Business, Investment and Economics

Network Marketing and Entrepreneurship in Jamaica are NOT the same

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Network Marketing has become quite a phenomenon in Jamaica over the last 5 years; and probably even longer. It has presented a much easier way of achieving financial prosperity, and would even lead you to believe you can escape the woes of our economic reality with no strings attached, that so many Jamaicans are battling with daily. Before delving into this article, let me just set the record straight in saying I have nothing against network marketing and the people who engage this as their means of livelihood. I class it as I would any other legitimate income earning job in our society, and would even go further to endorse it in providing (especially to our unemployed,disenfranchised youth) a viable alternative to making a life in Jamaica; instead of the narcotics/drugs or scamming business. Where my reservations lie, however, is with the delusion that so many network marketers are under in believing so fervently that they are entrepreneurs because of what they do. Entrepreneurship and Networking Marketing might share similarities yes, but they are NOT the same.

wv11 wv15Entrepreneurship is a process whereby an individual(s) who sees an opportunity to create value, assumes the risk of organizing the factors of production (land/labor/capital) to create a product or service that offers that value; in exchange for profit. Network Marketing is a sales strategy in which a salesperson attends meetings of organizations whose members are likely to be interested in a particular product or service in order to develop a book of business. So essentially, Entrepreneurs create then sell whereas Network marketers identify then sell. But the biggest distinction between the two lies not in what each does, but rather the risk that each takes in doing what each is doing.

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To become a network marketer is similar to becoming a franchisee to a franchiser; just like the network of KFC fast food restaurants worldwide. The owner of a KFC restaurant in Downtown, Kingston cannot call himself the entrepreneur for KFC because the risk he takes in managing the franchise equates nowhere near to the risk the Franchiser took when the first KFC was founded in 1930. Harland Sanders, more popularly known as Colonel Sanders, saw the opportunity to create value for customers with his fried chicken and took on the financial risk of organizing all the labor, ingredients and facilities he would have needed at the time to produce and sell his fried chicken to the prospective customer base. The franchises that followed the birth of this first restaurant (the franchiser) already had the full risk of the venture minimized to a smaller investment due to the Colonel bearing that burden with the first undertaking in 1930. Essentially, all the back-end work of inventing the right mix of capital, ingredients and labor to produce the fried chicken has already been completed, and the role of the franchisee is to sell this product on behalf of the Colonel. I know you might be thinking that the investment to set up a restaurant as a franchisee and market the fried chicken to prospective customers is an argument to say that franchisees are still entrepreneurs; but I’m not trying to measure the extent to which one is more entrepreneurial than the other. I am saying the entrepreneur is the man who started it all; and anyone else who follows suit is just an ambassador of that entrepreneur. 

I chose this example to show you the difference between the marketer and the entrepreneur, in the grand scheme of network marketing. This is why I believe our Jamaican network marketers representing their respective international companies are seriously deluded to be thinking that the job that they are doing makes them an entrepreneur. What you are is just like the KFC franchisee downtown in my example above; someone selling another man’s fried chicken for a profit. Even if after a time of building your network around the product/service, it appears as if you can “retire” while your “employees” in your network make money for you, you are still an employee to a higher person in the network.  

While some network marketers may be earning upwards of USD $2000 (JMD $234,000) monthly from their “businesses”, I disagree with the view that because they are making so much money from selling a service they should still be considered “successful entrepreneurs”. For me, It’s the principles and processes behind that USD $2000 that should differentiate them from entrepreneurs. Where have they identified a need in the market that wasn’t already identified for them? How have they organized factors of production in a way that innovates on the existing formula by the Franchiser or is completely new? How much of the real risk of the venture are they bearing in their income statements?? To say they are still entrepreneurs even after that previous line of questioning is just like saying a graduate in Marketing from the University of Technology has acquired the same kind of education as a graduate in Marketing from the University of the West Indies. While the finished product, being the degree in Marketing is the same on paper, given the differences in environment, resource distribution and approaches to teaching; the applicability of each degree will naturally differ.

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Labels are very important, and I believe it saves a lot of us from sprinkling poison on our eggs instead of black pepper when making breakfast in the mornings. If you’re a network marketer, or considering to enter network marketing consider this post as another label to save you from the delusion that so many of your counterparts are currently in; but let it not discourage you from pursuing or continuing to pursue your dream to be a network marketer.

-G.B

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