San Francisco, CA (PRWEB) February 13, 2013
According his State of The Union speech, President Obama is serious about job creation, but he neglected to emphasize the role of start-up and small businesses. He also failed to mention the policies that that create more businesses and recognize that self-employment and very small businesses equal job creation.
The Bureau of Labor statistics reported in March that the average size of new start-ups was 4.7 employees in 2011 – that’s down from 7.6 employees in the 1990’s. And the share of the self-employed in the labor market is growing exponentially (see graph ). And the trend is expected to continue. Whether it’s the technological gains that allow high productivity or the disappearance of the ‘safe corporate job’, the reality is that businesses are starting smaller (and perhaps staying smaller).
Despite the real trend toward self-employment and micro-business, most efforts to help entrepreneurs are focused on high growth businesses. Everyone wants to be the next Facebook, but only 1% of those businesses will actually scale and employ more than 10 people.
CAMEO, California Association for Micro Enterprise Opportunity, has been creating jobs since its inception in 1993 by helping people to create their own job. Our member organizations provide the entire spectrum of entrepreneurs with small and micro-business financing, business coaching and business management training. In 2011, a survey of CAMEO members found they served 21,000 very small businesses that supported or created 37,000 new jobs in California and generated $1.3 billion in economic activity. This success is possible because of a continuum of business services exists within our network.
"After 25 years in the micro-business industry, it's my experience that businesses that receive business coaching have an 80% success rate," said Claudia Viek, CEO of CAMEO. "That's compared with the 50% to 80% mortality rate for small businesses overall. Our member organization need solid, sustainable support. to continue their good work."
The cost of job creation through micro-business development is about $3,000 per job, according to the Aspen Institute. Public infrastructure projects and corporate incentives usually cost around $100,000 per job. With less than three percent of the money, micro-businesses employ more people than venture capital firms. As a job creation strategy, micro-business development is very cost effective.
If Congress were serious about helping small business, it would do something that will really help the majority of small businesses – support business start-ups with business assistance and microloans. They could do that by funding the SBA PRIME Program, the Microloan Technical Assistance programs, Women Business Centers, and Small Business Development Centers at their 2010 levels. A relatively small investment in these programs provide big returns in terms of job creation and economic growth. Also policy makers at the state and federal levels need to break down barriers to and remove penalties of self-employment. Big corporation can make a commitment to do a percentage of their business with their local small businesses. Consumers can make every day Small Business Saturday.
To create jobs, America need strategies that will harness the entrepreneurial spirit of all small business and cultivate homegrown local businesses.