It seems everyone is getting “stimulated” but the little guy. The old “80/20” rule is at work again. Except this time it’s more like “100/20”…100% of the stimulus money went to 20% of the people. So, what else is new?
And, now that the train has left the station without us, the 20% are complaining about deficits and over-spending. After all, now that a trillion bucks has disappeared into the ether we better hunker down and begin to deal with reality. No more federal deficits to help the rest of us work through this mess.
I’ve got an idea. It’s simple and so easy you’ll wonder why no one ever thought of it before. Let me explain:
Imagine the Grand Canyon. Imagine that the 20% are on one side and the rest of us are on the other side. It is an apparently uncrossable chasm. On the 20% side are all the tools of capitalism: access to credit, access to capital, access to government programs, access to the banking system, the ability to create jobs.
On our side we have no access. It’s always been that way. But don’t understand it in terms of “haves and have-nots” because that’s not really the case. Part of the fallout from the financial debacle is that a measurable percentage of “haves” have been “transported” to our side of the canyon, finding themselves on the “wrong” side of the abyss for the first time in their lives. And they don’t like it one little bit.
They are coming up with all kinds of contraptions to try to get back across. All to no avail. Where are the Wright Brothers when we need them? And it’s not only the new little guys that would like to get across. The rest of us could use a crack at the credit and capital markets necessary to build businesses and create jobs. After all, according to the Kauffman Foundation, most permanent jobs are created by start-up and early stage businesses.
Since the beginning of capitalism there has been one insurmountable stumbling block that prevented ordinary people from joining the fraternity of successful business owners: the unavailability of investment and working capital. Or, so they say.
But, no small business ever failed because it ran out of money…small businesses fail because they run out of time. Capital in a start-up business is more like tuition than an investment. Money merely buys the time to go through the grinding learning curve until the money runs out. And it runs out 75% of the time.
Because of the odds against success, the folks on the other side of the canyon are happy to leave us be on our side. We’re far enough away so they can’t hear our petition. They’ve tried to listen in the past and lost money every time. Remember the “.com” era? They coined the phrase “burn rate” to describe how their investments were being consumed to produce nothing (except some very beautiful now empty buildings).
So, undaunted, the folks on our side persevere and scrape together businesses using whatever is available to them. With little capital, no small business experience and no leg up from the guys on the other side these “entrepreneurs” continue to fail year after year. And what do we hear from our friends across the way? “I told you so”!
THE PROPOSAL
I propose a radical new program to change the world we live in, through education.
I propose that the Small Business Administration create a new branch that deals only with “microbusiness” i.e. employers with fewer that 10 employees.
I propose that this branch use the state economic development departments and they, in turn, use local economic development programs and/or local Workforce Investment Boards to execute the programs developed.
I propose that a “licensing” or “certification” examination be developed that is linked to a pool of small business loans (either publicly or privately funded) the sole criteria for which is the achievement of a satisfactory grade on the exam.
I propose that an entirely new way of teaching potential small business owners be adopted to replace the ineffective methods we currently use.
I propose that the loans would be forgiven after the business owner achieves a targeted level of performance measured either by the number of jobs created or longevity of the business.
That’s it.
This program can be a temporary stimulus program for 24 months, with a review after that period of time to see if renewal makes sense.
Here’s what the program accomplishes:
· For the first time in history, people on our side of the canyon have a way to earn capital/credit by improving themselves through education. We do this with every other profession now. Doctors, lawyers, nurses, accountants, teachers even plumbers and contractors are all subject to licensing exams that certify them as acceptable to do business with the public. Why not certify small businesses?
· Little attention is paid to the damage small business failure does to local economies. Communities allow anyone to start a business, lease space, hire people, run up liabilities to local vendors and fail 75% of the time. Look around at the collateral damage in the form of empty strip centers, dog-eared signs, lost services and trashed expectations. Why not certify small businesses?
· Real estate developers (many of whom find themselves on our side of the canyon) and financial institutions (many of whom are well represented on our side) can require potential tenants to be certified before they can sign a lease for a proposed strip center or commercial development. Why not certify small businesses?
· There are roughly 500,000 small business failures each year wasting around $25 billion in lost equity…every year. Imagine if that lost money (derived primarily from home equity loans and deferred compensation plans) were used for a productive rather than a futile purpose? Why not certify small businesses?
· One of the problems of society (worldwide) is the distribution of wealth. Rightfully so, the folks on the other side of the canyon do not see an obligation to toss some our way. The Right says “no way” the Left says “open the treasury”. I say “create a qualifying exam”. If you pass it you earn certain privileges if you don’t pass it I say “sorry about your bad luck”. But, most importantly, if you pass it you get enough capital to start-up and create jobs and complement local economies and form a firm foundation for local business. Why not certify small businesses?
The Sacks Group, Inc. has already developed this program. We have designed the entire curriculum, timeline and exam. Our program has required courses, like any course of study that leads to certification. Our program puts participants through an array of different forms of education (from classroom to individual to on the job training). My book “The Twelve Commandments for Small Business”™ is the unique foundation for our course of study. My philosophies have helped businesses to be successful for 25 years. But we teach differently than any existing institution and our results prove the efficacy of our program.
Maybe if we all scream loud enough the 20% will begin to realize that we have their best interests at heart. Many of them started out on our side and got over there through education. But, they only accept education that fills a pre-existing space on their side. Why not create a program that would allow entrée to the world of business to the 80%…but only if they qualify.
rjs
Tuesday, August 24, 2010
Tuesday, August 3, 2010
A Storehouse of Tools
Archeologists discovered what they believe to be an old civilization that apparently disappeared from the face of the earth. They found evidence of burning on most of the buildings, leading them to the conclusion that there was some sort of violent upheaval that spelled the doom of the society.
As they dug deeper they found some interesting anomalies. There appeared to be an absence of any kind of tools throughout the area. The more they explored the stranger it became. There were no cutting or hammering or digging tools. No farming or building tools. What they did find were crude tools of conflict…clubs and knives and axes.
Most interesting was that there was no apparent way for the people to make a living. What, they wondered, did these people live on? Apparently they had some way of getting food because there were plenty of household relics. The dishes and cups must have been filled with something.
But they were unable to uncover anything obvious that would describe the mundane activities of a people. For all intents and purposes they appeared to be ill-equipped to survive on a day-to-day basis.
Over time the puzzle gained followers in the anthropological community. Together, the field workers and the social scientists continued to work on the dilemma. And then, an even more challenging discovery was made.
High on a hill, in the center of the main town, was a huge storehouse containing tools. Thousands of implements that would normally be found dispersed among the ruins but, in this case, were all in one place. All the things the people needed to live a life were there. And the place was surrounded by battlements and barracks. Obviously well-guarded.
The anthropologists concluded that the tools of trade were considered valuable. A currency of sorts. If one had access to the tools of survival one must have been wealthy. He who had tools had an advantage over he who had none.
The fact that there were no tools in the hands of the general population indicated that they must have been dependent on whomever controlled the tools. Or maybe the general population was cared for by the people with the tools.
It all began to become clear. Here was a civilization that was so well taken care of by those who had tools that the people had no need for tools. As a result, over generations, the people lost their ability to use tools themselves. And they were probably quite happy and even prosperous.
But in their prosperity they failed to realize that they could no longer survive on their own. If their benefactor ever stopped providing tools and laborers they were helpless. And it was too late to do anything about it.
And, then it must have happened. For some reason, yet to be determined, the time of benevolence ended. And the people had no tools of their own. And people had no way to provide for themselves. And they must have become desperate to feed their families.
The battle lines must have been drawn. With no tools and no skills and the benefactor telling them they were on their own the people began to fight for survival. And what was left was what the archeologists discovered in the year 2110.
rjs
As they dug deeper they found some interesting anomalies. There appeared to be an absence of any kind of tools throughout the area. The more they explored the stranger it became. There were no cutting or hammering or digging tools. No farming or building tools. What they did find were crude tools of conflict…clubs and knives and axes.
Most interesting was that there was no apparent way for the people to make a living. What, they wondered, did these people live on? Apparently they had some way of getting food because there were plenty of household relics. The dishes and cups must have been filled with something.
But they were unable to uncover anything obvious that would describe the mundane activities of a people. For all intents and purposes they appeared to be ill-equipped to survive on a day-to-day basis.
Over time the puzzle gained followers in the anthropological community. Together, the field workers and the social scientists continued to work on the dilemma. And then, an even more challenging discovery was made.
High on a hill, in the center of the main town, was a huge storehouse containing tools. Thousands of implements that would normally be found dispersed among the ruins but, in this case, were all in one place. All the things the people needed to live a life were there. And the place was surrounded by battlements and barracks. Obviously well-guarded.
The anthropologists concluded that the tools of trade were considered valuable. A currency of sorts. If one had access to the tools of survival one must have been wealthy. He who had tools had an advantage over he who had none.
The fact that there were no tools in the hands of the general population indicated that they must have been dependent on whomever controlled the tools. Or maybe the general population was cared for by the people with the tools.
It all began to become clear. Here was a civilization that was so well taken care of by those who had tools that the people had no need for tools. As a result, over generations, the people lost their ability to use tools themselves. And they were probably quite happy and even prosperous.
But in their prosperity they failed to realize that they could no longer survive on their own. If their benefactor ever stopped providing tools and laborers they were helpless. And it was too late to do anything about it.
And, then it must have happened. For some reason, yet to be determined, the time of benevolence ended. And the people had no tools of their own. And people had no way to provide for themselves. And they must have become desperate to feed their families.
The battle lines must have been drawn. With no tools and no skills and the benefactor telling them they were on their own the people began to fight for survival. And what was left was what the archeologists discovered in the year 2110.
rjs
Subscribe to:
Posts (Atom)
