Everyone talks about job creation as the ultimate economic saving grace for our community. But shouldn’t we aim higher and talk about career creation instead? Often, the jobs that are created are low-paying service jobs that have proven incapable of bringing about long-lasting change. They continue to keep people mired at, or below, the poverty line.
The best alternatives to those low-paying service jobs are entrepreneurial business startups and careers in manufacturing consumer products. On average, manufacturing jobs start at $14 per hour, which is more than double the wage of most entry-level service jobs and offer the best opportunity to boost the economy in low-income communities.
In fact, there is a crop of manufacturing companies being launched in South Florida, which is helping to diversify our industry sectors and adding new career opportunities locally.
Miami-Dade Commissioner Audrey Edmonson, who represents District 3, has led the charge to support native businesses by spearheading a change where they receive additional points in the county’s procurement process. This is critical support that local entrepreneurs need in order to compete with multinational corporations that can often undercut smaller, local businesses.
Of course, there’s more work to be done because the same native-business priority needs to be given during the School Board procurement process and for Miami-Dade County consumable-product contracts. In fact, producers of consumable products are the largest sellers to public entities.
The reality is that the majority of entrepreneurs and consumables manufacturers will not receive government contracts and will require some sort of funding or start-up capital in order to sustain themselves and hedge against cash-flow issues. Funding for these companies does not always seem to be a priority, although the consensus is that small businesses are good for the economy.
However, the politics of banking don’t support lending funds to start-ups. Banks usually lend money to those that need it much less to survive. The lending policies of banks, large and small, are antiquated and require businesses to show profitability and tax returns for a minimum of three years in order to qualify for a loan. But these are not the companies that are most in need of funding support.
My company, EcoTech Visions, applied for and was denied 40 loans from financial institutions of all sizes before I resorted to private-equity funding that was achieved through business relationships.
Google, which had giant mounds of cash sitting in the bank, borrowed $3 billion in a bond offering. Interest rates were low and it took advantage. That’s fantastic for Google, but shouldn’t companies that need just a tiny fraction of that amount have equal access to funding?
Community foundations and private banking foundations primarily give to nonprofit entities and not to for-profit entrepreneurs with exciting and innovative products or solutions. Venture capital is available, but it is almost exclusively secured through existing relationships, which makes it difficult to come by for a start-up.
Private-equity investors are available, but they often act like vultures looking to swoop down and prey on a business in need and can sometimes walk away with a 50-percent stake in the company for infusing their cash. Angel funding primarily goes to tech and app development because that is hip and sexy right now.
Native start-up entrepreneurs are the backbone of any local economy. In addition, buying locally is better for the environment and the economy. It reduces emissions of greenhouse gas from transporting goods all over the globe while simultaneously reducing our trade deficit.
It’s time to move past the status quo, the old school ways of awarding contracts and lending money. Funding entrepreneurial startups creates careers for those who need them most and not just low-paying service jobs. We can do better, and we must.
Pandwe Gibson is CEO and executive director at EcoTech Visions.