Attended the White House Urban Entrepreneurship Summit at Rutgers-Newark today....what an eye opener!!! I urge all Africans to take their development best practices and repackage them for developed emerging markets, for this is intellectual property capital bar none!!! Our breakfast keynote speaker was Russell Simmons with his latest book, Super Rich: A Guide to Having it All. The first thing he said was integration destroyed minority entrepreneurship because it destroyed self sufficiency and innovation in the black neighborhoods. I expected to hear gasps in the room there were non so I took it as concurrence. It sounded like a social capital argument; I am not a fan of Putnam. Then he redeemed himself in my mind by saying in his conclusion forget just being friends with just people of your own race or ethnicity – make friends outside your comfort zone, network, invite diversity to your dinner party, because business is about embracing and knowing people of all backgrounds. He gets it.
The essence of the Summit was discussing ideas on how we can best promote urban entrepreneurship? Many ideas were generated from this conference. Of interest was the first panel of practicing entrepreneurs that gave their testimonials – challenges with people management, motivation and incentives; payroll taxes to worker’s compensation; business liability insurance; building a business that’s scalable; operations management; need for more entrepreneurship training to CEO personal development and giving back through mentoring.
The other panel I had a chance to sit through was on public-private partnerships for urban entrepreneurship development made of all the local, federal, and not-for-profit dignitaries. I have been in this conversation before. They were selling PR. How much cash infusion (really AID) is “invested” into minority and women businesses and urban entrepreneurs to get them on a level playing field; what resources are available; all the initiatives coming out of Washington that will be so great for this business constituency; how much we finally got it in this administration or the other; initiatives and programs to promote young entrepreneurship – the catch them while they are young approach; how we love our urban entrepreneurs and how we feel their pain and suffering and we are trying to do everything we can to get them started and going. This is a common narrative! Frankly as an administrator in small business development, I am fatigued by this narrative and sometimes feel hopelessly defeated! Its well meaning sounds good, if not great at times even inspiring. But is inspiration what we need in this era of globalization? Sometimes they get it and sound like they are on point (like today) but sometimes they are completely disconnected from reality.
No one on this panel talked about technology competiveness and global competitiveness. We are living in the first developed wealthy country of the world with everything available in excess yet access to internet technology is inaccessible to most residents and microenterprises of the urban community. It should be free because, even if they wanted it they couldn’t afford the monthly premiums. For the businesses, they come for business plan training and they have no typing skills, writing skills, analytical skills – forget research skills – that we can teach, but one has to know how interpret that data! They do not know how to download basic information or use social media functionally to grow their businesses at no cost at all even if they have access to online technology. It’s unnerving to say the least and there is lots of work to be done.
My question to the public-private partnership panel was: “How come no one at the local, state or federal level had ever thought of putting an application demo or simulation that would help the federal or state contracting procurement process; such as having the online business registration process demos; or the licensing and permit application demo; or the copyright, trademark registration process demo; or the minority, woman and veterans business enterprise certification application demo so that we can teach small businesses about completing the application form, demystify these application qualifying processes thus more businesses will gain access to these government procurement opportunities, instead of having only a live online protocol process that is accessible one business at time?” I have a PhD in research capability and even I sometimes find the process daunting when I have to do it for a small business! They looked at me strange – maybe it was my accent – who knows. Its common sense! I was clear at the implications of my question - if you want to get urban entrepreneurs to access opportunities you need to remove the barriers we all know are preventing them from getting it. Such as complicated application processes and certification requirement and buddle contracts that they cannot access because they have not yet mobilized the capacity and capability yet they are potentially successful small businesses. You can’t put a big piece of T-bone steak in from of a baby and wonder why they are not eating it – they need to grow teeth first before they get bite into that steak. How do small businesses grow teeth, by trying out small contracts and fulfilling them so that as they grow they gain experience and capability to enable them to manage big ones. It was a similar question I asked to the White House Ex-Im Bank delegation to Newark about why they did not have different export-import financial funding packages based on business size that would enable different small, medium and big businesses to benefit from their services, like fishing nets with different hole sizes that enable a fisherman to catch different size fish if he so chooses. If we really want small businesses to participate in export initiatives we have to give them incentives that fit their sizes and gradually graduate them to medium then big business. Another aha moment!
As a public administrator, I know that too much customization or specialization of programs increases the cost of doing business, but the benefits in the long run outweighs the costs. If reduces the income disparities. The Minority Business Development Agency notes that the quantity of minority businesses does not match the quality of revenue earnings from this business community given their numbers in the economy. The US Census Bureau study in 2002 of large minority businesses ($1million+ in revenue) vs. small minority businesses (under $1m) showed that 2% of large firms grossed 64% of revenues and had 58% paid employees whereas in comparison 98% of the small firm grossed 36% of revenues and had 42% paid employees! Clearly the difference in job creation was small yet the gross revenue disparity was much bigger. The implications are that wealth in large firms is in the hand of a few, yet they are benefit from exclusive government contracts that the smaller firms cannot access at their under 1 million dollar levels of capacity yet they are producing comparable job creation in the economy. The benefits of letting small firms take a bite of the pie certainly will outweigh the administration cost of introducing programs that they can access in the mean time. Using this data, the MBDA concluded that “while smaller in number, minority firms with receipts of $1million or more generate a much larger percentage of all minority revenues and paid employment than firms with receipts under $1 million.” What they do not mention is that at these gross revenue levels the percentage of paid employees is too low given that the opportunities are only open to a significant few – 2%. My conclusion, urban entrepreneurs and small firms are marginalized from access to procurement opportunities by government policy design!
Copyright @ June 6, 2011 by Dr. Tendai Ndoro (DocNdoro) – Founder, SLIPPA (Strategy Leadership Institute in Private & Public Affairs); Brighten The Corner Foundation; CEO EDCTrainers, LLC.
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