewhere else. 99% of companies are purely marketing arm. They don’t produce or manufacture their products. And there’s nothing wrong with that.
Sometime in 2005, a big MLM company came in the country. They got their products from China because they have a huge plantation there.
Then a big misunderstanding took place in the higher levels of the management.
The mother company from China decided to stop supplying the products. The sad thing was distributors have no idea what was going on. Lahat sila eh humahataw nationwide when in fact the company no longer exist…

Scenario #5.
Some MLM owners are only after the profit.
Here’s the story…
2 best friends decided they want to venture in network marketing. They have the money to invest in MLM.
They contacted a “computer” expert guy who understand the mechanics and marketing plans of MLM companies.
Investor: I want to start an MLM company and I want this particular marketing plan.
(and so they made marketing plan simulations with the “computer” guy.)
Investor: How much I earn in 10 pairs/day?
How bout 16 pairs/day?
I.T. guy: your profit is P5 Billion in this marketing plan but according to my computation your company will only last 6-7 years to avoid “over payout”.
Investor: that’s okay. Lets go for it. Basta sure ka na P5 Billion ang profit ko? Don’t worry about the distributors or the networkers, I’ll just form another MLM company once mag-close ang itatayo nating company. All I need is to bring in the leaders at puputok ulit ako.
Anyway, sanay naman ang karamihan ng mga networkers na magpalipat-lipat ng companies.

Scenario #6.
Many MLM owners have been to many traditional business.
To them, MLM is just another business venture or experiment.
George invested in food business. It worked.
He tried real state business. It didn’t work.
He decided to move on with the next business which is transporation. It went well.
“how bout I’ll try putting up my own MLM company? kapag di nag-work, eh di iclo-close ko lang. as simple as that.” ganito ang mindset nila.
To them, its purely business. Nothing personal.

Scenario #7.
It’s a phenomenal company. (The #1 earner was reaping huge incomes month after month.
All of a sudden, with all the earnings and popularity he’s getting… a great idea hit him!
“why not I go to the next level? I don’t want to be a networker all throughout my life. Owning a company looks promising…”
The top earner decided to form his own MLM company.

Smurkydad’s thoughts:
After reading everything I’ve said, did you begin to worry?
That’s good. It’s a valid feeling. That means you’re smarter now by being cautious. That’s means you’re now vigilant.
First. I don’t want to see you “hataw ng hataw” and then before you know it biglang nag-close na pala ang company mo.
Second. I don’t want seeing you guys jumping from one company to another. Without you knowing, you’re already becoming a “junkie”.
Again, MLM companies “close” because of leadership issues.
Choose a company who’s got solid leadership ability.
Check the owner’s business background before joining. (that’s what I did)

Original Article From...

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  1. I suggest to each and everyone, study how your company was built and who are the people managing it. If it falls in the same scenario presented here, better find another company before you waste your integrity.

    This post is very informational so use it!

  2. I think its just the nature of MLM.. they really don't last.. Even in theory they are doomed by design.. Simple elementary economics law of supply and demand are ignored in this business model.. I can not name one MLM company who has an expert watching over their product penetration in the market.. All they care is recruiting excessive distributors producing more product than what the market demands. This will lead to market saturation and eventually they collapse..

    I am no marketing expert but is my commonsense right?

  3.  You can make as much money as you want in MLM, but for most people, it doesn’t happen overnight. Treat your MLM Home Business as a long-term business. You want to build up your income in MLM Home Business before you get rid of your job. If you rush to walk away from your job before your business has reached a certain level, you run the chance of getting stressed out and quitting your MLM business all together. Never let that happen to you. Before you even think of quitting your job you should be making at least the same amount of money from your MLM business as you’re earning at your job. That way you can quit your job and be excited about your MLM business.

  4. Hi Ed this article is very informative, and this educates potential marketers. I also made an article about Network Marketing the right way to educated and lessen the misunderstanding about MLM. Most people got stuck and never earn in MLM because of the lack of knowledge on what they are getting into.

  5. There is you have right reason to closed mlm company in Philippines. But now you must know how to maintain that business with in right way. Longtime who want like to run their mlm business in legal way at this situation the government can give authorize for their business and can’t close it.

  6. I've join several kind of MLM programs since so many years ago... And my conclusion is STRAIGHT and CLEAR, no doubt about it, the best MLM for me (and many of my friends) is here, you can see it by clicking this secret link... CLICK HERE and don't be surprised, such as "OMIGOD, why I never think of that before", etc - All of you may thank me later ;)