Why aren’t we teaching them how to own?

Published by Lori Pickert on November 29, 2011 at 01:21 AM

Speaking forcefully and with great determination, President Obama mentioned small business at least five times in his American Jobs Act speech … telling Congress: “Everyone here knows that small business is where jobs begin.”

If entrepreneurship is this vital to the American economy, why aren’t we teaching every high school student in this country how to start and operate a small business?

I believe many do not know how to create opportunities for themselves…

Entrepreneurship education is a great way to teach basic subjects to children who are failing to learn through traditional academic approaches, because it provides concrete incentives. Owner-entrepreneurship education teaches young people that they can create jobs for themselves and do not have to be victims of this economic downturn but rather view it as an opportunity to start a business. It also makes them more employable because by running their own small businesses, they learn how business works and what makes an employee valuable. This shift in viewpoint can immeasurably benefit the psyche of an unemployed teenager, and also benefits companies that hire them.

Currently, our national strategy to combat poverty among low-income youth is built around improving K–12 education. That’s a good choice, yet we’re not teaching entrepreneurship, even though most Americans would probably agree with President Obama that small business is the driving engine of our economy.

Instead, most of our national education efforts seek to teach low-income youth to become better workers. Given the widening gap between rich and poor in this country, however, I’d like to raise one critical point: Why aren’t we also teaching them how to own? If entrepreneurship is the engine of the American economy, why aren’t we raising more creative owner-entrepreneurs like the Williams brothers?

On an income statement, workers are located on the “wages” line. Professional business owners, venture capitalists, and private equity firms have a distinct advantage in the creation of wealth because they can sell the profits generated by workers for a multiple of a business’s earnings. One dollar of profit can become $3, $10, or even $50.

This is how fortunes (and jobs) are created — an entrepreneur starts a business, sells some or all of its ownership, and uses the resulting capital to start and build other businesses that he or she can sell in the future, creating more capital. Workers, on the other hand, spend their lives selling only their time for hourly wages, or perhaps a salary.

Disadvantaged youth are seldom let in on this secret to wealth creation. I once asked a leading venture capitalist and philanthropist, who has donated millions to helping low-income children attend private schools, “What about teaching kids the ownership skills that made your fortune, so they can become financially independent?” He responded, only half-jokingly, But then who would do the work?”

Raising Owner-Entrepreneurs Would Solve Youth Unemployment, Spur Growth, and Rescue Low-Income Communities

 

 

9 comments

Comment by amy on November 29, 2011 at 02:19 AM

Oh boy. That last bolded quote doesn't surprise me at all. Saw that coming.

Comment by reinaelliston on November 29, 2011 at 06:59 AM

You have a point. Entrepreneurship can start and create jobs. Thing is, aside from the fact that the subject is not common in schools, not all aspiring businessmen have enough capital. They have to work for some time until they are able to save enough money to run their own business ventures.

Comment by Lori Pickert on November 29, 2011 at 01:42 PM

amy, ha!

reina, the immigrant model, of course, is to work and save money for your own hot dog cart, then save for your second cart, then go from there. myself, i freelanced for a year while starting my business, and i also had an employed spouse so i could take out a loan to buy a computer (which was expensive when dinosaurs roamed the earth!).

jason fried has a great essay online about boot-strapping. it's how i started each of my businesses. it's possible to start small and grow.

Comment by Susana on November 29, 2011 at 02:45 PM

I don't know what it's like in the US, but even in my neighbourhood here in Toronto Canada, I see very little hope for entrepreneurs with independent grocery stores, hardware stores or meat shops. Over the weekend I listened to people praise the Costcos and Walmarts of the world. I hear people defend those big corps daily, everyone is driving somewhere to 'get a deal' and they drive past shops owned by their neighbours. Lori, you know I'm not a pessimist it's just the reality I see/hear. Is it the same where you live?

Comment by Lori Pickert on November 29, 2011 at 03:46 PM

hi susana! :)

there aren't many neighborhood shops anymore, but i don't feel qualified to comment on this, really. i live in a rural location and i drive a half hour or more to buy groceries. i shop once a week and i DO care about prices. but i buy all my meat at an independent butcher, and they seem to be doing well. (i HOPE.) and i think that's because the meat at the big-box grocery stores is *terrible*. so maybe the pendulum will swing back a bit when people find the *only* place left to shop is walmart. they might start craving handmade and unique again.

i do think it's a walmart-costco-sam's club world here in general. maybe some other americans will speak up and say how it is in their area. i feel a little off the beaten trail. ;^)

i feel i am a realist about business. when my first business (which lasted 20 years!) was killed (slowly, thankfully) by company clients sending the work to be done cheaply overseas, i saw it as an unavoidable development. who *doesn't* want to get something cheaper? it's the corporate version of shopping at walmart. most businesses *do* have a lifespan, and as life changes, some businesses become obsolete. think about video stores!

however, realistically, there are still rampant opportunities - they're just different opportunities. deciding what business to open, gauging what's needed and wanted, figuring out locations and prices .. they're all part of being successful. the businesses of yesterday might not all be viable today, but the businesses of tomorrow will be.

Comment by Tana on November 29, 2011 at 05:50 PM

A couple of things really jumped out at me from this excerpt.

First, entrepreneurship seems to be about more than just being self-employed. It's about generating wealth and jobs for others too. As a freelance writer, I am still just straight trading my time for money. It (being a freelance writer) requires some of the same skills as being an entrepreneur but I think they are two different things.

And then reading this, "Why aren’t we also teaching them how to own?" I started thinking that most kids don't own much. Not even their time or their own thinking.

When my daughter started university this year, she was super stressed about earning good grades and I kept trying to get her to think about university in a different way - as something that was hers. Her education. She owned it. It didn't necessarily matter if she got good grades, it mattered how she used it, what she got out of it. I don't know if it fully sunk in, but it seemed to settle her down and give her a sense of control. I wish I had taught her that so much sooner.

That sense of ownership seems connected to the whole idea of teaching kids to own businesses. More at the core of it than teaching things like accounting and marketing.

Comment by Lori Pickert on November 29, 2011 at 07:08 PM

an entrepreneur could start a business that employed only herself, so it doesn't necessarily mean employing others. there is a lot of crossover in the terms freelance, self-employment, entrepreneurship. it might come down to perspective - someone might identify himself as a freelancer and another doing the exact same work might identify himself as a business owner.

when i started my first business, i freelanced until i made enough money to support myself. i thought of the work i was doing completely differently - my freelance work was more or less a part-time job; the business work was building up a client base. but it was very similar work!

"[R]eading this, "Why aren’t we also teaching them how to own?" I started thinking that most kids don't own much. Not even their time or their own thinking." so true! we have to start by letting them own their interests, their opinions, their plans, their dreams.

agree so much with what you told your daughter .. that was the mission of my school. i told the teachers over and over again, our job is to convince our students that their education is for *them* to do what *they* want to do - they have to own it.

agree with you completely that ownership of ideas and the process comes first!

Comment by Tana on November 29, 2011 at 10:36 PM

I doubt I would have made the connection, Lori, if I hadn't been reading your blog for the past couple of years. :-)

Because I am a complete word nerd, I looked for a definition of entrepreneur. This is wikipedia:

"Entrepreneur in English is a term applied to a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome. Jean-Baptiste Say, a French economist, is believed to have coined the word 'entrepreneur' in the 19th century - he defined an entrepreneur as 'one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour'. A broader definition by Say: 'The entrepreneur shifts economic resources out of lower and into higher productivity and greater yield.'"

I like that first definition. It would include both self-employment and running a business that employs others. I like that it is based on both willingness and responsibility.

Comment by Lori Pickert on November 29, 2011 at 10:39 PM

:^)

my ever-so-simplified dictionary on my laptop defines entrepreneur as "a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so."

i notice there's a trend of people referring to themselves as entrepreneurs when they start an online business that might only be a website with some ads on it. i think people define it for themselves - they might think of entrepreneurship as having to do with an original idea or, as you suggested earlier, someone who creates a business that employs others. for myself, i think if you've had to throw on rubber gloves and plunge a toilet 10 minutes before clients arrive from out of town, you're an entrepreneur. ;^D

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