A case for modifying City Hall’s involvement in entrepreneurship.
January 25, 2017
City Hall’s involvement in entrepreneurial pursuits has risen greatly over the last several years.
This involvement includes short duration programs of learning business basics – business plans, marketing, legal structure, etc – but also includes programs modeled after ABC’s television program, Shark Tank.
At the end of many of these programs and contests, entrepreneurs may qualify for grants, loans, or awards to launch and grow an idea, brands, or business.
The focus of these programs is undoubtedly revenues, but not the kind entrepreneurs are most concerned with.
Instead, many of these programs charge the would-be entrepreneur a fee to learn business basics, and then make grants and loans, or bestow awards contingent upon the entrepreneur opening a brick and mortar location within the municipality or State sponsoring the program.
We’d be remiss if we did not point out that we currently have no brick and mortar location to individually support our brands, but do have one small administrative office in Cary, North Carolina. Our very first individual location(s) will occur when we launch www.TOG.space/.
We get the need for City Hall to have a revenue base, and, the global excitement supporting the largest entrepreneurial shift in history is an attractive way to boost those tax revenues. But at what expense?
We argue, that in many ways, these programs stifle the most common entrepreneurial pursuits because they engender a short-term focus on real-estate associated revenues within six to twelve months of ‘launching’.
A brick and mortar location would have been an unimaginable expense to us several years ago, when we launched our first brand. In fact, we likely would have failed due to the costs.
The National, and indeed global data, suggests that the vast majority of entrepreneurial pursuits are tech-driven, tech-supported, and tech-delivered/consumed. What do we mean by that?
Simply, the vast majority of ideas, brands, and businesses launched from 2013 through 2015, who are still in business, did so without the need for a brick and mortar location. As these businesses grew, there wasn’t the need for a brick and mortar location for nine to eighteen months. And, even when these businesses had the need to centralize certain employees in a physical location, their ‘product’ was and is overwhelmingly consumed within the digital marketplace.
So, what does this say about the curriculum of the City Hall programs? Simply put, if the goal of those programs is ‘local’ entrepreneurs creating brick and mortar business, the teachings certainly share that focus. And therein lies the problem.
Above, we mentioned that we have an admin office in North Carolina. Why N.C? Well, as we launched and grew – developing our core consumer-base, iterating and reinventing our wallet-expansion plan, and enjoying ROI – we realized that being close to our partners was a huge asset. Our four largest technology partners are either based in, or have a regional footprint in NC.
But, we hadn’t fomented any of those relationships when we launched. It took just over two years to find the collection of partners best suited to our model and delivery of our service-offerings to our customers. It’s a process, and it doesn’t happen overnight!
One of our new clients is based in central Virginia. 100% of her revenues are expected to be internet-based for at least the first twelve months from launch. Her message delivery, marketing, sales platform, and consumer interface will be almost entirely e-centric. She has absolutely no need for a brick and mortar location for the foreseeable future. That being said, she’s been enticed into one such City Hall program, and only after paying a fee, did she learn she had to ‘open’ a brick and mortar location within six months to qualify for funding.
We have a total of 17 clients across the Country who have found themselves in this position – a great idea, in need of funding, but have zero need for a brick and mortar presence for the foreseeable future.
Prior to coming to us, their design & development path was stifled – by the very City Hall and States that want tax revenues from their entrepreneurial pursuits. Not to worry, we’ll make that happen anyway.
But there’s still a large and systemic problem, and as much as we appreciate the business driven to us, we argue that City Hall and Sates can and should do it better!
We believe that City Hall and State governments will enjoy greater ROI via tax revenues if they adopt an agile system of entrepreneurial investment. We also believe that more high-value entrepreneurs will surface within municipalities and States that support and award a borderless launch & grow concept.
Amazon launched in Washington State, Airbnb in California, Citrix in Texas, and so on. But these are now international companies and iconic brands pouring billions of dollars into every State and territory in the Union.
When City Hall and States constrain the growth of an idea, business, or brand from its very launch, they actually rob their municipalities and State coffers of future revenues from employment, advertising, regulatory fees, travel, and sales tax.
How can City Hall and States governments change their model?
We suggest good-ole-fashion competition and a future-success investment model.
Our next blog piece will discuss our thoughts on such a borderless, future-success investment model.