Tag: Business Incubator

Jobenomics Community-Based Business Generators

 Jobenomics Community-Based Business Generators

www.Jobenomics.com

By: Chuck Vollmer

15 August 2016

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Jobenomics Community-Based Business Generators - 15 August 2016

The way that government and big business can plan, manage and support small business and job creation is via community-based business incubators, business accelerators and business generators.

Business incubators tend to focus high-tech, silver bullet innovations that have extraordinary growth and employment potential.   Business accelerators focus on expanding existing businesses in order to make them larger and more profitable.  The Jobenomics business generator concept involves mass-producing small and self-employed business with emphasis on lower-tech but plentiful service-providing businesses at the base of America’s economic pyramid.  Many cities have business incubators, usually located at or around universities or technology parks, and business accelerators that are associated with mezzanine financing institutions.  Jobenomics is working with cities and states to create business generators to mass-produce startup small and self-employed businesses.

JCBBG Concept

Jobenomics Community-Based Business Generators mass-produce startup businesses by: (1) working with community leaders to identify high-potential business owners and employees, (2) executing a due diligence process to identify potential high quality business leaders and employees, (3) training and certifying these leaders and employees in targeted occupations, (4) creating highly repeatable and highly scalable “turn-key” small and self-employed businesses, (5) establishing sources of startup funding, recurring funding and contracts to provide a consistent source of revenue for new businesses after incorporation, and (6) providing mentoring and back-office support services to extend the life span and profitability of businesses created by the Jobenomics Community-Based Business Generators.

The process starts by using community leaders to identify high potential job seekers.  Churches, non-profit institutions, schools, sports teams and veterans groups are a great source for identifying talent, desire and fortitude.  These organizations provide the first phase of the triage process by screening and assessing high performance people who are known to them. The second stage is accomplished during onboarding that involves Jobenomics screening and assessing.  The third stage uses aptitude and personality tests to determine potential career paths.

Once completed, candidates will be separated into a business leader group or a high potential employee group for training.  The leader group will undergo management and startup business training.  The employee group will undergo skills training based on the role that they will assume in the startup business (operational, technical, mechanical, financial, marketing, administrative, etc.).  After the training is completed and certifications awarded, the team will commence startup operations under the guidance and assistance of the Jobenomics Community-Based Business Generator team.  Jobenomics contends that Community-Based Business Generators could vastly improve the rate of startups and expanding businesses, and reduce the rate of contracting and closing businesses.

JCBBG Process

Starting with a notional pool of thousands of candidates, Jobenomics will work with local civic organizations (churches, non-profits, sports teams, etc.) to identify and nominate the top 30% to 50%, who they know, for the Jobenomics Community-Based Business Generator program.  This is the first stage of the due diligence process to separate the proverbial wheat from the chaff.

These nominees will then be subjected to standard aptitude and attitude tests in order to identify and assist those (1) those that should be sent other educational (GED and postsecondary) or training (vocational) centers for career development, (2) those that are qualified and suitable for immediate employment with existing companies, and (3) those that desire and have an aptitude for starting a small or self-employed business.  Jobenomics Community-Based Business Generator will help all people who enter the program to find meaningful employment and career paths.

Jobenomics envisions that 25% of the nominees would seek a traditional education and training path, 25% would be hired directly by existing business who are looking for quality workers, and 50% would seek a more independent and self-sufficient route offered by a small business startup or self-employment.

Of the 50% that choose the Jobenomics Community-Based Business Generator training and certification process, Jobenomics anticipates that approximately 25% will eventually implement a small business startup or incorporate as a self-employed business.  The 75% that undergoes but does complete Jobenomics Community-Based Business Generator process will be certified (with empirical data by professional testing and evaluation) as high-quality candidates for immediate employment or traditional education/vocational training.

Many of the initial candidates are likely to prefer working for existing companies rather than going through the Jobenomics process.  Anticipating this, Jobenomics will implement a “pipeline” to connect these individuals who have undergone some level of due diligence to companies that are hiring.  Consequently, the Jobenomics management team includes a nationally recognized leader who developed such a pipeline system that has matched 250,000 veterans with companies.  This system is ideally suited for matching Jobenomics candidates to local employment vacancies.

The overall objective is to mass-produce small and self-employed businesses, which makes the Jobenomics Community-Based Business Generator process unique as a traditional business and workforce development center.  Traditional workforce development processes focus on preparing potential workers for employment by existing businesses—usually large corporations.  For marginalized individuals at the base of the American economic pyramid (especially those in depressed urban and rural areas) the odds of employment at existing businesses are slim as evidenced by the long lines at traditional job fairs versus the low percentage of people hired.

The Jobenomics process focuses on preparing workers for starting a business, whether they actually start one or use the experience to be more competitive to get a job.  In today’s world, gainful employment is difficult and oriented to those that are currently employed, credentialed or high-skilled.  Conversely, a common complaint that Jobenomics often hears from companies is that they have a very hard time (1) finding good people who want to work, (2) who have the right attitudes and aptitude for work, and (3) who have workforce credentials, experience or related skills.

Every nominee that enters the Jobenomics process will setup a self-employed business, which can be incorporated in a matter of days, and undergo elementary business training.  The reason for setting up a small business is to make them more competitive in today’s job market.  Many employers prefer to “try before they buy”.  An incorporated self-employed individual can position themselves for subcontract or contingent work (1099) as a prelude to standard full-time work (W2).  Even if a self-employed individual never receives an income as a self-employed business, that individual can present themselves with credentials (Employer ID Number, website, business card and skills resume) that align with the business community.  In addition, Jobenomics will provide additional credentials regarding the individual’s workforce aptitude, skills and suitability tailored to the specific hiring opportunity.  Jobenomics credentialing, along with letters of recommendation from the nominees’ sponsoring organization, will greatly distinguish the individual from the masses of unemployed or new or returning workforce entrants.

Today, the United States does not have standardized national, state or local processes to create or mass-produce startup businesses.  The U.S. startup process is largely ad hoc.  By instituting a community-based (all jobs are local) standardized, repeatable and scalable process to mass-produce startup businesses, millions of new establishments could be created across America.  By being part of a small business team, team members will be motivated to grow the business in order to make it more profitable, which facilitates upward mobility, higher wages, better benefits, potential equity positions, and, perhaps most importantly, a sense of camaraderie and purpose.

Job creation is the number one issue facing U.S. in regard to economic growth, sustainment and prosperity.  Jobs do not create jobs, businesses do, especially small businesses that currently employ 80% of all Americans and created 80% of all new jobs since the end of the Great Recession.

Unfortunately, America is focused on big business and government employment solutions that have not been very effective growing the U.S. labor force.  In fact, the U.S. labor force is in a state of decline as evidenced by the eroding middle-class and the transformation from standard full-time to part-time and contingency workers.  With the next fifteen years, Jobenomics forecasts that the contingent workforce will replace traditional full-time workforce as the dominant force of labor in the United States—a trend that is largely unknown to policy-makers and the American public.

Jobenomics asserts that the four demographics with the highest need and growth potential include women, minorities, new workforce entrants, and the large cadre of financially distressed citizens who want to work or start a business.  These demographics are ideally suited for the accommodating the growing contingent workforce and attracting new labor force entrants that often do not share the same employment dream of older generations.

Jobenomics believes that new small, emerging and self-employed businesses could create 20 million new jobs within a decade, if properly incentivized and supported.   Notwithstanding filling the 5+ million open U.S. jobs positions, the emerging Energy Technology Revolution (ETR) and the Network Technology Revolution (NTR) could create 20 million net new American jobs within a decade given proper leadership and support.

Using the Jobenomics Community-Based Business Generator process of mass-producing highly repeatable and scalable “turn-key” small and self-employed businesses, America writ large could create tens of millions of jobs that would transform the U.S. labor force, middle-class and economy as well as providing hope and jobs for marginalized urban and rural American communities.

 

Nation of Shopkeepers

The epithet “Nation of Shopkeepers” was used by Napoleon to infer that a British merchant society was incapable of effectively waging war against the mighty nation of France.  Napoleon was wrong.   British merchants and industry provided the resources that enabled England, with half the population of France, to win the Napoleonic Wars.

The phrase, “Nation of Shopkeepers”, did not originate with Napoleon. It first appeared in The Wealth of Nations by Adam Smith in 1776.   Smith believed that when individuals pursue their self-interest, they indirectly promote the greater good of society. He argued that merchants, seeking their own self-interests, contribute significantly to the commonwealth by producing vital goods, services and tax revenues.  Without this “invisible hand”, societies would be incapable of effectively pursuing self-sufficiency, prosperity and wealth creation.

Recent articles in prestigious publications, like USA Today and The Economist, make similar claims that a nation of small businesses cannot compete in the global marketplace because:

  • Big is better.  Big firms employ more, are more productive, can reap economies of scale, can focus resources on innovation, offer higher wages, and pay more taxes.
  • Smaller means weaker.  Small businesses fail at greater rate than big businesses.    Small businesses are not particularly adept at creating jobs, at least not the best jobs.  Almost all the 6 million companies in the US are small businesses, with fewer than 500 workers.  Most small business owners just want to be their own boss and never expect to hire more than a few employees.

Like Napoleon’s premise that a nation of shopkeepers cannot compete, those that believe that a nation of small businesses cannot compete are simply wrong.  Small business is America’s economic backbone—producing $6 trillion worth of annual products and services and employing half of the American private sector work force.  Moreover, it is small business, not big business, which is the foundation of job creation.  Since the beginning of this decade, small business generated 95% of all new American jobs (see: Employment Scoreboard: March 2012).  As far as innovation, the Small Business Administration (SBA) reports that small business produce 16.5 times more patents per employee than large firms.

There are not 6 million small businesses in the US.  There are 27.3 million small businesses.   The latest available Census data show that there were 5.9 million firms with employees and 21.4 million without employees in 2008. These 27 million small businesses pay 43% of total US private payroll and are responsible for 97.5% of all identified exporters with 31% of export value as reported by the SBA Office of Advocacy.  Just as important small businesses do not export jobs like big businesses.

The perception that small businesses regularly fail is only partly true.  While the failure rate is high, so is their entrance rate.  A recent landmark Census Bureau study showed that small establishments are no more inclined to exit business than large businesses.   This misperception exists because of the high exit rate of micro-firms (1-4 employees), which averaged 18.4% over the last three decades.  While this rate was high, their entry rate was even higher at 21.3%, therefore producing a net gain of 2.9% over the period.  The entry/exit rate difference for all firms was only 1.9%.  Looking at this data from a different perspective, compared to all businesses, micro-firms were more likely to succeed, which is counter-intuitive to common perception.

More recent data, reported by the ADP National Employment Survey, shows that very small businesses with 1-49 employees grew +7% over the last dozen years, whereas small businesses with 50-499 employees and medium/large businesses with more than 499 employees lost -4% and -16% respectively over the same period of time.

According to a recent Kauffman Foundation Study, job growth in the US is driven entirely by startups.  The study reveals that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing one million jobs net combined per year.   By contrast, in their first year, new firms add an average of three million jobs.  According to the Kauffman Foundation, “Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies. But the data from this report suggest that growth would be best boosted by supporting startup firms.”

From a Jobenomics perspective the government’s primary jobs creation role is to create an environment where small, entrepreneurial businesses can flourish.  Unfortunately, government officials are locked in a mindset that a nation of “shopkeepers” cannot compete and the solution to growing the economy is a combination of big business and government. Perhaps the greatest factor contributing to this mindset is the scarcity of business owners working in government.  Furthermore, entrepreneurs and serial-entrepreneurs are almost completely absent in government decision-making.

Bureaucrats tend to view risk as a liability, whereas entrepreneurs embrace risk as an opportunity.  Serial entrepreneurs embrace multiple ideas, get companies started, and transfer leadership to operational managers so they can move on to new ventures.  Steve Jobs is an example of a serial-entrepreneur who created multiple iconic businesses.  Our country is blessed with tens of thousands of proven serial entrepreneurs.  Unfortunately, few serial-entrepreneurs serve on government economic councils that are replete with politically-correct and process-driven corporate chieftains and economists.

If small business is America’s economic engine, and if entrepreneurs and innovators are essential to business startups, then how does America change the government mindset?  The upcoming presidential election debates are a good place to start.

From a Jobenomics point-of-view, neither the President nor the leading Republican candidates have yet articulated a viable jobs creation strategy.  Virtually all of the proposed job creation plans are top-down political agendas oriented to ideologically-driven constituencies.  Almost every political speech contains references to a reformed regulatory environment, better tax incentives and cuts, debt and deficit reduction, helping the middle-class, importance of small business, revitalized manufacturing, green jobs, environment protection, energy independence, stimulation packages, tort reform, reciprocal trade agreements, and increased exports as ways to increase jobs.  While all of these areas are necessary, they are insufficient.

Political focus has to be on business creation, not job creation.  In recent years, small, emerging and self-employed businesses have been responsible for virtually all of America’s new jobs.   Yes small businesses fail, but enough survive to prosper our society.   Seven out of ten startup firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more.  From an entrepreneurial perspective, these are very lucrative statistics that should be the bedrock for a national business initiative to create millions, or tens of millions, of new small and self-employed businesses by year 2020.

A nation of small businesses empowered by 21st technology can compete globally in ways never before thought possible.  It is almost inconceivable that today half of America’s GDP is generated by 27 million small businesses.   It is equally inconceivable that 52% of these businesses are home-based.  Jobenomics envisions that the American labor force will continue to be transformed by small, largely self-employed, home-based businesses. This transformation will be lead by 70 million members of America’s millennial generation who will monetize the internet and social networks in ways not yet conceived.  The country that learns how to monetize social networks, like Facebook with 825 million users, will be transformed almost overnight.  Tens of millions of new businesses (mostly small and self-employed) will be created.

American innovation, ingenuity and entrepreneurship are the keys to a prosperous future where everyone who wants to work can find a job.  A national small business initiative starts with an achievable vision.  President Kennedy focused American science and technology on getting to the moon in a decade.  In comparison, the Jobenomics 20 million new private sector jobs by year 2020 (20 by 20) goal should be very achievable.  If China can lift 400 million peasants out of poverty in two decades, America can create 20 million new private sector jobs in one decade. Adding millions of new “shopkeepers” to a nation that is already of nation of small businesses could boost our commonwealth to new economic heights.