I’ve been off the grid for about a week and am catching up on all of the small business articles. There is a lot of buzz and excitement about the Jobs Act – and associated CrowdFunding legislation that passed the House and now the Senate is fighting about. In a political season, this is being dubbed as the “small business funding solution”.
Here is my two cents. Unless you’re a high tech start up and a Silicon Valley junkie – there is likely nothing in this legislation that is going to help you. Ninety nine + percent of businesses in America aren’t on the fast track to IPO and don’t think they have the next Facebook or Twitter on their hands. Most small business owners are ordinary people trying to do their thing and satisfy their customers.
It seems to me that @StartUpAmerica has taken over the political agenda when it comes to small business financing. Many articles I have read espouse the idea that the vast majority of “high paying” new jobs come from fast growing technology companies. I don’t buy it.
Imagine a race.
On the one starting line are 100 Main Street Entrepreneurs. They want to start a contracting firm, a new restaurant, a retail store, or perhaps open a Franchise. Let’s assume that on average they will each employ 10 people. If at the end of the year, 70% of them survive, that’s 700 jobs added to the economy.
On the other starting team are 100 Silicon Valley, StartUpAmerica Entrepreneurs. They have a billion dollar company in mind, and they want to revolutionize the world. Let’s say that they will also each start with 10 employees. But realistically, at the end of year one, 20 of the companies have survived and 1 of the 20 is really rocking and rolling. If the rocking company has 100 employees, and the other 19 survivors still have their 10 – this team has added 290 jobs.
Main Street Entrepreneurs win the race.
Please don’t take my perspective the wrong way. I think that StartUpAmerica is a positive thing for a specific type of entrepreneur. And I am all in favor the Jobs Act and CrowdFunding if they will help a segment of entrepreneurs move their businesses forward.
What I am opposed to though is the Silicon Valley StartUpAmerica agenda taking over and leaving Main Street mom and pop entrepreneurs in the dust. Remember, in our imaginary race this group creates 700 jobs. They might not be the highest paying but last I checked our unemployment problem is not a “high paying” problem. Everyone deserves a job.
In some articles I have read, folks suggest that CrowdFunding will help main street businesses and that their fans and customers can become owners and investors in the company. The proof will be in the pudding, but I doubt that this will be true. It’s likely that the paperwork and accounting standards that will be required to meet the CrowdFunding standards will simply be too arduous and complicated for a main street business owner to take on. They have a tough enough time keeping track of their books today.
If the Jobs Act passes the Senate, I suspect we will hear lots of politicians this fall touting their support for small business. Don’t buy the argument. Let’s hold their feet to the fire (and our own as well) to make sure that we’re all doing everything we can to help ALL entrepreneurs, not just the special ones who think about big companies and IPO’s. If we focus on lots of singles, our economy will be better off in the long run.
That’s my two cents.
UPDATE: March 28, 2012
Entrepreneur Magazine agrees with Ami's Blog Post!
Read It Here