Flesh out new entrepreneurship study before we live by it
An entrepreneurship study calls for Miami to shift focus from aiding a flood of business startups to instead helping to expand those in six key industries that already total 50 or more jobs.
That report, issued last week by non-profit Endeavor Insight, the research arm of Endeavor Miami, is thought-provoking, creative and worthy of careful study. It is also notable for what it does not touch on.
The report says companies with 50 or more jobs pay higher wages, so growing them brings Miami more bang for its buck. It also recommends weaving networks around the entrepreneurs who built those companies.
Those recommendations might be 100% correct – but they end there. The report doesn’t tell us how we can best support those kinds of companies or how the networks might be built. It’s like the doctor telling you that you need medicine for your illness but not yet writing the prescription.
The illness that Endeavor Insight points to is that Miami trails most metropolitan areas in economic growth: we’re seventh in population but 65th in population growth; 102nd in gross domestic product per capita but 268th in the growth of that GDP per capita; and 61st in income per capita but just 327th in income growth per capita. We’re underperforming.
The suggested cure is to fuel entrepreneurs in industries in which we’re already a success: passenger transit and transport; financial services; consulting; pharmaceuticals and medical devices; software; and advertising firms. The report, as others have for years, warns against relying on growth in the visitor industry because it’s low paying.
The laser focus is on the higher pay found in the six targets. The report cites an average salary per Miami worker of $54,000, stacks that up with the average wage per industry and then picks six endeavors more highly concentrated here than nationally.
The report doesn’t deal with the nature of Miami’s higher concentration. Does it uncover a demand to expand the businesses we already have far more of than average, or are we in fact nearing saturation in those industries?
Before basing growth policy on our abundance, we’d like specifics on the nature of the six targets.
Because we have per capita 130% of national average in consulting firms with 50 or more workers, for example, can we really handle major growth? If so, would the industry’s local $90,000 average wage fall in a fight for market share? Just how big, in other words, is our appetite for consulting?
We’d ask the same in every business category, and these six might turn out to be the best options.
But if we do focus growth funding on these areas, what do we miss that’s coming down the road? Creative future entrepreneurs with the biggest impact may do what none of us has yet imagined. Uber, for example, created a totally new field. Many breakthroughs do.
This plan calls for more of what’s already succeeding. That may be the best strategy, but it does downgrade the entrepreneurship that built companies in the first place.
Of concern is that the study deals with neither the nature of our community nor education’s role in explaining why Miami’s economy performs the way it does and what our future possibilities are.
Diversity, multilingualism and immigration are among Miami’s greatest strengths, but they also explain why incomes differ from areas that are homogeneous and native-born, and why we have the kind of businesses that we do.
If such a study in 1980 had ignored that year’s immigration by 200,000 Cubans, Haitians and Nicaraguans who did not generally have high job skills or educations, how would we have ranked in GDP growth? Yet those same newcomers brought us a growth spurt later.
We continue to add people from elsewhere, now with higher skills but still diluting the economic averages in their early years here.
The other missing element is education. How many Miami graduates are fit for jobs in the six targeted industries? If we’re not looking first at the available human resources, targeting those industries might be overreaching.
If we were looking to target industries, we’d copy the One Community One Goal effort of the Beacon Council in working with educators to produce grads skilled in the chosen areas as fast as possible. That program rightly recognized that the education of Miamians was key to job growth, and our colleges and universities joined as partners from the outset.
Other than population and education, we’d focus on how many jobs we could add in the chosen areas. How many consultants do we have now, for example, and how many could we expect the market to need in a decade?
In its conclusions, the report gives the community a vital warning that more startups is not what we need. What we need is startups that survive and grow.
So many people here teach others how to be entrepreneurs, for example, yet many of them have never done it themselves. That advice could be suspect.
“Even arbitrary increases in the number of support organizations can harm an entrepreneurship community, since these efforts usually include funding for programs run by people with little or no entrepreneurship experience,” the report correctly notes. “Strategies that promote quantity for the sake of quantity also lead to actions that ignore the importance of quality. They tend to spread a community’s resources too thin in an effort to generate tangible impacts.”
We commend that thought and the effort to fuel entrepreneurship where it will do the most good in Miami. Next should come the specifics.