This can be a betrayal for many government agencies and politicians who want to create jobs and wealth – and stop focusing on small businesses if they want to help small businesses.
There are 3 main business strategies for influencing job creation and wealth creation in an area:
A Work catalyst–Asset Importer: These are mainly medium sized for large businesses that sell in regional, national and world markets and import assets in an area. But they often do not create many jobs because they need to be highly productive and labor-efficient if they are to be globally competitive.
A Creator of work–Asset Circulator: These are mainly small businesses, often retail or services, that cater to local consumers who promote the wealth generated by job catalysts. Their resources are needed by importers and are usually more labor-intensive than capital-intensive.
A Job Destroyer – Asset Exporter: These are mainly importers of goods or services who can create jobs, but the resources of the export area are generated by job catalysts. These businesses need job catalysts to create wealth.
Yes, small business can create jobs. But small business does not create jobs in a vacuum. They mainly sell locally. They are already promoting that money in the area. To create employment, they need increased purchasing power, which requires someone to import resources. The resources in this extended area may be from job catalysts who sell outside the region, or from government spending, including transfer payments. Small businesses have been brought into areas that benefit from these resources – by others.
In the 1970s and ’80s, many large US manufacturers began outsourcing to reduce costs. They were paying their own employees expensive benefits and huge salaries, and they saw that they could outsource to smaller subcontractors who would hire employees at lower wages and without corporate benefits. The myth is that small businesses created jobs, and some government agencies actively promoted those who benefited from this hype and it never left its place in our collective minds.
The net reality is that small businesses create jobs if someone else imports the assets, that is, they need the direct and indirect purchasing power created by the exporting business.
To create or attract exporting businesses, the regions may focus on attracting the corporation’s branch plants or develop their own unicorn-entrepreneurs who can develop exporting giants:
· Multinational and large corporations can locate plants anywhere – will they pick you?
· What is left for local entrepreneurs – can areas develop entrepreneurs who can export unicorns, compete with regional, national or global competitors and import resources?
VCs do not finance any initiative until the evidence is found, that is, aha! This is because pre-meal financing leads to many failures and some homranes, which is not a good recipe for VC success. Entrepreneurs need to know how to take off from Idea to AHA with finance-smart skills and strategies – and without VC. This means that the focus should be on developing unicorn-entrepreneurs in regions with limited resources who can bridge the gap from Idea to Aha without VC.
By focusing on developing globally competitive unicorn-entrepreneurs to create more unicorns, areas can import resources and help small businesses develop. They can do less and do more for small businesses.
My Tech: Developers in the area can help small businesses through more asset import and purchasing power. To do this, they need to focus their resources on entrepreneurs who export from the area and import resources. These exporting businesses need more sophisticated leaders who can successfully compete against big competitors in other fields. Areas can benefit more by giving priority to unicorn entrepreneurs who import resources into the area. They increase local purchasing power and enable small businesses to create jobs.