Tags: Economic Development
THE FUTURE OF ENTREPRENEURSHIP
The future of entrepreneurship is extremely bright. I’m going to walk you through my evidence-based theory on the future of entrepreneurship, and why community-led economic development models will be the leading force behind health local economies.
First, let’s identify the term Entrepreneurship.
WHAT IS ENTREPRENEURSHIP?
Entrepreneurship is about what people do to take their career and dreams into their hands and lead it in the direction of their own choice. It’s about building a life on your own terms. No bosses. No restricting schedules, and no one holding you back.
Entrepreneurs are able to take the first step into making the world a better place, for everyone in it.
Entrepreneurs are the people who embark on the journey of entrepreneurship to solve these worldly challenges, whether innovation-based, community-based, entrepreneurship-based, or government-based economic models.
However, the role of entrepreneurs in the process of economic development is what we will be exploring.
According to the Global Entrepreneur Monitor states there are currently 25 Million entrepreneurs in the United States, to date. Of those 25 Million, 88% of entrepreneurs were born out of opportunity. 57% of entrepreneurs see a good opportunity to start a business. This is really a statistic derived from those who can develop a feasible and viable business model around a particular challenge.
The rest of the entrepreneurs fall into categories associated with freelancers, subcontractors, and 1099-miscellaneous status opportunities. These are the folks who simply obtain a contract to receive outsourced tasks. This can include transportation, distribution, manufacturing, marketing, sales, and even some in support roles from remote locations - to name a few.
Entrepreneurs are truly the agents of change across the world, focuses solely on making a positive impact through innovative solutions to meet the complex demands and challenges of our world today.
One of the major factors in measuring entrepreneurial activity includes Total Entrepreneurial Activity (TEA), which assesses the percent of working age population both about to start an entrepreneurial activity, and that have started one from a maximum of 3 years and half.
PRODUCTIVITY AND PROFITABILITY
While corporations are gobbling up incentives in Business Improvement Districts and Tax-Free Zones, entrepreneurs and employees are still liable for any and all tax liabilities. Corporations outsource their production, call centers, and an array of other jobs to third world countries to maintain profitability, while also keeping the shareholders satisfied. Again, meanwhile, the entrepreneurs and employees who live, work and play in their very own communities are eating the burden of those tax liabilities.
The question arises: “What happens If productivity continues to grow, but fewer and fewer people contribute to the productivity and profitability, would that entice support for Universal Basic Income?”
Rather, knowing the trends and economic impact of investing in local entrepreneurs, the movement should be towards, expanded public support for entrepreneurs. The conventional wisdom states, people have money but lack meaningful work tend to be very unhappy people. The arithmetic of developing a Universal Basic Income plan would be very difficult, whereas the taxes associated with companies footing the bill to ensure every citizen in the United States is allowed a $10,000 per year stipend.
It would be much more attractive and feasible to garner public support for small businesses and entrepreneurs to undergo an attractive incentive system allowing entrepreneurs to reap the benefits most corporate enterprises are currently receiving. Entrepreneurs would be encouraged to pursue subcontracts and locally outsourced opportunities as well as government contract opportunities.
While engaged in their very own community and contributing to the local economy by providing jobs where corporations have failed, while providing products and services from a locally sourced entrepreneur, again, where corporations have failed. The flight of capital isn’t as pronounced as it once was when the corporations sent out their revenues to third world countries to pay for outsourced work, production, manufacturing and freight - among many other expenditures.
The primary metric we should be viewing as a society is “impact”, rather “local impact.” Yes, the corporations move around chess pieces simply to provide shareholder profit at a maximum. Meanwhile, the little guys and gals, the entrepreneurs are focused on the local impact of their existence. As mentioned above, the role of an entrepreneur is to make the world a much better place by solving worldly challenges, but as we get closer to home, the majority of entrepreneurs focus on solving local challenges, first - only to branch out from there.
CORPORATE WELFARE FAILURES
Let’s take a look at an example of failed corporate subsidies. As an example, we are going to use Startup New York (SUNY), which offers a Zero Tax Program for 10 years. The incentives include zero property tax, zero corporate tax, zero business tax, and zero income tax when applying with SUNY.
We are looking at zero taxes going to the likes of:
The taxes paid by entrepreneurs and employees cover the following:
In 2016, there were a total of $45 Billion spent on corporate incentives.
While corporate incentive programs have hiring incentives, we can’t help but look at some of those incentive programs more in depth. Looks stick with Start Up New York (SUNY). They have a requirement of creating just 1 job per year. SUNY does require that you are on payroll for a minimum of 6 months, and will accommodate and count a 1099-misc contractor as a “New Hire” for the tax incentive.
The Loophole that is present in the type of program includes the transfer of a certificate. A company can subcontract and LLC which they own for 6 months, terminate the contract, and bring in another LLC which they own to contract for further work. This is the prime example of temporary placement agency using 6-month contracts to perform work at the Tax Free Area (TFA), paying zero taxes on any corporation and satisfying the requirements of Start Up New York (SUNY).
Here are a few more examples of corporate welfare failures. The state of Louisiana has reported that for every dollar spent on corporate subsidies, it received just $0.22 back in return. Maryland reported that for every dollar spent on corporate subsidies, it receives just $0.10 back in return. Lastly, Connecticut reported that for every dollar spent on corporate subsidies, it receives just $0.07 back in return.
Lastly, I want to use an example from the HBO show, “Last Week Tonight.” The case study of Kansas and Missouri. In 2016, Kansas created a total of 6652 jobs, meanwhile Missouri created a total of 5562 jobs. However, what has happened is that jobs were moved from Kansas City, Missouri to Kansas City, Kansas. The net job creation total included 1,090 jobs, yet spent a combined total of $331M in corporate subsidies.
That comes out to $303,669 in tax incentives for each job created. Think of what could be done when empowering entrepreneurs and employees with those dollar amounts. The corporate welfare programs are failing our national, regional and local economies.
THE “ME-WE-US” MODEL
This is a model of empowerment and encouraging others to participate. When we apply this to entrepreneurship as a catalyst to economic development, this can be a great model to inspire localized economic growth.
Me refers to the entrepreneur. The entrepreneur grows, develops and expands their skill set, their business, and clientele. By doing so, they’re in a position to lead others, blaze the trail and help others develop their own businesses through the creation of business accelerators and incubators. The entrepreneur establishes competence and expertise in navigating the local business community as well as a creating jobs, contributing to the local tax base, and supporting local non-profit organizations or social programs.
Us refers to the entrepreneurs and trail blazers helping others join in the movement. Us is all about developing groups of entrepreneurs to work together in business accelerators, business improvement districts, and buying groups to leverage buying power, and resource sharing of employees, corporate office space, among other local development activities.
We refers to the group effort lead by those who have proven successful, can now mentor, assist and contract other freelancers in the local business community to help these companies grow, develop and expand.
The ME-WE-US model is all about empowering others to get involved, encourage others to take advantage of the free market, and develop their very own businesses.
In casting a vision on the future of entrepreneurship, we can see that empowering entrepreneurs and investing in their business development efforts, can provide a tremendous economic impact. Entrepreneurs will be contributing to a local tax base, hiring local employees, and spending in their very own communities where they live, work and play.
While there are various universities conducting studies on the dying model of “Live, Work and Play” does provide some great data, that’s for the employees moving to a new town or city to fill employment vacancies.
We are talking about leveraging the power of entrepreneurship and employees, investing and incentivizing entrepreneurs for their localized economic impact their through very own business development efforts.
A final example includes Sports Engine, which is a company based out of the North Eastern metro area of Minneapolis Minnesota. Sports Engine was acquired by NBC Sports in 2016, which is a web software and mobile application company providing services to youth, amateur and professional sports clubs. Sports Engine has a substantial Co-Working and Collaborating (COCO) space attached to the primary corporate location housing hundreds of local entrepreneurs in the technology sector. The primary purpose of this COCO space is to subcontract local entrepreneurs for various projects, through a progression moving them from the COCO spaces to suites once the local entrepreneurs are able to develop a team to service the increases in service demands. In short, it is a business accelerator to serve local entrepreneurs in the Minneapolis metro area, where those who have left the corporate workforce to explore entrepreneurial endeavors.
In conclusion, the future of entrepreneurship, in my personal opinion, includes a cornerstone of future local economic growth and prosperity. Outsourcing pads financial statements and feeds corporate profits, but at what cost? Downsizing and layoffs are the direct result of padding corporate profits. Starbucks decided to layoff 350 senior employees as a result to “increase profits.” While this is a common strategy for corporate entities, what impact are you providing to your local economy? Incentives set aside, you’re still putting people out of work and moving them to the safety net programs.
Incentivizing entrepreneurs can provide a far great impact on local economies and should be heavily considered as a viable option for future economic development efforts.