11 January 2010

Back To Business

Way back when, The Jenius was launched as a biz-tech thingy of a blog where I could take notice of things--good and bad--in the local Internet/small business realm that were largely ignored by the media and the masses. Lately, as in the last 97% of the time, The Jenius has been more of a political/social slingfest. And yet, I still think and work in the biz-tech world, mainly focused on education and communication.

So Let's get back to that, shall We?

Here's My short list of the Biz-Tech Action Steps We need to take now to start transforming Our economy from carpet beater to world beater:

1) The number to focus on is "businesses," not "jobs." We still have the mentality that ScrewThee Conglomerate International is going to plunk a container-load of Franklins on Our Island and create several hundred jobs. That's like trying to catch "The Daily Show" interactive clips on radio. The new driver of the economy--as was the old driver--is small business, but the new small business has global reach from Day One. In Puerto Rico, 64% of all private employment (roughly 34% of all employed) is in small businesses: to transform Our economy, We need to focus on developing more businesses and stop the chasing the stuoid myth of "big company jobs."

2) Make starting a small business as easy as ABC. A) State your name, physical address, phone number and Social Security number. B) State your business name, whether you get paid under that name or your own and the related bank or credit union account number. C) Define your business and ensure it does not violate the new short-list of environmental or commercial laws.

That's it. Have that one-page form on the Web for easy download and immediate e-mailing to the business owner's Municipal Tax office and Hacienda (the Treasury.) Nothing else needed. Note that the physical address need not be a commercial or business location; home businesses don't need the extra hassles they go through now. Yes, the business owner must have a bank or credit union account. And as far as laws go, just list the requirements for a business to request additional permits and/or licenses and if none are needed, let the business launch. (Cull the list so We eliminate the bogus permits and licenses like the "waste permit" beauty salons supposedly need because they use water.) The current system would make a Byzantine bureaucracy fetishist lapse into an ecstasy-excess coma, so streamlining it makes sense. And has since the early 1970s.

On the topic, when will the sorry excuse for a government We call Our own actually freaking USE technology in the ways it is supposed to? Case in point: To request the Added Value Tax certification, from the Treasury, you have to prove you don't own any money...to the Treasury. Who either know you already (from tax filings) or can't find you (for whatever reason), but the point is: they already know. That's why they bought computers and supposedly spend millions every year tending to them or buying new ones. So why in the name of holy hell do they make you get the motherbleeping certification at another office

Frosts My perineum, I tell you.

3) Give every small business launch a two-year tax exemption and extend it another two-years if it employs 10 or more persons. We give ScrewThee Conglomerates 10, 15 and even 20 year tax exemptions worth billions of dollars. So why not extend the same advantage to the billions of dollars created by small businesses? (Our GNP is about $74 billion a year of which small businesses produce roughly $24 billion.) In fact, We already have a tax mechanism to "deduct" business expenses from personal income (how almost all start-ups are primarily funded), so all We need to do is remove the cloying and annoying rigamarole and let the business owners build their companies without having to waste time and money on working the tax code.

And why cap the employee number at 10? Because it allows a business to grow within reason without striving to (a) Hire people just to get a tax break, which really means just added expenses and (b) Focuses a company on being a viable economic engine by Year Three. True, most small businesses fail in 5 years or less, but We're not trying to create a welfare economy for small businesses (We already have that for the ScrewThee Conglomerate crowd), but a faster start-up system to increase the numbers of small businesses and thus the chances of more successful businesses.

4) Convert downtown empty spaces into biz-tech labs. Note I said "labs," not incubators. Labs are places where people work in a structured setting to achieve results; incubators are where debilitated babies are kept on life support. We need results, not life support. Have towns convert a few or several empty buildings into office spaces, conference rooms and work centers with broadband Internet access. Let anyone who wants to use the facility do so for 90 days at no cost. Then if the person wants to continue using any facility, they pay a nominal fee per use or a small amount of rent. Those fees/rent increase every 90 days until they match commercial rates.  The purpose is two-fold: Create networking centers of entrepreneurs, techies and just plain business-oriented developers to engage in creative exchanges and secondly, to make them aware that they have to grow their business to pay market rate rent or get out.

Now some of you might note that We have several coffins, er, incubators on the island already, such as ViTEC2 in Mayaguez, the CyberCenter in Guaynabo and whatever the hell Caguas has with INTECO. They are stand-alone boxes with an ICU-type death watch feel to them, where businesses are subjected to the lengthy bureaucracy found elsewhere and lured by the promise of free digs and maybe--maybemaybemaybe--a paltry sum of money from government dunces.

Of course they don't work: they're not meant to. Their goal is to somehow snag a Google or Facebook out of a process meant to wean such possibilities out. It's like trying to find a diamond in a pile of cow shit. Why? Because a Google or Facebook-type success is not a question of picking the right project, it's about fostering the right environment. And the right environment doesn't happen overnight and isn't built on government red tape: it takes years and it is entirely removed from red tape.

It takes years, so We have to start now, building on the minds We have now and those that join the fray when the fun starts. It takes the absence of red tape, so Let's eliminate all that We can and let the creative types find ways to ignore what's left.

And yes, it takes money, so here's Action Step #5:

5) Give a 100% tax credit to local investors who support a local start-up. Oooh. That sounds heavy... It is. You say there's no money here? On Christmas Eve 2009--Christmas freaking Eve, people--the government had a bond issue that raised $1.36 billion...from local investors. Now maybe a lot of that money was local only in that it was held by local institutions, but if even 10% of that cash was in "private" hands, that means some $103 million were pushed around in about 12 hours. Between legitimate revenue, underground revenue and outright crime, there's millions of dollars in Puerto Rico--maybe even billions--looking for a legitimately strong investment and 100% tax-deductible is pretty strong. Hell, just talk to Nelson "Valley of the Dolls" Valle's mom: she's got plenty of cash.

For you Fools out there, cap it at $100,000 so that the big crime bosses (other than elected officials) can't easily smear legitimacy over sin. And no, don't expect venture capital dollars to drop like snowflakes in Norway within a few months. It will take 2-3 years and a string of small-to-moderate successes before the investment money starts trickling in and rising. But the time is going to go by anyway and the dollars, well, they'll keep on flowing...someplace else.

We're long overdue on the "Take Action Steps" front. Take these 5 and Let's get back to some real business growth. For a change.

The Jenius Has Spoken.


The Insider said...

I love it Gil. No reason it all cannot be completely turn key including the bank account.

1. Go to the online form.
2. Enter biz name & select biz type from category.
3. Enter personal contact details for each founding member (sole proprietorship or partnership).
4. Enter credit card info, electronic check info, or PayPal. Let them know a VISA giftcard available at Walgreens is all they need to have - if they do not already have a credit card at their disposal.
5. Scan for name conflicts and give temporary approval on the spot.
6. Complete registration of business immediately.
7. Automatically forward information to relevant government departments that must be aware of new registration.
8. Automatically create a new bank account (order to create) for a participating bank or credit union (selected from a checkbox by the user).
9. Guaranteed delivery of a full package of business literature (within 48 hours) that includes a list of further steps required, a VISA debit card for the new account and checkbook, a sample business ledger, names of professional service providers local to the user, and a book list for top selling titles related to the business type they selected. Throw in a technology primer for establishing a website, email account, etc, with local preapproved consultants who can help them with that aspect.
10. Have a member of a business start-up advisory team call them the very next day to welcome them to entrepreneurship and ask them if they have any additional questions on how to get started.

I recently dropped into a Fedex Business Center. They have a nicely streamlined little cubicle setup that would achieve what you explained (sans more full scale incubator, that is hardly realizing the results of the professional incubators in Boston, Silicon Valley, etc).

Let their new biz welcome package include their identification card that allows them to use services at these centers for free, with a scale up in fees applicable over time as you suggested. Make digital resources free, and charge them primarily for physical resource usage such as paper/ink, etc. In fact, that new VISA debit card can serve dual duty with some minor tweaking of the magnetic strip. ;)

Have some geeks on staff that will ensure they can get their biz name registered for a website and have at least a skeleton site up and online with email, until they are ready to move into this area more.

The government should institute an immediate full scale review of permitting requirements and create a waver list, whereby businesses may skip particular permits until future notice (without penalty) until the matter is resolved completely. Stuff like the waste permit for hair salons would be an example.

Anyway, just steaming on the juice from your suggestion. The key point that excites me is that all of this really can be a single turnkey operation that takes less than 5 minutes for even a 2 finger typist to complete and start their business. Make all the admin red tape easy. No reason for it to be a precursor or right of passage blocking and discouraging new business founders from getting into what they really love to do for their customers. And no need for that same hassle to be accumulated in the form of billable hours to government employees.

And with intangible sales (stuff like software) you can literally sell air to International buyers and pump hundreds of millions of dollars directly into the Puerto Rican economy without every having manufactured, shipped, or held anything in inventory. Likewise, per unit costs per sale are near nothing. These are the types of opportunities being overlooked and discouraged by the current setup.

Give Singapore some competition in the "small islands with limited natural resources that still can thrive" category, damn it! ;)

How much would the software to do the above cost to create? Much less than $50,000 depending on who they choose to eye gouge them.

GCSchmidt said...

Insider, I knew there was a reason I missed you...

You've put muscles to the skeleton I outlined. Strikes Me that in the absence of a government intelligence moving on this, it could become the basis for a business model, say at the Municipal level.

Let's keep the discussion going to flesh it out, okay?

The Insider said...

Yes, it could definitely be looked at on a municipal level. Of course, the right municipality (if they built the system) could then license their capabilities out to other municipalities who could certainly benefit not only from revenues generated, but from the resulting increase in commerce, taxation, jobs, offset of red-tape-esque man hours, etc, etc, etc.

Alternatively, it could be deployed privately and licensed to the municipalities.

For government infrastructure, I'm always curious why (instead of being scared away by the million dollar price tag of implementing advanced systems) they don't simply license the technology from other governments (any level) that has established the infrastructure they want to apply. There are already some good gov systems out there, but Gov 2.0 is exploding in the US right now as well.

Other than getting the various departments on board, this is really a *very* easy task, completely non-challenging at the standards of modern IT development.

But the sad part of government IT projects seems to be:

a) If it's government, the price tag soars, and
b) The government seems to be hesitant to contract out to small firms.

I.e. Why can't 5 really smart UPR Computer Science grads win the contract right out of school, rather than everything being channeled to the Microsofts and IBMs of the world - where the projects are certain to have vastly inflated costs. ;)