The Rise and Fall of Entrepreneurialism
I ran across a blog post by Simon Black at the Sovereign Man blog recently, and because it is so timely, I thought I would post it here in its entirety. It discusses the emerging entrepreneurialism in Zimbabwa, as well as some of the effects of over-regulation on entrepreneurs in the U.S.
January 17, 2012
Santiago, ChileOne of the most phenomenal human beings I’ve ever met hails from Harare, Zimbabwe of all places. His name is Time. That’s seriously his name. When you ask him about it, he shrugs, grins, and says, “My mom felt that she was in labor for way too long.”
Time is a real Sovereign Man. He understands that his family comes first and foremost above all else, and growing up under the regime of Robert Mugabe, he had to get very creative in order to support his loved ones.
By the time he was 15-years old, Time could see the writing on the wall. Mugabe had all but destroyed the market and private property rights, and Time knew there would be absolutely no prospects for him in Zimbabwe.
So what did he do? He learned a valuable skill and looked beyond his own borders for the best opportunities. He spent years in the wilderness living with the native bushmen learning how to track animals. He worked diligently to improve his English. He read everything he could get his hands on about botany.
He traveled to Tanzania and Botswana to cut his teeth as a safari guide while Mugabe plunged Zimbabwe into hyperinflation. He worked hard, saved his money, and always sought to improve his professional capabilities to become a better guide.
When the smoke cleared, he returned to Zimbabwe and took a tracker job at one of the most exclusive lodges in southern Africa. I got to know him when I was visiting the lodge last year, and we became fast friends due to our common philosophical outlook.
Time and I talk regularly, and I’ve been helping him to invest in Zimbabwe’s burgeoning agricultural sector. Mugabe’s economic policies absolutely devastated what used to be one of the most fertile places in the world… but now it’s starting to make a comeback. Time is eager to capitalize on the opportunity.
A few months ago, he scrapped his savings together and bought a small piece of land that he wants to begin planting with various small-scale organic crops. I offered to pony up the $3,000 he needs to buy submersible pumps for irrigation.
“Western Union,” he told me, “is the most efficient way to receive cash in Zimbabwe. As you know, because of Mugabe, we don’t have our own currency anymore. But be advised, they’re going to give you a hard time when you tell them that you want to send money to Africa.”
My next call was to Western Union.
“I’d like to send money to Zimbabwe,” I announced to the operator.
“What’s the city and state, sir?”
“Zimbabwe.”
“Is that an international transfer?”
“Yes!”
“What country?”
“Zimbabwe.” I was about to lose it. I heard the familiar click, click of the keyboard as his system pulled up the country-specific rules.
“Uh, sir, we are obliged to discourage you from sending money to people that you don’t know. Did you receive this request to send money from an email?”
“No, it’s cool, I know this guy, we’re friends.”
“Yes, sir. But did you receive this request by email from an unknown person?”
“What did I just say? No. I know the guy personally, quite well. Let’s proceed.”
“Yes, sir. Will you be sending the money in local currency?”
“There is no local currency in Zimbabwe.”
“… sir?”
“Nevermind. Let’s just send US dollars. $3,000 total.”
“Yes sir. Now, US government regulations require that I collect your social security number for any money transfer in the amount of $3,000 or more.”
“What? Seriously? I’m calling you from Chile trying to send money to Zimbabwe. What business is that of the US government??”
“…”
“Look. Let’s just make the total $2,995. OK?”
“Yes, sir.” And then he proceeded to collect all the information about Time, confirm my credit card information, and all the other nonsense. After a few more minutes, he submitted the order for processing, and then told me,
“I’m sorry sir, the transfer has been declined.”
“What? Why? Was the credit card declined? I can call Mastercard.”
“No, sir, it was declined on our end. Our system refused to take the order. US government regulations require…”
Steaming angry, I politely thanked the man for his help, hung up, and sent an email to my banker in Singapore asking if they could send money to Zimbabwe.
“No problem!” she replied. Exactly the answer I was hoping for.
As I write this note, I’m happy to say that the funds are on the way to Time, and that he should be up and running by the middle of next week.
The whole affair was just another friendly reminder of why I try to avoid doing anything in the US at all. Regulations, financial tracking, consumer protection… it’s just too damn difficult to get anything done.
In fact, that I achieved my objective by using a flexible, “can do” bank in Singapore is probably the perfect conclusion to this allegory.
Well, it is great to see that entrepreneurship is coming back to Zimbabwe and that young people there can start their own businesses again. Maybe that could be an example for entrepreneurs in other countries.
On the other hand, it is sad to see how the U.S. is crippling free enterprise with an unbridled lust for more and more regulations.*
According to Senator Collins of Maine, there are over 4,200 new business regulations being prepared in Washington for imminent implementation—a large number of them aimed specifically at small business. That is why she introduced Senate bill S.1539 – Regulatory Time-Out Act of 2011, to slow down the avalanche of new regulations.
Of course we won’t even mention the customer service at Western Union.
Sadly, many people commenting on forums, blogs, and YouTube believe that all these regulations are good and proper—that they keep us safe and healthy. What do you think?
* The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008. Had every U.S. household paid an equal share of the federal regulatory burden, each would have owed $15,586 in 2008. (SBA Office of Advocacy, September 2010)
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Global Entrepreneurship Week
Today marks the start of Global Entrepreneurship Week, which is being promoted by 123 countries around the world. More than 25,000 partner organizations are hosting over 40,000 events and activities in a weeklong celebration that will drive awareness for the world’s leading economic driver—entrepreneurship.
This is the third-annual Global Entrepreneurship Week, and more than 10 million present and aspiring entrepreneurs will participate in events during the week of November 14-20, 2011.
Anyone, anywhere can participate in wide-ranging activities that includes virtual and face-to-face events, competitions, and intimate networking gatherings. In the U.S. alone, 1,400 organizations will be hosting 3,500 events across most of our states. For information on entrepreneurship activities wherever you live in the world, click here.
Global Entrepreneurship Week is an initiative of the Ewing Marion Kauffman Foundation of Entrepreneurial Activity, the world’s largest foundation of its kind. Here is what Carl Schramm, President and CEO of the foundation had to say about this special week:
“For one week each November, students, educators, entrepreneurs, business leaders, and government officials come together to pursue one cause—to spread the power of entrepreneurship. It’s during this time that we celebrate the innovators who bring ideas to life, drive economic growth, and expand human welfare.”
Although supported by dozens of global leaders and well-know entrepreneurs, the mainstream media seems to have totally ignored the significance of the events of this special week. In the long term, these events could be much more significant to global economic stability and growth than all the G-20 meetings combined.
How many of you are participating in a Global Entrepreneurship Week event near you?
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Entrepreneur Definition
Many people are looking for a valid entrepreneur definition, but the very term “entrepreneur” is being challenged by the “bully” of the entrepreneurial world–Entrepreneur Media, Inc. (EMI), publishers of Entrepreneur magazine. EMI is one of the largest resources of information for entrepreneurs around the world…as long as you don’t use the word ENTREPRENEUR in your business. It seems that EMI owns the U.S. trademark on the word “entrepreneur.” Yup, even though the word is 100′s of years old, commonly used, and derived from the French–EMI holds the trademark. Worse yet, they vigorously defend their trademark as evidenced by just a few of their threats and prosecutions, as follows:
EMI goes after a broad spectrum of businesses with the help of Latham & Watkins, a 2,000 attorney corporate law firm with 31 offices around the world. No one is spared, from the one-person website business, to Universities and non-profit organizations, as well as large businesses. There is no tally available, but EMI has sued, or threatened to sue scores of businesses and organizations since the early 1980′s.
Interestingly, the founder of Entrepreneur magazine, John Leonard Burke (aka Chase Revel), was a convicted felon (attempted bank robbery) who also, sometime later, had notes delivered to bank tellers saying their children had been kidnapped and to leave canvas bags of money for him, and the children would be returned. Actually, he did not kidnap the children, nor did he receive any money. However, attempted extortion still carries a penalty.
After his release from prison he started Entrepreneur and then registered the trademark “entrepreneur” in 1979. He eventually sold his enterprise to the current owners in the late 1980′s…and continued to have brushes with the law.
The irony I see in this whole issue of entrepreneur definition is the fact that the people who are at the forefront of promoting entrepreneurship (EMI & Entrepreneur) are the very people who are running roughshod over the entrepreneurs who use the word “entrepreneur” in the definition or promotion of their business. So be very careful how you use the word “entrepreneur” in your business
It also makes me question whether I will ever recommend any product or activity sponsored by EMI or Entrepreneur magazine in the future. I think I will distance myself from this enterprise from here on.
What do you think?
Note: This post is an excerpt taken from an article in Businessweek, (May 23-May29, 2011) authored by Paul M. Barrett.
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Entrepreneurial Activity During the Recession
The new Kauffman Index of Entrepreneurial Activity has just been released for 2009 and the report indicates that 2009 had the highest number of new U.S. business startups since the index started in 1996. There were an average of 558,000 new full-time businesses started each month of 2009, for a total number of startups of 6,696,000 for the year.
You won’t find anything close to this number published by the U.S. government, because most government agencies do not count non-employer businesses as startups—even though they make up 70% of all American businesses (and contribute a Trillion dollars to the GDP). Thankfully, we have the Kauffman Foundation.
Here are some of the highlights for 2009: (The following numbers are expressed as the number of new businesses created each month out of 100,000 adult population.)
- 340 out of 100,000 adult population created a new business each month of 2009. This is also the third straight year of increased rates of new business startups.
- Men created new businesses at the rate of 430 per month…a slight increase over 2008.
- Women created new businesses at the rate of 250 per month…also a slight increase over 2008.
- African-Americans had the highest rate of increase in entrepreneurial activity in 2009, with 270 new businesses. In 2008, the rate was 220 per month.
- Latino entrepreneurial activity dropped from 2008, but still had the highest rate for 2009 at 460 new businesses…against 480 new businesses in 2008.
- Immigrant-owned startups were higher than native-born, with 510 new businesses. Native-born entrepreneurs started 300 new businesses in 2009.
- The oldest age group (fifty-five to sixty-four) continued their upward trend of startups with 400 new businesses in 2009.
- The youngest group (twenty to thirty-four) had the lowest new business creation of any age group, at 240 new businesses.
- The West continued to lead the country in creating new businesses, with 380, while the Midwest continued in last position with 270. However, the Midwest did show a sharp increase from the 230 new businesses created in 2008.
- Houston had the highest rate of new businesses in large cities, at 630, while Seattle had the lowest rate at 160.
Remember, the above numbers represent the number of new businesses created each month, per 100,000 adult population.
Men, African-Americans, Latinos, older people, and immigrants seem to lead the activity of entrepreneurial startups. Sadly, the youngest group (twenty to thirty-four) peaked way back in 1996 at 280 new businesses, and have consistently been under that number ever since.
I wrote about the dearth of women entrepreneurs previously, but they too have not matched their peak startup year of 1996.
Obviously, the “startup” business is good. Three straight years of increases in the startup rate—right through the recession—seems to indicate that a small business can be created anytime, regardless of economic conditions.
So, for all of you who have been waiting “for things to improve,” I think right now might be the best time for you to start your business. Debbie Fields, founder of Mrs. Field’s Cookies, said, “The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try.”
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Becoming an Entrepreneur
Becoming an entrepreneur takes more than an MBA. The other night I watched a TV show, where Chef Gordon Ramsey went into a financially troubled restaurant to teach the owner how to turn it around. This has been a popular show for a while and Ramsey did his usual “shtick.” But what captured my interest was the owner/entrepreneur, who was allowing her business to fail, and what becoming an entrepreneur meant to her.
In this case, the owner had an MBA from a prestigious business school, and while in school had specialized in entrepreneurship…she was a well-trained entrepreneur—or was she?
Here were the business problems that surfaced during the course of the show:
- This entrepreneur had no previous“experience” running a business. This was her first business.
- She had no “core knowledge” for running a restaurant.
- There was a distinct lack of passion for her chosen business. She said she wanted an existing business so she would not have to “start from scratch,” and this opportunity just showed up.
- She exhibited no leadership, nor control, over her staff. The cooks did whatever they felt like doing, and the owner was mostly unaware.
- This business owner spent little time on the “front line” with her people—she was oblivious to what actually went on in the kitchen. The “front line” was in disarray and she didn’t know it.
- She could not test the products she was serving customers, because she was a vegetarian, and this was not a vegetarian restaurant.
- She was also dating one of her employees, which, in a small business, totally precludes any sense of leadership within the business.
- This entrepreneur was totally out of touch with her customers. The food was poor, and she responded to their immediate complaints with apologies, but never tried to fix the long-term problem.
- No improvements were ever made to the customer’s “experience” during the five years this person owned the business. The menu stayed the same, as did the décor, and dishes.
- The computer system for transmitting food orders to the kitchen was antiquated and worn out.
It was obvious that during her MBA studies, this person was not taught much about becoming an entrepreneur and actually operating a Business. Of course, Gordon Ramsey “fixed” everything and turned the business around—but for how long? It would be interesting to see a follow-up show to see just how much this person learned from Ramsey about becoming an entrepreneur.
Watch for my next post where I will give some tips on how to become an entrepreneur.
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Women Entrepreneurs(?)
Where are all the women entrepreneurs? There is a scarcity of women entrepreneurs, and frankly, I don’t understand why. The rate of men entrepreneurs creating new businesses has increased from 370 per 100,000 population in 1996, to 420 per 100,000 population in 2008.
At the same time, the number of women entrepreneurs creating new businesses has actually decreased…from 260 per 100,000 population in 1996, to 240 per 100,000 in 2008—which is up from 200 per 100,000 population in 2007. Let’s hope the upward jump in new business creations by women entrepreneurs in 2008 will continue through 2009, and beyond.
For me, one of the most inspirational entrepreneurs in the world is the late Dame Anita Roddick, founder and creator of The Body Shop. When she first wrote Body and Soul, I would buy several copies at a time and give then out to clients and friends who were struggling to make their business succeed. I, and many others, believe Anita was one of the greatest entrepreneurs of modern times…so where are the women that should be following in her footsteps?
In 2007, twice as many men entrepreneurs started new businesses as women entrepreneurs. That is sad news indeed. Capability is certainly not the issue; nor is education; nor is opportunity…I’m at a loss.
However, it does lead me to think that perhaps not as many women want to start a business. However, this is just a guess on my part. That is why I would like to hear the thoughts and opinions of others, as to why there are not more women entrepreneurs. Please let me know your thoughts, and I will incorporate them into a later post on this subject.
NOTE: All data is taken from the Kauffman Index of Entrepreneurial Activity, prepared annually by Robert W. Fairlie, Professor of Economics at the University of California, Santa Cruz.
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