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Small Business Financing May Suffer From Obama’s Proposed Budget and Political Wrangling

February 21, 2012 Leave a comment


Business Mentoring
Posted: 02/21/2012 10:11 am

Lenders are concerned that President Barack Obama’s proposed 2013 budget and the political scuffling in Congress may leave the U.S. Small Business Administration and U.S. Department of Agriculture with inadequate loan-guarantee authority to satisfy the needs of small-businesses owners. If that happens, and “guarantee coffers are low, the borrower needs to worry if their loan will be approved before the program runs out of money,” says Mike Rozman, co-president and chief strategy officer of BoeFly.com. The New York City-based company matches borrowers with lenders online. Of further concern, he notes that “there is still limited conventional financing for start-ups.”

Before the financial meltdown and the Great Recession, start-ups were able to get financing when the applicant had related experience, invested approximately 20-percent equity into the venture and pledged collateral. That has changed drastically and fledgling entrepreneurs are left with few, if any alternatives. For more mature companies, however, “we’ve seen an increase in conventional lending over the past six months for existing profitable businesses seeking to expand or refinance debt,” Rozman says.

Kraig Kramers, a management consultant and consummate entrepreneur who turned around such Fortune 500 Companies as Snapper-brand lawn mowers, has advice for surviving economic turmoil and a possible tightening of credit. “Stay close to lenders and prospective investors long before you need them,” Moreover he says, “You must have prior happy relationships with those who will provide the cash timely when you really need it.”

He also coaches business owners to drill down “into cash management with tools you can introduce into your business to accelerate incoming cash.” Additionally, “Delegate these tools to those managers and employees who can do the best with them.”

Borrowing an idea from “a Fortune 500 company,” he says, “Look at a detailed balance sheet, yes, to the penny.” As a result, “we found a half-million-dollar stock certificate that had been forgotten.” But the technique is not just for large corporations. Kramers also found “recapturable deposits in several smaller businesses this way.”

Equally as important, cleaning up your financial statements, footnoting the most important line items and highlighting key financial ratios, prepares you for making a loan application. Furthermore, include an extensive discussion telling the loan officer and her committee how you arrived at the forecast for the next 12-month’s proforma.

Rozman adds that if customers get the cold shoulder from their exiting bank, the borrowers will need to be “aggressively seeking alternatives.” BoeFly’s 1,500 participating lenders pay subscription fees in order to view applications from entrepreneurs seeking financing. In addition to conventional loans, some of the lenders make loans that are partially guaranteed by SBA and USDA and may consider start-ups — especially for franchises.

SBA’s 7(a) loans are suitable to finance real estate, equipment, machinery, working capital, and to purchase an existing business. The agency’s 504 program is for fixed assets and most suitable to build, expand or purchase real estate. More recently, SBA initiated a temporary 504 program to “rescue” borrowers who have existing loans with balloon balances coming due and find that take-out lenders are scarce.

The basic 504 program requires job creation or retention and does not include working capital. But the temporary refinancing program waives the job-creating requirement. And it also allows some working capital for projected operating expenses.

USDA’s Business and Industry Loan Program is similar to SBA’s 7(a) but the businesses must be in rural locations. Sometimes, sparsely populated locations on the fringe of urban areas are approved. Unlike SBA’s loan limits of $5 million for 7(a) and approximately $10 million for 504, USDA’s B&I program tops out at $25 million under certain circumstances. And the loans may go up to $40 million for rural cooperative organizations that “process value-added agricultural commodities,” according to USDA’s web site.

Small-business owners are holding their collective breaths as the Obama Administration’s proposed budget wends its way through the politically-charged Congress. It is as much the chief executive’s opening salvo, as it is his wish list. But if the budget that survives includes large reductions of SBA and USDA guaranteed loans, you need to be prepared.

To test the water, talk to your bank’s loan officer about your chances of getting financing. It is better to see if your loan officer tap dances and stutters now than before crunch time. And if you don’t get a positive reply, start looking for other funding alternatives.

Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national “Journalist of the Year” award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him at http://www.Twitter.com/JerryChautin

Copyright © 2012 Jerry Chautin — All rights reserved
Huffington Post readers are permitted to distribute with attribution to the author

Follow Jerry Chautin on Twitter: www.twitter.com/JerryChautin

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Another Small Business Success Story

October 27, 2011 9 comments

CIN ALERT
October 27, 2011

For many of us, the idea of starting a small business is a lifetime goal. In fact, the chance to be your own boss by providing a product or service ranks right up there with homeownership as one of the true American dreams. Despite tough economic times, the environment for starting a small business in many parts of the country is better than you might think, particularly in view of the various assistance programs made available for small business owners.

An enterprising business owner can be very successful, but it takes a lot of work. (And usually a lot more time and money than the business plan calls for.)  Christy is an individual who knows the score. A Registered Yoga Teacher, she has been helping people achieve healthier lifestyles through massage therapy, group exercise, yoga, and Pilates for over 17 years. However, success had rendered a problem for her: the small storefront she used for years in a downtown Midwest city is just too small for her growing clientele. She faced a daunting task: Find a new location that would be a lot larger — yet also fit into her operating and personal budgets.

Driving to work one day through town, she noticed that ‘for sale’ signs had just been posted in front of a small one-story home nearby. All along Christy had been thinking about finding a larger storefront or office. Suddenly, the idea of conducting her instruction classes in a small home made sense. The next several weeks were consumed with meetings and communications with the local town officials, realtors and the chamber of commerce, to be sure that the zoning was correct and that she could have access to some small business assistance programs.

That was three months ago, and the bottom line today is: Christy has much more room in brand new surroundings, her customer base is growing by the week and it all fits into her budget very nicely.  Things are looking up now for her.

All told, there are an estimated 15 to 17 million small businesses operating in America today. Small businesses are still the backbone of our communities – our Main Streets! — and are seen by many as the embodiment of the spirit of entrepreneurship.

Entrepreneurs are credited with creating the vast majority of new jobs and employing the majority of the nation’s workers. Granted, big businesses have emerged in fields where new technologies permitted economies of scale in the production and/or distribution of goods. Still, small businesses have remained vital to the nation’s economic development, and even more important as a component of American culture.

Even as our new 21st Century embraced what many Americans could view as superior efficiency and productivity (for both small and big businesses), Americans continued to revere small business owners like Christy for their self-reliance and independence and can-do spirit.
Small businesses have also been the primary way immigrant families coming to America have climbed the economic ladder and achieved the American dream.   Many minority populations today — in urban, rural and suburban communities — have seized the small business pathway as a road to economic independence and building personal wealth.

CIN editors have always recognized the vital role played by small businesses, and we devote a large section of the CIN to them. This resource tool provides basic information  – including the pros and the cons of small business ownership – basic start up information – government assistance programs on the Federal and State levels – grassroots programs provided by NCRC members – private sector assistance programs – franchising basics – banking connections assistance –  available small business resources and the latest small business news and information.   Here are some recent excerpts:

Keeping Your Small Business Ahead of the Curve  
(Source: Small Business Trends)
Ten key ways to keep a small business profitable and ahead of the competition are provided by Small Business Trends.

Small Business Owners Think Controlling Employee Expenses Will Lead To Cost Savings
(Source: Gaebler)
A recent Citizens Financial Group/Mastercard study found 55 percent of small business owners believe better management of employee expenses would reduce costs and benefit their business, while 40 percent said more control over employee spending would give them a better peace of mind.

Wells Fargo Lends More Dollars to America’s Small Businesses Than Any Other Lender
(Source: Market Watch)
2011 US Small Business Administration data shows Wells Fargo & Company is the top lender in dollar volume, approving $1.2 billion in SBA loans to America’s small businesses for the 2011 federal fiscal year.

How Small Business Owners Were Hurt by the Fall in Home Prices
(Source: Forbes)
Personal borrowing plays a key role in how many small business people finance their companies. When the housing crisis hit, small business owners that relied on home equity to finance their companies’ operations faced a credit squeeze. Thus, small businesses have access to about $25 billion less in credit than they would have had if the trend in home equity loans had continued in the direction it had been going in the first half of the 2000s.

Coffee Fix: Starbucks Pushes Small Business Loans
(Source: Business Week)
New York Times columnist Joe Nocera lauds Starbucks for supporting community development financial institutions, the nonprofit lenders serving small businesses and affordable housing in low-income communities. The coffee chain is donating $5 million and encouraging customers to pitch in at the checkout line as well.

Geithner Defends Performance of Small Business Lending Fund
(Source: Business Week)
Treasury Secretary Timothy F. Geithner says that the Small Business Lending Fund had been successful even if it was smaller than envisioned. The program closed Sept. 27, having distributed $4 billion of its $30 billion to 332 community banks nationwide.

Naval Ravikant, AngelList: A Social Network That Connects Startups With Investors

October 2, 2011 1 comment

Venture capitalists may invest in innovation. But within the venture-capital industry itself, innovation is rare.

There are signs, however, that the old boys network is changing. AngelList, a social network that connects startups with investors, is attempting to lead the way.

The site helps solve a problem that Naval Ravikant, AngelList’s co-founder, saw emerging two years ago. The cost of starting a new Web company had plummeted, and for early funds, scores of young Internet startups were flocking to so-called “angels” — people who invest relatively small amounts of their own money in newborn businesses. But finding an angel was no easy task. At the time, few promoted themselves online and, until recently, there was no one go-to directory of angels.

Since launching in 2010, AngelList has become that directory for many, with 2,500 investors and 13,000 startups using the service. Now an Atlanta-based startup that sells medical iPad apps can sign up on AngelList to connect with an investor interested in bankrolling a healthcare startup in the South.

It’s simple: Startups create a profile and pick which investors can see them. As soon as they share themselves, investors see the startup in their feed. Investors see 10 to 20 new startups in their feeds each day, in addition to the startups AngelList admins send to investors based on the interests they’ve indicated.

So far, Ravikant says AngelList connections have lead to at least 750 individual investments in an estimated 400 companies. (Those numbers are probably low, he notes, since not all deals are ultimately reported to AngelList.)

Deals born on AngelList typically range from $50,000 to $1 million a pop, and go to young startups. The industry calls this type of financing “seed-funding,” and its soaring popularity since the beginning of 2010 has been a boon to AngelList, which primarily serves the seed market. Data from CB Insights, a market research firm, shows that seed investments — mostly in Internet startups — jumped from a mere one percent of all deals during the third quarter of 2009 to a whopping 11 percent of all venture investment deals in the third quarter of 2010. Since then, seed investments have hovered at around 10 percent of all venture deals, CB Insights said.

And while Silicon Valley once left sub-$1 million investments in less-proven startups to angels, now big-name venture firms, investor groups and even Google are starting to think small.

“You’re seeing the broad institutionalization of seed investments,” said Joe Kraus of Google Ventures, the venture fund of Google, which announced at last week’s TechCrunch Disrupt conference plans to do 80-100 seed investments this year.

Accordingly, AngelList is seeing a large number of institutional investors use the service to find young startups. Thirty percent of the investors on AngelList are venture-capital firms. And while VC firms account for just 10 percent of investments reported to AngelList, it’s likely they make up a much larger share of the total dollars invested, as VCs tend to make larger bets. But Ravikant doesn’t track exact amounts in each investment, so it’s hard to say, he says.

So why did Ravikant and his partner Babak Nivi name the service AngelList when nearly a third of its users aren’t even angels? “It has to do with the evolution of the seed market,” he says. “Most of the money used to come from angels and super angels and now most of the money probably comes from VCs.”

Although it’s riding the seed-funding wave washing through both realms, AngelList is yet to make any money. Part of the reason is that the site is just a social network, not an online exchange. Deals born on AngelList are executed offline. After an entrepreneur and investor connect on the network, the two hash out a deal on their own. Unlike SecondMarket and Sharespost, two online exchanges that have been cashing in on the business of connecting startups with investors by taking a small cut of the transactions they arrange, AngelList is only in the business of making connections.

Ravikant, 37, says he has no immediate plans to change that. The company supports itself with a grant from the Kauffman Foundation, an entrepreneurship-focused advocacy group, and Ravikant found early success as a serial entrepreneur: He co-founded epinions, a product review site and vast.com, a classifieds site. He was also an early investor in Twitter and Foursquare.

As you might expect, being in the business of connecting startups with investors provides Ravikant with a front-row seat to the latest trends in Silicon Valley and beyond, including who gets money these days — and why. Investment seekers, listen up.

How did AngelList come about?

I was operating a blog with my partner Nivi called Venture Hacks, which became one of the go-to guides on raising venture capital. But we started getting a common request from readers. They would say, “Don’t tell me how to negotiate a term sheet, tell me how to get a term sheet.” So we built this product to connect entrepreneurs with investors. [AngelList] began as a mailing list in 2010, which we ran for six months, and then toward the middle of last year, we started coding furiously on it.

What percentage of the startups that have received funding through AngelList are based in Silicon Valley?

The data is a bit fuzzy, since we don’t track the actual investments but rely on self-reporting. The stats are: Silicon Valley, 53 percent; New York, 18 percent; Los Angeles, 6 percent; Europe, 4 percent; Boston, 4 percent; Austin, 5 percent; Seattle, 3 percent; and the rest, 7 percent.

How have things changed from your time as an entrepreneur in the late 1990s?

Back when I was an entrepreneur, the environment was a lot more friendly toward investors. These days, because it takes a lot less money to start a company and you can raise money from many more sources, and because the information is now out there on various blogs like Brad Feld’s site, Yokum’s site and Series Seed documents, it’s gotten a lot simpler. So I think the opportunity for investors to take advantage of entrepreneurs is diminished.

Has the average age of successful entrepreneurs dropped since then?

Yes, I’m 37 and I almost feel too old to be doing this relative to all the 20-somethings running around. Berkeley is now running Founder School and Stanford is running StartX Labs, which are these on-campus incubators. And students are going into these incubators before they’ve even graduated. Traditionally, nobody thought young people had the resources. But now code is a resource. These days, code is power. And the capital required is so low that an investor can bet on 19-year-olds who have never done anything before just because they seem really smart and have managed to build something on their computer by themselves or with their buddy before they even raised any money.

So can being relatively older hinder an entrepreneur’s ability to attract investors?

It can, and here’s why: If you’re a little older, you probably have a family and a lifestyle that requires a higher burn rate. You have these young kids going into Techstars, and for $20,000, they can live for a summer or six months and build a prototype. Whereas if you have an older team that has more personal financial obligations, you say, well, we need to raise half a million to fund our team to build a prototype. And so if one team needs $20,000 and the other needs half a million, it’s just a different risk to reward ratio.

So what’s an older entrepreneur to do?

What you often find them doing is they either have the capital to play and they seed-fund themselves or they don’t compete against the college students in the early-stage market. That is, they might go into disciplines where the initial prototype costs are high anyway. For example, if you’re building a semiconductor or a pharmaceutical, that’s going to require a few million, so at that point, there’s less that a young team with $20,000 can do to displace you.

Have you seen the average age of startup investors also drop?

Yes, but not as much. You definitely have a lot more rich people who sold their company to Google or were early employees at Facebook. Maybe they joined Facebook when they were 20, and now they’re 24 and wealthy. You see a bit of that — but not a lot. The angels and investors still tend to be an older bunch than the entrepreneurs. That’s because the bulk of the capital, even in the seed market, comes from VCs who run seed funds. And a limited partner is not going to fork over $100 million to an investor who shows up fresh out of school. So there’s sort of a minimum age threshold when it comes to VCs.

Did AngelList play a role in fueling the latest tech bubble?

There’s definitely been a rise in valuations in seed-stage companies, and we try to discourage companies from posting high valuations. We do expose startups to many more investors, which brings their price up, but we also expose the investors to many more startups, which brings their price down. So it sort of cancels out.

We also try to be a neutral marketplace and not take a point of view on this. But here’s an analogy: When the NASDAQ goes up and then it crashes, is it the fault of the people who run the NASDAQ? If the seed-funding market collapses or retreats, is that going to be our fault? I don’t think so. We’re just trying to operate a platform that makes it more efficient. But efficiency can work both ways. In a very efficient market, you actually get faster volatility and faster adjustments. That’s because as soon as news comes in, it flows through all the participants instantly. You can see that happening on AngelList. Pre-AngelList, when the seed market was going to slow down or shut down, it would take a long time for that information to ripple across the market. Whereas in the age of online markets, that information travels a lot faster. So you can see, for example, a hundred companies reduce their fundraising prices the same day.

So is AngelList a stock market for startups in a sense, similar to, say, a SecondMarket?

SecondMarket is a place where you trade secondary shares. We operate when the company itself is raising $300,000 or $1 million, as opposed to SecondMarket, where there’s a company that’s worth $50 billion, and one of their shareholders is selling $500,000 of stock to a third party. We’re different, first, because we deal in primary capital — the company itself is raising money — and second, we’re much, much, much earlier stage. And the way the market behaves at the very early stages is there are no financials, there are no customers, there are no revenues. At this point, it’s about trust, and people and vision and credentials and who is associated with your company, and what school you went to and where is your prototype and how do you think it will beat YouTube. SecondMarket’s model works for companies that are further along. But for a raw startup, like a Mark Zuckerberg in his dorm room, it won’t work for that.

Do you have any plans to monetize AngelList in the near future and, if so, how?

We don’t have any immediate plans to make money. But there’s a huge amount of active investing happening on AngelList. I was an investor myself, and I may be an investor again. We can, for example, raise a fund and invest it in some of the companies ourselves, and we would have the advantage of a great brand, good data, and we would be helping the startups in a very scalable way.

Entrepreneur Spotlight

Name: Naval Ravikant
Company: AngelList
Age: 37
Location: San Francisco
Founded: 2010
Employees: 9
Revenue: None
Website: www.angel.co

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

September 12, 2011 5 comments
Madison

Image by ifmuth via Flickr


Founder, Network for Teaching Entrepreneurship
Posted: 9/9/11 08:37 AM ET

Speaking forcefully and with great determination, President Obama mentioned small business at least five times in his American Jobs Act speech Thursday night, telling Congress: “Everyone here knows that small business is where jobs begin.” The president admitted that large corporations “have come roaring back” from the recession, but “small businesses haven’t. And he described tax cuts and hiring incentives in his jobs bill especially designed to stimulate and support small business, which he has often referred to as “the engine of our economy.”

I have just one question: 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’m not just picking on the president; I didn’t hear entrepreneurship education mentioned during the GOP debate on September 7 either.

Yet, if you think the current 9.1% unemployment rate in this country is frightening, take a look at youth unemployment. On September 2, the Department of Labor reported a teen unemployment rate of 25.4 percent. The rate among African-Americans teens is almost 49 percent, more than four times the national average. The rate for Hispanic youth jumped up nine percent this summer to 35 percent. The number of teens living in poverty in the United States has reached almost 19 million — with the majority in African-American and Hispanic communities.

I don’t believe our teenagers lack initiative or don’t want to work. I believe many do not know how to create opportunities for themselves because they have not been exposed to the tools necessary to create ownership of assets within the free enterprise system. As an educator of at-risk youth for thirty years and the founder of the Network for Teaching Entrepreneurship (NFTE), I have seen firsthand the powerful effect that learning to start and operate a small business has on young people.

The time is now for an unprecedented initiative in owner-entrepreneurship education to reduce these catastrophic youth unemployment rates — before we see London-style riots in the streets of our own cities. Without such an initiative, we risk losing this generation to a permanent depression and long-term structural unemployment.

Let me share with you the story of two at-risk youth who were saved by owner-entrepreneurship education. Jabious and Anthony Williams were living crammed in with their mom and eight other family members into their aunt’s two-bedroom apartment in Anacostia, a violent South East Washington, D.C. neighborhood. Every day the boys walked miles to the nearest Exxon station to pump gas for tips. “Typically, we would earn about thirty to fifty dollars a day to help support my mom,” says Jabious Williams.

Luckily, the Williams brothers met Mena Lofland, a caring NFTE-certified business teacher at Suitland High School in Maryland. She got the boys in to a NFTE’s owner-entrepreneurship class. NFTE currently reaches over 60,000 students a year in the United States, as well as in ten countries. There are 400,000 NFTE graduates globally.

Like many of our low-income students, Jabious and Anthony displayed an aptitude for entrepreneurship, born of tough childhoods that encourage independence, toughness, salesmanship and hard-won street smarts. I’ve seen this repeatedly: Our at-risk youth are uniquely equipped to handle the risk and uncertainty inherent in entrepreneurship. They also have valuable insights into their local markets.

The Williams brothers started their own hip-hop clothing line, for example, with support from Lofland, and two local mentors — Phil McNeil, managing partner of Farrgut Capital Partners, and Patty Alper, a dedicated volunteer, philanthropist and former entrepreneur.

Now 24, Jabious is a scholarship graduate student at Southeastern University and operates Jabious Bam Williams Art & Photography Company. Anthony heads a youth-mentorship program. They recently gave their mom $5,000 as down payment on a house. “If it weren’t for the NFTE classes and the support of our teachers and mentors, we would have been likely to drop out of school,” Jabious notes.

The story of the Williams brothers is just one of countless examples from NFTE’s files that beg the question: If owner-entrepreneurship education can create jobs, prevent students from dropping out, and provide economic rescue for people in our low-income communities, what’s it going to take to open a conversation about making owner-entrepreneurship education standard in every high school in America?

Professor Andrew Hahn of Brandeis University points out the social consequences for an entire generation brought up in poverty that has never set foot in a workplace — and the potential benefits of owner-entrepreneurship education. Hahn notes: “Research studies show the scarring effects of early unemployment. The lack of work experience among minority teens contributes to a host of more serious challenges in their early 20’s. Studies demonstrate that NFTE’s entrepreneurship programs create jobs and are among the few strategies that work during these periods of massive youth joblessness.”

I’ve seen firsthand that owner-entrepreneurship education gets disaffected teens excited about school again, and about their futures. It teaches them that they can participate in our economy and make money. They quickly realize that to do so, they must to learn to read, write and do math. I’ve also seen how owning even the simplest small business fills a teen with pride.

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?”

His comment illuminates a core issue in our society: If only the wealthiest people own the increased profits resulting from the better education of our low-income youth, how much has really been accomplished in helping our most impoverished citizens achieve the American dream?

This is why NFTE teaches owner-entrepreneurship education. We teach not only entrepreneurial skills like record keeping, sales, finance, negotiation, opportunity recognition, and marketing, but also the power of ownership. Our students learn how to properly value and sell a business, and how to build wealth utilizing franchising, licensing and other advantages of ownership.

Teaching business skills without also teaching the power of ownership potentially creates wealth for an owner down the line, not necessarily for the entrepreneur who created a business. Even well-educated entrepreneurs can find themselves at a disadvantage when dealing with professional owners who are experts in valuation and procuring a high rate of return in exchange for investing in a business.

We seek to demystify wealth creation for our low-income students, so they will have the same knowledge that a child of wealthy parents might pick up at the dinner table. Owner-entrepreneurship education empowers young people to make well-informed decisions about their future, whether they choose to become entrepreneurs or not. They become aware of five assets that every individual has: time, talent, attitude, energy and unique knowledge of their communities. They learn to use these assets strategically as they move along in their careers — which may include creating businesses and jobs, and building wealth in their communities.

Owner-entrepreneurship education reveals that anyone can start a business and use it to create wealth. This awareness can be a matter of life or death for at-risk young people like the Williams brothers. Through owner-entrepreneurship education, they discovered the value of their assets and created a business out of a comparative advantage – in this, case their unique knowledge of hip hop culture and what kind of clothes would appeal to other kids in their community. As a result, they became motivated to stay in high school, went on to college and helped their mother become a homeowner.

As the Williams brothers learned, owner- entrepreneurship education can help solve the youth unemployment crisis, rescue our low-income communities by increasing home ownership and employment, and even bring about a fairer distribution of wealth. We need a national debate on owner-entrepreneurship education, particularly for low-income youth. We must raise the consciousness of those who have been left out of our economic system, so that they comprehend the joys and responsibilities of ownership.

As Jabious Williams says, “Because I own my business, I know I have a future.”

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