07.28.07
OMBs
For the past twenty-five or so years, ever since President Reagan was in office, the American business press has been enchanted by “entrepreneurs”. We define an entrepreneur as someone who starts a fast-growth business, especially a business that operates in a technology-related field. We get excited about speeches and articles and books, as long as the person producing the information is one of the scarce members of this exclusive club.
Is American business really about this kind of entrepreneur? An entrepreneur, according to the meaning of the word, is a risk-taker, someone who risks his or her own capital in establishing a business venture. An entrepreneur, then, is really either an owner-manager or an equity investor in a business that is either new or expecting to expand. Equity investors are very important to funding someone else’s dream, but are most often going to fund “me-too” businesses until there is no doubt that the owner-managers are on to something.
Do you disagree? Read the business section. Isn’t it amazing that the companies getting funded are usually all in the same field of business and even the same neighborhood of the same city? That’s the herd mentality. People that have funds to invest also have assets to protect, and so they are going to be more conservative about how they invest than they would have been during their years of earning the funds with their own labor.
So who is it that really builds the economy and puts people to work? It is the owner-manager. The true builders of the economy are owner-managed businesses (OMBs). Who employs more people in your local community? Who is faster to respond to the needs of customers? Is it big multi-national corporations? I think not.
In fact, MNCs are busy laying off American workers and replacing them with contracted third world workers. In the third world, these workers have few protections and fewer benefits, so companies can not only pay less, but avoid expenses for things like break periods, overtime, occupational safety requirements, medical / dental / vision insurance, workers compensation insurance, disability insurance, medical leave, pensions, the forty hour work week, and environmental protections.
Go to your locally-owned pizza joint. See all those photos of youth sports teams? That is because the owner helped pay for uniforms and equipment (and sometimes even field rentals) for those kids, so the owner gets a small plaque and a team photo to put on the wall. See that jar on the counter with the cheesy photo of someone wearing a cheap wig? Read the label–the local owner-managed business is the one helping raise a little money to help a local resident pay for cancer treatment.
Look at your local non-profits. Who is it that is giving personal time to help improve the community? Is it the manager of the local big chain store? No, it is the local business owner.
Who is it that hires your brother-in-law that has never worked in his life? Certainly not big corporations? Who is it that hires your cousin who just came out of prison and promises that he’s going to get his life together? Not big corporations.
Surprisingly enough, owner-managed businesses (OMBs) are the foundation of a strong and resilient economy. OMBs are frequently also SLOBs [Small, Locally-Owned Businesses]. An economy built upon OMBs and SLOBs survives with little apparent effect when one of the businesses closes. On the other hand, an economy built upon one or a few large businesses suffers hardship when one of those businesses closes.
