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Four Simple Rules For Initiating Entrepreneur Zones Anywhere In The World.

Entrepreneur Zones or EZones are place-based accelerators located in economically challenged communities that result in a sustainable ecosystem creating local living wage jobs. The concept was originated by Dr. Dale G. Caldwell, the Executive Director of Fairleigh Dickinson University’s Rothman Institute Of Innovation And Entrepreneurship.

An EZone is a collaboratory that provides guidance, training and financial support to companies within a specified geographic area. Coopetition, a form of mutuality where the businesses work together while competing for clients, is the key to ensuring that the businesses have the necessary support and skills. The goal is for these businesses to become profitable enough to generate as many jobs as possible in the local community.

Dr. Dale Caldwell, Professor Scott Livengood and Hunter Hastings will discuss EZones at the G7-G20 Group Of Nations
Solutions through Inclusivity Virtual Summit on November 17th, 2021

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The science of systems-building has evolved significantly over recent decades. While recognizing that economic ecosystems emerge and grow as a result of a vast number of ongoing interactions between people, firms, neighborhoods, markets, supply chains, prices, jobs, education, health and many more, it is nevertheless possible to identify the web of causes that result in sustainability and economic thriving. Causality can be linked to a simple set of rules that everyone in the system knows and can follow; the rules become a culture and the culture nurtures successful outcomes.

The four simple rules for EZones are:

1) Through empathy, identify a desired valuable experience.

Entrepreneurs generate value for others – their customers. Value is a tricky thing to identify – it’s entirely in the mind of the customer, subjective and idiosyncratic and often changeable. EZone entrepreneurs actually enjoy a potential advantage. They live in the local community and are close to their neighbors and friends and have a better idea of the dissatisfactions people want to address. Maybe an entrepreneur knows that a mom in town would like to work at a paying job if only she could get help with cooking and laundry and babysitting or in-home teaching. Maybe the entrepreneur knows that the local quarry owner needs a special kind of driver for the under-maintained trucks that are finicky and unpredictable in their performance. Maybe the entrepreneur is aware of some artisinal craftsmanship that could find a market on Etsy. Empathy is the skill to identify others’ desires and dissatisfactions. Everyone is capable of empathy; the skill can easily be honed to apply in economic situations.

2) Translate empathy into a deliverable service.

There’s a gap between understanding another’s needs and successfully offering a solution that results in a transaction and a sale. The articulated (or unarticulated) need is never identified with perfect precision and the product or service that’s designed to meet it is never 100% accurately targeted. That’s OK. It’s normal. The task is to make the design deliverable. Can the entrepreneur bring the finished product or service to the customer in such a way that the customer can buy and the exchange can be made? Can the proposed in-home cooking and cleaning service recruit the right people that the customer will trust, train them and place them in the customer’s house on the right day for the right number of hours to perform the service in way the customer wants. This process is capacity building. How is the entrepreneur going to get the job done? What people are needed? What tools will they need? Will they be well-aligned with the mission of serving the customer? Capacity is the state of readiness.

3. Remove all barriers.

Even when capacity is built and aligned, there will be barriers to completing a market transaction – mostly in the mind of the customer. Is the price right? Are there alternatives i don’t know about or have not fully evaluated? Can I trust the entrepreneur to keep the promises made? Am I really ready to take this leap? The entrepreneur must be able to sense all these barriers (often unspoken) and maintain the energy to remove them as they arise. This phase of entrepreneurship has been likened to sharpening a pencil – the art of removing and removing until the point is as sharp as desired and ready to use for the purpose it was designed. Entrepreneurs are constantly sharpening.

4. Set up feedback loops.

Ecosystems grow and thrive as a consequence of their feedback loops. Feedback loops are a form of closeness to the customer – setting up mechanisms for monitoring, listening, data collection and adaptive response. It’s another aspect where EZone entrepreneurs are advantaged: they are in the community, naturally close to their customers both physically and emotionally, and open for communication. As they expand their markets beyond the community, including via the internet and e-commerce, they extend this natural advantage into better customer listening and customer service that will serve them well as their businesses grow.

These four simple rules – empathy, capacity, no-barriers and feedback – will guide EZone entrepreneurs in a system of networked value co-creation with customers that can scale to any level once it gets started.

How does it get started? There are 4 simple steps to energize the 4 simple rules.

Convene the network.

The “Big Bang” for the EZone ecosystem is the first convening. There are existing businesses and business owners in the EZone geography, and there are aspiring entrepreneurs who haven’t yet got started. There are community supporters who want to help – whether these be churches or associations or clubs or business roundtables. There are educational institutions, whether these be schools or colleges or universities. There may be some large firms (banks, for instance) who would like to support EZone growth. There might be non-profits and philanthropic organizations to help. There is technical infrastructure to be tapped. There may even be government support, although EZones don’t expect it and don’t want to be restricted by bureaucratic rules and impediments.

Physically bringing together all these groups to talk and begin thinking about a shared vision and mission is both necessary and sufficient to impart initial momentum to the EZone. Energy builds from this start.

Value Co-Creation Training.

Entrepreneurship is a learnable process. Professor Scott Livengood has designed a training curriculum specifically for EZones and their participants. It starts with developng the appropriate mindset, emphasizing that entrepreneurship is subjective and that the right mindset is the precursor to sound entrepreneurial judgment. The training is fun and engaging, encouraging and empowering. it imparts knowledge, skills and process and introduces tools for participants to use with immediate effect. Most importantly, it can imbue with confidence even those who are uncertain.

Let the exchange begin.

The secret to getting started is to get started. Entrepreneurship is exchange. The first exchange tumbles the dominoes. EZone training and infrastructure are in place to help entrepreneurs get everything ready to go, whether that is setting up digital or physical storefronts, initiating manufacturing, assembling supply chains, connecting to business partners, or developing sales and marketing campaigns. The checklist may be long but it is do-able. Entrepreneurs simply need the momentum to get up to – and one step beyond – the start line.

Explore and expand.

Once under way, the entrepreneurial process is relatively simple: continuously explore different elements and components of the value proposition, evaluate the customer acceptance via feedback loops, and do more of what works and none of what doesn’t. The explore and expand mechanism is a flywheel – it keeps on turning and growing and strengthening. Entrepreneurs quickly get to the point where momentum can take over and management and growth replace experimentation – but the EZone entrepreneur never stops exploring.

4 simple rules and 4 simple steps are sufficient for EZone acceleration from inception to expansion to sustainability.

106. Mauricio Miller: Entrepreneurship as the Path Upwards From Anywhere, for Anyone

Entrepreneurship is the best pathway for all people out of unsatisfactory economic circumstances.

Mauricio Miller, who arrived in the US as a poor immigrant from Mexico, and who also experienced living in some of America’s worst neighborhoods, spent over 20 years running social services for people growing up and living like he did. His conclusion: social services are the worst policy for such people. It is entrepreneurship that will open up the pathway out of the neighborhoods and out of the traps of low income and limited prospects. Entrepreneurship lifts up individuals, families, and communities.

Key Takeaways & Actionable Insights

Job creation programs are not the answer. In the US, people can get jobs, but they are often on a dead-end track that doesn’t generate learning or leverage-able experience — waiter, assistant, security guard, etc. Outside the US, even these jobs might not be available. Often, people with these jobs are entrepreneurs “on the side”, exchanging in the informal economy. This is just another indicator how important entrepreneurship is to upgrading people in low-income situations.

Entrepreneurship is inherent in people.

Is entrepreneurship hard? Is it too daunting for some? Does it require skills that only special people possess? Absolutely not. People have the capacity, the capability and the creativity. They are typically smart and determined. The requirement is simply to let that come out — to remove the constraints. Entrepreneurship is already inherently there.

Furthermore, people are motivated for entrepreneurship. Everyone has a particular talent, or at least their own interests, and they always perform better when they’re working on what interests them. And people want to run their own life, and make their own decisions.

Release the constraints.

The constraints that face them trace to being stereotyped and labeled, and these are barriers to credibility. Reduced credibility makes it hard to institute relationships, establish partnerships, to get loan financing, and generally to build the network support and capital required to advance their businesses. Mauricio says that if we don’t label them, and simply let talent and commitment shine through, all kinds of people can demonstrate entrepreneurial potential and achievement.

Entrepreneurial achievement and success will emerge when people are unconstrained.

How does the entrepreneurial movement get started? Naturally, and without intervention. In any community, there will be one or more individuals who become “leading lights” in the sense of trying something unusual or unprecedented, and succeeding. The definition in sociology and innovation diffusion theory is “positive deviants” — those who deviate from the norm or from history with a successful outcome. Leading lights is a better term.

The leading lights are followed by early adopters, who see a strategy that is successful and copy it or follow it. Then comes community support, which Mauricio characterizes as mutuality — everyone in the community eager to help anyone who can demonstrate success.

In his book The Alternative, Mauricio tells the story of Ted Ngoy, a Cambodian immigrant to the Los Angeles area of California who got a job at Winchell’s donut chain. He quickly absorbed the techniques of donut making and decided to open his own shop. Members of the community pooled savings to provide equity capital to buy equipment. The single store became successful and Ted opened more. The mutuality of the neighborhood was activated and neighbors became delivery drivers and ingredient wholesalers and came together as a supply chain and value creation network.

The word spread across California and Cambodian immigrants in San Francisco and elsewhere started reproducing Ngoy’s strategy. In a more general sense, the learning is: people, whoever they are, can start and run a business and make some money and become independent.

A new mindset: No plan, no policy, no structure, no institutionalization.

Mauricio’s key insight is that any intervention by government or charities or social services that aims to provide a plan or a process or a structure or to configure institutionalized support is not only not needed, it is destructive. It distorts and undermines the natural human motivations and drives that people draw on in entrepreneurship. The opposite approach — or no approach — is the best. Honor the natural preference of communities for self-help and sharing — mutuality as Mauricio has named it — and let them discover the pathways for themselves, find the knowledge, pool the savings, get access to the technology, use their network to connect to the needed skills.

Entrepreneurship is catching.

Once the bright lights shine, once the positive deviants emerge, once the early adopters find follow-on success, once the natural mutuality builds the supply chain and the support network, no intervention or encouragement or policy is required. Stand back and admire.

Additional Resources

The Alternative: Most of What You Believe About Poverty Is Wrong by Mauricio Miller: Buy it on Amazon

Family Independence Initiative: FII.org

Community Independence Initiative: CIIAlternative.org

Mutuality Platform: Click Here

The Austrian Business Model (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

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Empowerment Through Entrepreneurship.

[postintro]There are many reasons to elevate entrepreneurship as the institutionally-approved and institutionally-accelerated pathway to economic success for everyone. Community flourishing through self-help is one of them. I’m supporting the team behind Entrepreneur Zones, focused efforts for enhanced performance of small businesses in targeted locations in economically under-performing geographies  [/postintro]

2020 witnessed small businesses across the country struggling to adapt and survive during the government-imposed pandemic lockdowns. And while some were able to pivot their services and business model to serve an increasingly digital market, many were forced to shut down for good, leaving thousands jobless.

The closure of these businesses is one of this year’s biggest tragedies. The economic impact of these closures will continue to be felt for many years to come. If we have collectively learned anything this year, it’s that America relies on small business entrepreneurship to flourish and prosper. 

Entrepreneurship is empowerment

Nowhere is the empowering potential of small business entrepreneurship more prominent than in our small-town Main Streets and local communities. Even through the pandemic, we’ve seen small businesses all across the country step up and change the way they operate in order to help their communities. Via a quick search around the internet, you can find dozens of examples of small businesses doing their part: from local pharmacies doing Covid testing to distilleries manufacturing hand sanitizer and restaurants providing free meals.

These entrepreneurs and workers were faced with an existential crisis like they’ve never seen before. Their response? Do good for the community. There’s something about small businesses that is just so inspiring.

Ultimately, entrepreneurship is the backbone of these communities, and provides both residents and the local economy the opportunity to grow as these businesses grow. What’s more, entrepreneurship is not just for the rich, it is for everyone. Building a business from the ground up is no small feat, but it is something that’s achievable by anyone, regardless of background. Through entrepreneurship, people can pull themselves up and bring new economic value to their communities and to themselves.

The potential of Entrepreneur Zones

Heading into 2021, we need to place a renewed focus on encouraging entrepreneurship in our small towns and cities. The key to this could be Entrepreneur Zones –  targeted areas within economically-distressed communities where new entrepreneurship-focused initiatives can help local business get their start, and help those that have already started to thrive. Policy initiatives can include relaxed regulations, tax incentives to encourage investors, focused education and training, and the kinds of mentoring and interconnection that help businesses integrate into larger value-creation ecosystems. 

Dale G. Caldwell of Fairleigh Dickinson University’s Rothman Institute of Innovation and Entrepreneurship notes, “To accelerate small business employment, government could provide entrepreneur grants and issue small business bonds through the Small Business Administration specifically for the businesses in federally approved entrepreneur zones. These programs would not be a burden on taxpayers and potentially lead to an injection of billions of dollars into businesses…that desperately need a lifeline to survive.”

As more than 11 million people look for new opportunities, these small businesses could help provide the jobs needed to both keep food on the table for struggling families and spur economic growth at the national level. 

Further, many in the growing pool of unemployed Americans are skilled workers who have been through the training and education for their jobs. The talent is there, what is needed is the capital to invest in these businesses.

The future lies in small businesses

We’re dealing with a once-in-a-lifetime crisis, and we need to work to establish apolitical policies that support our nation’s small businesses. Nearly 50% of America’s GDP output and nearly 50% of all American workers are employed by small businesses. It’s time that we began to recognize and reciprocate the values and utility that small businesses provide to this country.

And it’s not just local, it’s global. For example, Scott Livengood of Arizona State University is part of a team offering Education For Humanity – a program of education, and entrepreneurial skill training for conflict-displaced refugees in countries like Uganda and Lebanon. Entrepreneurship provides a pathway out of not only America’s distressed inner cities, but out of distressed environments of all kinds, all over the world. Over the past half-century, we’ve seen that entrepreneurial and educational expansion into underdeveloped regions and markets is one of the best ways to raise people out of poverty and equip them with the skills and resources they need to prosper.

Across the world, we see just how important creating avenues for entrepreneurship is to keeping economics vibrant and resilient. In 2021, one of our top economic priorities should be to create more of these avenues.

 

102. Dale Caldwell: Entrepreneur Zones Will Drive Accelerated Growth For Cities

Can entrepreneurship be a collaborative undertaking across multiple firms? Entrepreneur Zones are an idea from Dale Caldwell to boost the economic performance of cities, and represent one form of collaborative entrepreneurship. The business platform the Mises Institute is building — Economics For Business — represents another: an online collaboration of entrepreneurs to share knowledge, experience, and practices, while competing individually to be the best at serving customers.

How will this work? We can answer this question using our “5 Cs Framework”.

Download The Episode ResourceThe 5 C’s of Entrepreneur Zones – Download

Key Takeaways & Actionable Insights

1. Consumer Sovereignty / Customer First

The first principle of entrepreneurship is that value is subjective, and one way to express that principle is that consumers determine value. Entrepreneurs facilitate value for consumers. That principle is never relaxed. Deviation from it is fatal for entrepreneurial businesses. Therefore, even in circumstances where we see opportunities for entrepreneurial collaboration, it is never in violation of consumer sovereignty. Any collaboration is directed towards the facilitation of consumer value, and does not detract from it.

2. Collaborative Efficiency.

In an Entrepreneur Zone, as envisioned by Dale Caldwell, there is the opportunity for a group of entrepreneurs (geographically co-located in a city in his case, but potentially grouped along other dimensions) to search for shared advantage. To speculate, the shared advantage in an Entrepreneur Zone might be found in shared services, reducing unproductive overhead for all firms and releasing resources for exploration, innovation, and customer service. It could be found in shared or pooled marketing.

In the case of Economics For Business, we aim to provide shared knowledge (reducing search and knowledge acquisition costs and overcoming knowledge constraints), processes and tools that can be applied by all for greater effectiveness, and shared experience that can speed up learning.

3. Competitiveness

“Collaborating to compete” sounds contradictory on the surface, but is the essence of capitalism. While firms look for shared advantage where it is available, they equally search for individual advantage through innovation, better ideas, better customer service and stronger relationships. The rivalrous drive to serve customers better and therefore enjoy the resultant revenue streams is primary. It’s the energy of economic growth. Success can be replicated by imitators, which is one of the ways the system works for all. By that time, the innovators have advanced to the next stage of competitive advantage. The system never stops and progress never ends, because of the competitive drive.

4. Creativity

Behind competitiveness is creativity. New ideas and new knowledge, the result of new experiments, provide the fuel for continued growth. The collaborative entrepreneurial group can share ideas, bounce ideas between them, pursue their own ideas, ask for help, and merge ideas into new combinations. Creative ideas remain the original source for all entrepreneurs.

5. Cumulative Improvement

Entrepreneurship is a journey, with many twists and turns. It calls for learning, which might often require abandoning a path that once looked promising and taking up another. Success comes over time, via more and more learning, more and more feedback from the marketplace, more and more experiments run and recorded, more and more customer experiences logged. Improvement accumulates over time. For a collaboration such as Entrepreneur Zones or Economics For Business, participating entrepreneurs can anticipate long term success without any certainty about the length of the timeline.

Free Downloads & Extras From The Episode

“The 5 C’s of Entrepreneur Zones” (PDF): Download the PDF

White Paper: “New Jersey Entrepreneur Zones” by Dale Caldwell (PDF): Download the PDF

“Dale Caldwell Believes that Jobs Can Drive Societal Change”: Read the Article

“Healing Divided Country with Entrepreneurship”: Read the Article

“Opportunity Zones… We Need Entrepreneur Zones”: Read the Article

“Trauma in Employment” (PDF): Download the PDF

“The Austrian Business Model” (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

Apple PodcastsGoogle PlayStitcherSpotify

Entrepreneur Zones: Teaching People To Fish In America’s Abundantly Stocked Economic River.

Entrepreneurship has not been valued the way it should be.

Sure, we read about and hear about the outliers of venture-capital funded unicorns, and the spectacular wealth of entrepreneurs like Jeff Bezos and Elon Musk. But the most important entrepreneurship is represented by the tens of millions of so-called small businesses in the US. As a group, these businesses are the biggest employers (over 99% of employer companies are small businesses) and the leading job creators. They are the energy and dynamism of our economy. They have made the US into the richest country in the world. More critically, small business entrepreneurs provide the economic backbone of cities and local economies, providing the employment, income, and prosperity that make for thriving families, neighborhoods, and communities. Entrepreneurship is not only the foundation of a strong economy, it’s the best generator of social improvement.

Dr. Dale G. Caldwell of Fairleigh Dickinson University’s Rothman Institute of Innovation and Entrepreneurship is an expert on the impact of entrepreneurship on social improvement, both in the US and worldwide. He has applied his analysis of entrepreneurship data to create an entirely new set of entrepreneurship policy initiatives.

“The quickest way to turn around low-income communities is to create new jobs that provide previously poor households with the income they need to pay their monthly bills on time”, he states in a white paper. The most effective way to create the jobs is to provide the tax incentives, regulation relief, and financial support that local entrepreneurs need to help them increase profitability and employment in the local community.

To implement such a policy, Dr. Caldwell introduces the idea of Entrepreneur Zones. These are designated areas within urban neighborhoods with the highest joblessness rates, where an increase in successful new businesses can significantly increase local employment, providing the jobs that local residents need to work their way out of poverty. Dr. Caldwell has outlined principles of legislation that would provide for lower state and local business taxes and relaxed state regulations for businesses located in Entrepreneur Zones and employing local residents. The businesses would receive tax credits based on the number of new employees they hire who live locally.

These businesses also need to be investable – they must be able to attract and accumulate the capital that supports growth and success. Dr. Caldwell suggests that lenders and investors receive favorable tax treatment for loans and investments provided directly to Entrepreneur Zone businesses. Governments could make these financial investments attractive by providing tax credits or possibly tax deductions similar to those received for contributions to nonprofits.

Most decidedly, Dr. Caldwell’s proposal is not welfare. In fact, it could be construed as counter-welfare. He points to “safety net” programs like free and reduced price lunch programs and temporary income and housing support that are “band-aids” but do not lead to the elimination of the educational achievement gap that means that kids who eat better at school and go home to federally-subsidized housing still end up living in poverty when they are adults.

But if programs can “teach a person to fish”, they can break the cycle of systemic poverty. Research has indicated that children who live in communities with high levels of poverty have weaker neural connections in their brain, affecting judgment and ethical and emotional behavior. They may have difficulty focusing, communicating effectively and making good decisions about work, school and life. Dr. Caldwell calls this condition Urban Traumatic Stress Disorder (“UTSD”), drawing the parallel with Post Traumatic Stress Disorder experienced by soldiers after serving in war zones.

Entrepreneur Zones would avoid the problem of welfare that traps people in multi-generational poverty and contributes to UTSD. Rather than a safety net, they would be a trampoline, enabling people to bounce up into society to become productive, financially independent citizens. Importantly, Dr. Caldwell’s program focuses on household income, which is more important than the hourly wages of individuals in determining real poverty. The creation of additional jobs via entrepreneurship will reduce poverty even if there is no increase in the minimum hourly wage. Dr. Caldwell cites study data demonstrating that the household living wage index (LWI) can predict improved academic performance in school, the reduction of crime, and lower health care costs.

Entrepreneur Zones are a highly targeted, highly specific solution to the problem of urban poverty. The “Empowerment Zones” of the 1990’s were unsuccessful because of weak investment incentives and a lack of focus on creating jobs and supporting entrepreneurs. The “Opportunity Zones” created in the 2017 Tax Cuts And Jobs Act are aimed at spurring real estate investment, not entrepreneurial businesses in poor communities. Entrepreneur Zones build on past learning to craft a better program design.

Dr. Caldwell has originated a whole new policy pathway: entrepreneurship policy. Job creation is the most effective social program, and job creation is what entrepreneurs do. We are reminded that Dr. Martin Luther King’s March on Washington in 1963 was actually called the March On Washington For Jobs And Freedom. It was economic activism, as well as political and social activism. Economic activism – teaching more people how to fish in America’s rapidly flowing and abundantly stocked economic river – can be more productive on more fronts than protest, social justice campaigning or welfare legislation.