“You didn’t build that!” may be an iconic Obama phrase, but a lot of Americans have built a lot of businesses and are proud of it.
Calvin Coolidge said famously that “the chief business of the American people is business.” And the chief kind of business of the American people is small business. In 2010 there were 28 million small businesses (not including John Jimenez’s because he hadn’t started his yet) but only 18,500 firms with 500 employees or more. According to the Small Business Administration, the 28 million small businesses in America account for 54 percent of all U.S. sales. Small businesses provide 55 percent of all jobs and have provided 66 percent of all net new jobs since the 1970s.
Those figures mean that across America, every day, people like John Jimenez are starting businesses to make a living for their families and to provide a product or service for their fellow Americans. Stop for a moment and consider the vastness of America. That small business creativity is truly a wonder of the modern world.
But starting a business usually requires more than just an idea and the drive to realize it: it requires capital too. That’s not hard to get, at least not if you’re a Harvard dropout.
But suppose the spoon in your mouth when you were born was made of McDonald’s plastic: then how do you get your start-up capital (even if you don’t need very much of it)?
Go to a bank for a small business loan? Dream on. And what you’re dreaming of is the pre-Obama-regulated world. Banks don’t lend to small businesses any more. It’s too risky — not the loans themselves, but the response of the Obama bank regulators — which is why small regional bank are either going out of business or stopping lending to people who want to start small businesses, like John Jimenez.
John Jimenez had a very simple idea: cut busy executives’ hair in their offices instead of making them come to his office — which we call a barber shop. That may not be the next Windows, Google, or Uber. But it is, sort of, Haircuts 2.0.
So Jimenez entered a young entrepreneurs competition run by the Network for Teaching Entrepreneurship (NFTE). NFTE’s mission statement is: “to provide programs that inspire young people from low-income communities to stay in school, to recognize business opportunities and to plan for successful futures.” But NFTE doesn’t just provide programs: they also give out money to aspiring young entrepreneurs who win an NFTE competition, like John Jimenez.
Mr. Jimenez won a total of $4,000 from NFTE. With that seed capital he started and built his business, which with luck will take him far — or at least away from the streets of Harlem, New York, where he was recently robbed of a day’s take.
Mr. Jimenez’s family situation is precarious, and it’s really not necessary to describe it in detail here. If you’re reading this you probably have little or no experience with the kind of low-income family life Mr. Jimenez has had. He is probably the first in his family to graduate from high school (which he will do in a few weeks). He is certainly the first in his family to go to college — where he intends to continue his business.
And he’ll continue working on developing an app, for both barbers and customers. He wants to become the Uber of barbering. You see, Mr. Jimenez is not just a barber or an app designer. He’s an American entrepreneur.
The numbers he gave to NFTE for the competition have to make you smile. And they should make his college professors smile too.
Investment Opportunity: $ 4,794
Annual Operating Costs: $47,497
Annual Sales: 2,559 Units of Sale (i.e., haircuts)
Annual Profit: $46,685
Return on Sales: 46 percent
Return on Investment: 974 percent
An investment of $4,794 isn’t a whole lot, but a return on investment of 974 percent is likely to beat Microsoft, Google, and Uber this year.
The take-away from the Jimenez story is how little money it took to launch this young man on the path to independence — $4,000. That money has changed his life and likely the lives of other young people he meets, to whom he can tell his story of entrepreneurship and hope. And American generosity.
You can find John Jimenez’s business on the Web. It’s called GroomedOnTheGo.com.
John Jimenez built that.
• Daniel Oliver is chairman of the board of the Education and Research Institute and a director of Citizens for the Republic.