Entrepreneurs and their startups create all the new jobs, and a lot of the innovation in America and around the world. We’re going to need entrepreneurs to rebuild our economy, and yet they’re being left out, both from the government’s response and more fundamentally from the simplistic story of the “haves” and “have nots” emerging from our time.
Some truths are becoming clearer during the pandemic. Our states and communities are stronger than we thought they were. We focus on front-line heroes, community loan funds and dynamic governors. But in America, our federal system seems to disintegrate, in spirit and practice.
We can see, broadly, the narratives that the political parties are using. The Democrats want to help the most vulnerable people. The Republicans align themselves with the “winners” of the American economy. Hence writing the CARES act in a way that sent “small business aid” into the pockets of public companies with billions in revenue.
But I don’ t think the approach of the Democrats or of many philanthropists is right, either.
There is a class of people emerging, some 50 million strong, who don’t fit cleanly into either party’s base. Most entrepreneurs are not victims, they’re not freeloaders, and maybe most importantly, they’re not big donors. This crisis may be the turning point that brings entrepreneurs into focus.
They are the 50 million people who own true small businesses, are sole proprietors, or solopreneurs and freelancers. They are the people who, precisely because they didn’t want to fit into somebody else’s category, started their own thing.
The number of Americans who work entrepreneurially has exploded. One reasons the aid package wasn’t designed with them in mind is that we don’t have a good way of figuring out who they are or exactly what they’re doing.
“We actually don’t know very much about the land of small business and we don’t know much about funding small business,” said Karen Mills, the head of the Small Business Administration under Barack Obama, and the author of Fintech, Small Business & The American Dream, told me a couple of weeks ago. “But time is of the essence. They’ve probably running out of money.”
Some entrepreneurs probably overlap precisely with the people philanthropists would label “most vulnerable.” But I’ve interviewed hundreds of them over the past few years, and I can tell you they especially don’t like being in a category labeled “vulnerable,” on the receiving end of uncertain charitable impulses that come with a dollop of pity. Aid for hourly workers is probably reaching many people who think of themselves as solopreneneurs, artists or craftspeople; how much better to reach them through a program that aims to help them build a business where their heart lies.
Others are traditional small businesses with people on payroll, perhaps on their way to being larger businesses. But as any financier would tell you, it’s hard to guess which of the tiny businesses of today will grow into winners of tomorrow. Aiming government money at some small businesses that fit a 1950s patriarchal image of business, or worse, at big chains, seems a fool’s game to me. Where is the next low-cost test for COVID-19 going to come from? Most likely, from a small company run by an entrepreneur.
Real entrepreneurs of all stripes have been left out of the government programs. Promised unemployment insurance hasn’t come through. The Economic Injury Disaster Loan Emergency Advance feels almost like a scam. Entrepreneurs were promised $10,000 loans in three days; few have received anything. The Paycheck Protection Program has similarly failed to be equitable or broad – it was never meant to be. Banks favored lower-risk existing customers.
The entire response seems a damning illustration of how little politicians understand or value entrepreneurs. But here’s the funny thing: at this moment of extreme stress and uncertainty, guess how people who define themselves as entrepreneurs are feeling?
The pandemic is taking a toll: Only 20% of entrepreneurs rate the current climate as positive for entrepreneurship after March 30, down from 51% before March 16, according to the Ewing Marion Kauffman Foundation’s annual state of entrepreneurship report. (Disclosure: the Kauffman Foundation has supported my work with a founding sponsorship to launch Times of Entrepreneurship.)
They are supportive of the shutdown. Some 76% said policymakers made the right decisions to limit gatherings.
And on the whole, they are optimistic: 25% said they are not that concerned, or not concerned at all about the impact of coronavirus on their businesses; and an additional 36% said they are only somewhat concerned. Black entrepreneurs are even more optimistic: 30% said they not that concerned or not concerned at all; and 43% said they were only somewhat concerned.
Entrepreneurs today are astonishingly optimistic about their ability to build businesses, and therefore their communities. That’s exactly why we should be helping them, with dignified and fair finance and other forms of support.