In addition to having lost everything they put into the business (tools, equipment), they may have tax problems. That’s a huge issue for small businesses who go under. They can’t afford to pay the taxes they’ve accrued, and the IRS is not forgiving. They may go under because of a lawsuit.
And they lose self esteem. There are a few people who can repeatedly fail at a business and be ok. Most people take a self esteem hit.
Here’s a report that gives some numbers: Increasing Entrepreneurship is a Key to Lowering Poverty Rates
From there:
Your going to need a lot of controls there before you extrapolate.
Most people on public assistance are there due to temporary circumstances and move on to a more lucrative living quite quickly. So I’d want to see these numbers compared to a control group that took a more traditional route.
Secondly, people who choose to become entrepreneurs are almost certainly more likely to have some positive factors (access to startup funds, a strong support network, etc.) and less likely to have limiting factors (chronic illness, small children, raging drug addiction, etc.).
What works for a 22 year old college graduate who can’t find a job isn’t necessarily going to work for a 65 year old with lung cancer and custody of two toddlers. You’ll need to control for these factors.
What? I thought the debate was something along the likes of “Is entrepreneurship a way out of poverty?”
Not “Is it a way out of poverty for 65 year olds with lung cancer and custody of two children?”
Nor “Is it a way out of poverty for 22 year old college drop outs who can’t find a job?”
Should every idea for uplifting people out of poverty be broken down into estimated success rate for 1000’s of contrived living conditions that you can come up with?
“Hey, they are offering factory jobs for people in poverty! That sounds like a good idea!”
“Yeah, what about poor people WITH NO HANDS? How can they work at that factory, huh? Your idea is stupid!”
:rolleyes::rolleyes::rolleyes:
Not if you didn’t have any to begin with.
Let’s say through some miracle, a bank gives you a small-business loan with no collateral (cuz you’re poor, remember?)
Do you think the bank is just going to look the other way when you fail to pay them back?
Yeah, you could just default. But that fucks up your credit. Fuck up your credit and it becomes hard to rent an apartment, buy a car, or even get a job. Not to mention, borrow any more money. Including for school.
A shitload of 20-somethings are finding themselves in this exact predicament with student loans. They are learning that wage garnishment is not just something that happens to deadbeat parents. Of course, a lot of these folks are lucky that they have middle-class parents keeping them from living on the street and starving. Some don’t even have to worry about their credit-unworthiness keeping them from homeownership because of Mommy and Daddy’s generosity. But a poor person who ruins their credit has almost no hope of ever getting out of the muck.
Most poor Americans aren’t mired in abject poverty, fortunately. But you better believe if the majority tried their hand at legal entrepreneurship, there would be more folks transitioning to open-air living arrangements than moving on up to the east side.
Is there a debate there? Obviously entrepreneurship is a way out of poverty for some people.
But then, lottery tickets, sports contracts, becoming a model and investing in Apple are ways out of poverty, too.
The larger question is: is it a reliable way out of poverty. I think if it were that easy, people would have caught on by now. To posit otherwise is to posit that the poor are irrational actors, which is pretty unlikely.
Who ever said it was easy? Does anyone think it should be EASY? Life is hard. Being successful is hard. Overcoming the challenges of poverty is hard. It takes hard work and determination to be a better person, a richer person, a smarter person. I don’t believe everyone has the will to do it, no. But the opportunities are there, there for almost everyone to take advantage of. People just need to DO something to take advantage of them.
The excerpt I posted describe a study where more than half (53 percent) of low-income entrepreneurs had moved out of poverty in five years. Do you think it was easy for them? I doubt it. In fact, I’m sure it took a lot of effort.
And besides, a lot of poor people ARE irrational actors, acting against their own best interests. Buying a new truck when you can’t afford rent? Irrational. Not using birth control when you haven’t even graduated high school? Irrational. Renting furniture at huge rates of interest? Irrational. Note that I didn’t say ALL poor people.
I wonder what the left wing response would have been to a topic titled “Working at a Job Can Get You Out of Poverty.”
Are you serious? Jobs are hard! If jobs were so easy, EVERYONE would be doing one! You can’t just “get a job” and expect to make it out of poverty! What about people who can’t work? The elderly and disabled? The single mother with one eye, one leg, and 5 children she has to support? How is SHE supposed to get a job? Your mythical “job” idea is stupid!
Why the need for a loan in the first place? You’re poor - you’re not going to get one. If you’re poor and looking at a business for which you need a loan then you’re looking at the wrong thing.
I didn’t realize that “middle class life” was a requirement. I thought we were shooting for “more than minimum wage”
I had never thought about it, but this same dynamic is present in a lot of poor communities (particularly in mine, in rural Appalachia), except the potential entrepreneur is on the other side of it, and it’s a huge barrier to success.
To use an example I’ve seen myself more than once–say you’re a young man living with your parents in a little community (“up a holler”, we’d say) where half the people are your actual extended family and the other half might as well be.
You’re tired of living off Mom and Dad’s disability checks, so you take some initiative and put up flyers in the hospital offering to detail cars. You have some friends there who will vouch for you, and you’re good at it, so after the first week you’ve managed to make $500.
Problem is, your brother got put in jail a couple of weeks ago and needs bail money. Your cousin is going to go to jail if he doesn’t pay his child support, as will your sister if she can’t pay any on her fine. Your other sister has to go to the Suboxone clinic or you’ll have to watch her go through withdrawal, and they only take cash. Your aunt needs gas money to get to the radiation appointments for her cancer. They’re about to turn Mary Ellen up the road’s water off.
It doesn’t take all of those people–one or two can drain any extra money that’s coming in. And because these communities are so tightly-knit, saying no can be tough. So after a week of busting your ass and using the few resources you have at your disposal, you’re no closer to being out of poverty. And there’s no reason to think it’ll be any different next week.
I’ve known a lot of people who have tried to pick up odd jobs but tried not to let their families find out. Most of the people I’ve known who came from that background and managed to be successful are the ones who moved away. I don’t know other ways to get around that barrier.
I mispoke (mostly because a flatbed truck is not what I thought it was). Yes a truck and a trailer is fine. But that still costs money and you can’t really mow a lot of lawns with a residential size lawn mower.
How much would you pay to have someone mow your lawn on a regular basis becauseif you are mowing edging, weedeating and blowing your lawn in under and hour, I gotta say your lawn does not sound large enough to warrant $30.
Have you done a lot of physical labor in your life? Just emptying the bag takes physical strength.
These are not options for the poor. This is what happens when an entrepreneur succeeds.
Noone said that EVERYONE can move easily or even that MOST people can move easily but the notion that entrepreneurship is not a solution in places like Kansas City because 60,000 can’t start their own business is pretty silly. Aside from the fact that many of those entrepreneurs will have to hire help, if you really can’t find a job in Kansas city because there are no opportunities then there are enough people that can move that you can relieve a lot of that pressure.
Do you not understand how businesses are created?
How do you start a business off with NO capital? I’m not even talking about the hundreds/thousands you need for insurance, licensing, and fees. I’m talking about the hundreds/thousands you need to buy the equipment or the inventory. The rent on your storefront or the printer’s costs for all the handbills and signage. How are you going to make change for your customers if you don’t have any cash on hand?
The only kind of business that a poor person can start without a big outlay is some kind of illegal hustle, and even hustling has starting costs.
I was a sidewalk vendor for two years, and the experience taught me how difficult it is to run your own business, especially if you’re working solo. It was just a hobby for me since I have a good day job, so the annual $400 I’d have to shell out wasn’t a biggie to me. I never stressed out over bad weather or personal illness, but these would have been horrible for me if my livelihood had depended on always being out there, hustling. And I was so lucky I had a dependable automobile and that I lived right around the corner from one of the most lucrative (expensive) spots in town. How would a poor person be able to compete with the likes of me?
I’m curious what job you think a poor person can start without spending any money before hand that would generate more than pin money…
My point was not that it is impossible to get out of poverty, just that to do it you need to analyze the market and make rational business decisions. One of the first things a book about writing a business plan says is not to assume that there is market out there ripe for the taking - tons of people unhappy with their lawn service, for instance. And concentrating on those one or two people who make money means you don’t get the lessons from the tens or hundreds of people who didn’t. Look at the new business failure rate. The people we’re talking about are the ones who can least afford to take a bath.
If you have a competitive advantage, go for it. If your plan is to buy a used lawn mower and knock on doors in a region with lots of existing mowing services, you might have a problem. Same goes for restaurants or manicure services or anything else.
Hell, during the Bubble I knew lots of people who went into and really believed in lots of stupid start-ups. And they had PhDs.
There was an example a few posts up that only needed some flyers, a few rags, and a bucket.
In other words, you have to actually get off your ass and DO something?
Probably pretty good, since many of us support the government giving jobs to people who can’t find them in industry during downturns. Kind of like WPA. And when times are good, like in the Clinton years, drug dealers find they can make more money in traditional jobs.