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May 01, 2010

DSA News

Hispanic Entrepreneurship

by Adolfo A. Franco

The increasing prominence of the Hispanic population in the United States and the issues of importance to them have already had a significant impact on the nation’s political debates, commercial climate and on the wider society. A large population of millions of legal immigrants of Hispanic descent, and millions more who are in the country illegally, have created a volatile mix of issues, including immigration policy, labor issues and social welfare questions. Marches on Washington, a looming congressional debate on immigration reform and dual-language customer service menus are all indications of the growing prominence of this key demographic in the American marketplace.

Hispanic-owned businesses are one of the fastest-growing segments of the U.S. economy.

For businesses, the Hispanic population represents a remarkable opportunity and challenge. According to Jim Estrada, a noted Texas economist, many businesses are not “culturally competent” enough to capture the Hispanic consumer. While it is clear that large segments of the Hispanic community are underserved by some businesses, it’s also clear that Estrada has not had enough experience with direct selling companies and their potential for seizing the moment with the Hispanic consumer and salesperson.

Hispanic-owned businesses are one of the fastest-growing segments of the U.S. economy, expanding by almost one-third over the past decade—three times the national average. Between 1990 and 2005, immigrants started 25 percent of all venture-backed companies. The U.S. Chamber of Commerce estimates that the nearly 2 million Hispanic-owned businesses generate $350 billion each year, and that figure is climbing. These stellar accomplishments are repeated in the wider economy. Many prominent corporations are led by executives who were born outside the United States, including 14 CEOs in the 2007 Fortune 100 list, the top-ranked companies by size. This entrepreneurship at all levels has generated greater prosperity for the American people as a whole.

Of course, Hispanics are already a large and growing component of direct selling, both as distributors and consumers. But we are only beginning to scratch the surface of this huge market. Estrada is right, perhaps—there are many obstacles to be overcome before the full potential of this market can be realized. But direct selling may be one of the industries best positioned to take full advantage. Paradoxically, one of the obstacles blocking a wider participation in the national economy is also one of the Hispanic population’s most attractive features for direct selling, namely the close-knit communities in which many work and live. Many Hispanics prefer to shop and work close to home and instinctively trust and rely on family and friends. The Hispanic community is an ideal environment within which the direct selling model can thrive. The “personal touch” that face-to-face direct selling brings to the marketplace is natural for Hispanic Americans. The trust and friendship established between direct sellers and their clients come easily with family and neighbors, and can overcome the language and cultural barriers that often pose limits on outsiders seeking to access the Hispanic market.

The “personal touch” that face-to-face direct selling brings to the marketplace is natural for Hispanic Americans.

The Direct Selling Association understands these challenges and opportunities and is increasingly aware of the enormous potential of the Hispanic market. To that end, the DSA has established a Hispanic Marketing Council comprising leading direct selling company executives who seek to promote direct selling within the Hispanic community, share ideas on how to reach and tap this rapidly growing market, and overcome obstacles such as language and cultural differences.

By embracing Hispanics and being embraced by them, direct selling can continue to build on the diversity that spurs our industry and country to greater accomplishments. Direct selling in the 21st century should be guided by Walt Whitman’s description of America as “not merely a nation, but a teeming Nation of nations.” An appreciation of this truth can only result in success for direct sellers, but also the Hispanic community and our nation as a whole.

Adolfo FrancoAdolfo Franco is Vice President of Global Regulatory Affairs for the Direct Selling Association.