Those of you who know me won't be surprised at all when I gush: man, I just adore that Krugman!!

Ever see his supply-demand curve for crude oil?  Awesome stuff, explains a lot that happens at the pump.  Check out his old site for this particular analysis, it's worth the trip.

I'm especially enamored of him when he writes stuff like this.

Wonder what Mel Brooks thinks of the title?

 

  8:37:44 PM    comment []

DharmaSurfing: Minority Business Owner…

 

In response to my previous post about starting a business (click DharmaSurfing at left, scroll to 18-OCT at my blog), Steve@powersupply asks in Comments the question:

 

Why was your first reaction, 'let's take advantage of my minority status'? I'm not trying to be a prick about this, I'm just wondering what you think of it.

 

It wasn’t my first reaction.  For the sake of brevity and succinctness, I spared you the rambling discourse that came over a few weeks, over more beers, during successive Friday-evenings-at-the-local-watering-hole-with-friends.  (Spared you a LOT of blather, a LOT of ranting, horrid jokes, cigarette smoke, cold pizza, flat beer, Jagermeister chasers and weird lawyer patrons at this watering hole.  Located tooooo close to the county courthouse and hospitals…) 

 

First, know that when you read about the 40+% of unemployed today being white collar-technical-college-degreed people out of work for more than a few months, my partner and I are part of those statistics.  Yup, we’re officially stats, numbers served up cold as a report on somebody’s desk in the Labor Department, black-and-white details in your newspaper, a blurb on-line, a sound bite on CNN.

 

My partner’s initial idea about starting a company came as a result of the lack of jobs in the local area – no, restate that: none statewide or across 3-state-territory – after 6 weeks of looking.  He’d registered with numerous head hunters, got not even a single bite, nary a nibble.

 

While looking for jobs for myself, I’d sent him close to 60 different sales and marketing job ads gleaned from numerous job hunting sites.  They were from every conceivable industry, indicating that no one industry was doing very well.  These same tips were also from local, state and 3-state-area; again, an indication that no one area was experiencing a hiring boom.  My partner told me I sent him more opportunities in one week than he’d seen from all of his head hunters in a month.  Even after applying diligently for those that matched his qualifications, he’s drawn up nothing.

 

As for me?  Zippo.  Two e-mails acknowledging receipt of my resume.  One head hunter asking for my resume.  Nothing more after 3-1/2 months.  Zilch.  The majority of jobs in this area are in fast food, seasonal retail or trucking jobs.  I have kids that need a sitter, one of which also requires transportation to preschool for a 9am to noon schedule every day.  We’re talking 10K annually in child care costs alone, not including transportation or late nights when the spouse is traveling and I’m on OT.  That pretty much excludes any of these food/retail/trucking jobs, since I’d only net what I’d pay in day care (at best – probably less, and no benefits either). 

 

And we’ve been comparing notes frequently, by e-mail during the week and at the watering hole on Fridays – we both can triangulate from our experiences that’s it’s not looking good on the job search front for quite a while…

 

Beer number 1, week 3 of HIS job search, week number 8 of MY job search:  The process of arriving at a minority-owned business was, is, an evolution.  It was definitely not our first reaction to take advantage of my minority status.  Our first reaction was, dang, we need to do SOMETHING about this unemployment thing. 

 

Beer number 2, same week: Partner begins to think, hey, instead of being someone’s sales person full time, he’d settle for representing several products.  And maybe he should just start a business to do that. 

 

Beer number 2, week number 4 of HIS job search, week number 9 of MY job search:  Partner combs through a number of contacts, meeting them for coffee, lunch, dinner, phone calls, etc.  Finds out there’s a few opportunities for representation, but they’re pretty thin and they’re not excited about Partner as a representative.  Not because they don’t like him or don’t think he’s capable, but…well…just ‘cuz…

 

Beer number 2, week number 5 of HIS job search, week number 10 of MY job search:  After more poking and prodding (he's good, he's very persistent!), it seems there IS an opportunity.  But no one’s talking to Partner without a lot of prying because, well, Partner is white and doesn’t have an established business that is “Minority Certified”.  They’ve got reps and vendors who are just like him, don’t need another one.

 

Beer number 3, week number 5 of HIS job search, week number 10 of MY job search:  Seems he’s even gone and talked with some of the folks at the Big 3 automakers and their Tier 1 suppliers (and he's pretty gutsy, determined, brave enough to go to the Dragon's Lair).  Sure, they have set-asides, require a specific amount of content is minority-certified content.  But there’s NOBODY in the local market who’s a minority-certified vendor.  PERIOD.  So some amount of work is not awarded to local vendors or not awarded altogether. 

 

I’m thinking:  Wow, what an incredible market inefficiency, money left on the table all for the lack of a yentl to match and marry up resources, this guy did some great research work, why the heck doesn’t a minority member see this and do something about it, hey, what about me, what about us and a jillion other things, simultaneously…

 

Dang, I said, sounds like we should start a minority-owned and certified business! 

 

Well, gee, maybe that would solve the problem, says Partner, blinking a little, looking puzzled in a facetious sort of way.  Has a look on his face that tells me, “Yah, duh, you silly twit, where the hell are we going to get a minority owner???” 

 

At this point I order Beer number 4 and drop my bomb: I’m a minority, remember??

 

Lightbulb slowly fades on, I can almost touch it over his head as it dawns on him.  Yah, duh…

 

It takes Beers number 5 and 6 (wow, about 3 more than the average Friday) and another week and Beer number 1 next Friday evening before he’s fully on board with the concept.  Lots of strained jokes about crackers and minorities over beers 5 and 6 while we tip-toed about this idea.

 

Beer number 1, week 6 of his job search:  In the mean time, between Beers 4 and 6, over that next week and into Beer number 1 the next Friday, I’ve had a lot of time to think.  And think.  And think.  Yeah, this is it.  This is the right thing.  And here’s why:

 

§         There are NO minority suppliers in this market.  PERIOD.  In spite of set-asides, stipulated either at Big 3 corporate level or above them at their government client, set-asides have simply failed to encourage minority suppliers in the market for the product we intend to offer.  (Hold this thought…)

§         There are NO minority suppliers in this particular pipeline.  PERIOD.  In spite of government programs which are aimed at helping minority businesses get started, any that have started have either failed or never got off the ground, and there’s no one coming down this hall to the rescue.  (Hold this thought, too…)

§         The right players are available at the right time, in the right mix, and there’s an underserved market for this product.

§         Our percentage of ownership (white to minority) matches our personal risk profiles – I (the minority member) can risk more, he (the white guy) can’t.

§         A contingency plan can be put in place if I get hit by a bus, so that this business can continue without me, and still provide a minority owner, continue to meet obligations to customers, vendors, to the community.

§         I’ve got access to other resources that will allow me to get this off the ground at lower cost to enter AND offer opportunities to other minority community.

§         I’m a minority, and I’m fully aware of and respect the implications to the minority community that a successful minority-owned and certified business might have; I’m conscious of my obligations to my community-at-large (including you, taxpayer).

 

There’s more, but I’m not laying it out here, it’s becoming proprietary.  Needless to say, it’s being documented in my now in-flight business plan.

 

Back to those thoughts you’ve been holding…and back to my post a couple of days ago.  The set-asides were created with the best of intentions, but they simply didn’t work.  After decades of set-asides, there are no local businesses that are 1) minority-owned or certified, and 2) in this particular market.  There are too many local businesses already in the same market, causing businesses to fold or consolidate and thin staff to realize improved productivity.  Same issues all the way around: high cost to enter the market causes a nearly insurmountable barrier for minority owners.

 

Potential minority owners don’t seem to be able to get enough capital to buy an existing company, they can’t scrape up enough capital to start from scratch, and if they did have capital, they’re not established enough to get the time of day from anyone, even if it’s a failing business that needs the cash.  There aren’t enough minority business owners locally who can provide the necessary on-the-job “how to start and run a business”, let alone “how to start and run a business in this particular market and product”.

 

An example: a local minority business gets launched, in a related but not the same product.  (This could be a contractor to my potential product, a sub-set.)  He’s the ONLY local business in this field.  He’s failing, desperately seeking a buyer to bail him out.

 

First, there’s apparently a management issue here if you can’t be a successful business as the sole provider in a market for this product. 

 

Second, I’d consider buying this business, done the legwork already, but the cost is too high.  I’d be better off starting from scratch.  But neither partner nor I have expertise in this product, so even with the capital it’d be iffy.  I can’t afford to hire anyone with expertise, either, at least not until I have regular cash in-flows.  (No, this is not a situation that lends itself to buying into part of the business – the current owner needs to be clear of the picture.)

 

That’s the entire crux of it.  And the set-asides and government programs can’t fix this situation.

 

I know this, I see it.  And I can do something about it, because I’m in a good position to do this.

 

Like Steve@powersupply.com said, it appears that you have a life that is filled with good things--education, financial well-being, leisure time, etc.

 

Because of my spouse’s job and our frugal lifestyle, my kids will still be able to eat and have a roof over their heads if I start this business (my life’s filled with good things because I choose to read books over playing golf at the country club, because I patch and mend clothes instead of tossing them and buying new, because I cook gourmet meals at home instead of dining out, etc.).  I’m used to living on a shoestring, which is what I’ll have to start this business.  Leisure time I’ve got too much of, frankly; I’m willing to forfeit this because my family could use something to augment its current health benefits and replace the investments lost in this lousy market.  I’ve got a Certificate of Entrepreneurship and a Bachelor’s in Management, held numerous business roles from the mail room to management.  I know something about the market I’m entering, and I’ve got a partner who knows even more.  I’m certain I can find a way to help other minority folks in my community by being a business trailblazer, maybe even a leader (I’d be glad to start with co-op students from a local school, start them thinking they can do it too.  That’s how I started out, worked for me!)

 

So, why not me?  Why not this minority woman and her partner? 

 

Okay, you don’t like the set-asides, it’s too reverse-discriminatory.  Me neither.   Yet I long for the day when I walk into a meeting and no one assumes I’m a secretary and that I’ll get the coffee (it’s happened in the last 2 years).  Equally happy will be the day when no one would even think twice about my credentials because of my age, race, ethnicity, gender, sexual orientation – but we’re simply not there yet.  You know it, I know it.  There are articles every day about it in the news: someone has committed a hate crime against someone.  If people still commit hate crimes (which are usually pretty blatant), what kinds of subtle sh*t goes on every day that keeps people from minority groups from getting a fair crack at being employed, being a business owner?  And how do we fix it without set-asides?  The solutions simply aren’t there.

 

Look, I’d also really like NOT to have the set-asides because they clearly do not work.  Our tax dollars, all that legalese and regulation, useless.  Think about it: wouldn’t we be better off actively hiring people because of their minority status using these tax dollars, for all that set-asides have gotten this society?  We’re no farther ahead than we were decades ago.  Think of the wasted opportunities, the market inefficiencies, tied up in trying to sustain these set-asides.  Think of all the hoops I’ll have to jump through, to maintain my status – it’s a lot of paperwork, effort.  It’ll reinforce the necessity for me to justify my existence because I’m a minority member, which is what we’re supposed to move away from as a society.

 

And my business would still have to buy/make and sell this product, SUCCESSFULLY.  Regardless of our background, origin, status.  Regardless of these set-asides.   Even if I slap up a shingle that says “minority business now open”, I still have to pull this off.  There’s no way in hell that a business will buy something from me if I’m not competitive, within the competitive reach of other suppliers; they’ll find a way around it even if I’m the only game in town.  They’ll make a new game with new rules, albeit a somewhat less-than-optimally-efficient game.

 

But until some better solution is found, until there’s another answer, why not me? 

 

I might actually do something constructive for a change.  It can’t be any worse than it’s been up to now, and it could get better, maybe even a LOT better.  For starters, at least two people might have a crack at getting employment for themselves, both a highly-qualified minority woman AND a highly-qualified white guy (anti-reverse-discrimination and anti-discrimination simultaneously, yes?).  We wouldn’t be drawing unemployment checks, but paying into unemployment, paying taxes.  His kids and my kids would see a white person and a minority person, a woman and a man, working cooperatively, collaboratively on starting a business.  I plan on working with the existing local businesses already in the market, outsourcing whatever I can to them (it’ll be a fair amount of outsourcing, and it’ll be work they can’t win without minority certification, a real win-win).  And maybe word would get around that it’s possible: gee, Rayne, how’d you do it?  And I’d tell them straight up how, just like I’m telling you why.

 

Why the heck not me?

 

 

(I have a meeting this week with the local chamber of commerce and a SCORE representative; I’ll be asking them the same question.  Be sure to check back on Thursday next week for the answers.)

  3:52:56 PM    comment []