Safety Net Can Help Entrepreneurs Get Off the Ground

Published in UT San Diego, November 17, 2014

Entrepreneurship is diverse across cultures, races, genders and politics. So, dear reader who may be more red than blue, please exercise restraint and caution.

Gareth Olds, an assistant professor at Harvard Business School, has found that a definitive link exists between new company formation and access to government assistance programs. “Having the net made these people more willing to walk on the high wire. It didn’t make them want to walk on the net,” says Olds.

The rate of new business births rose by 13 percent among households that qualified for State Children’s Health Insurance Program, or SCHIP, and the survival rate of new businesses rose by 8 percent, according to Olds. In another study, Olds found a positive link between entrepreneurship and eligibility for the Supplemental Nutrition Assistance Program, or SNAP. Newly eligible households were 20 percent more likely to include an entrepreneur as a result of the policy and incorporated business ownership increased by 16 percent.

Not everyone who gets something from the government is a slacker or on the dole. And in this case, the facts speak for themselves — the true story of Oceanside business owner Jason Graves.

Graves, 38, an experienced telecommunications technician, had a run of bad luck. In 2010, he was laid off from his longtime job at the same time that he experienced financial difficulties coping with unexpected medical costs and problems with his insurance company related to a child’s broken arm and fractured elbow. The combination ruined his credit rating.

“We burned through my severance and vacation pay. I cashed in my retirement account to start Green Air Lawn Care, a sustainable organic lawn care service and yard maintenance company in Oceanside,” said Graves. To get started, Graves spent $10,000 for a truck, $2,500 for a lawn mower, $600 for a generator and several hundred dollars on shovels, rakes, clippers and a hose.

For many years, Graves had wanted to start his own business. “Amber (his wife) and I wanted to start something that had a moral compass that would make money and provide a feel-good for the customer.” Green Air was a good fit because landscaping had been a longtime hobby. Since he had spent 20 years working inside in a cold refrigerated room, he welcomed the opportunity to work outdoors.

At the time, the Graves family included five children, all living at home. The family had no safety net, and as business revenues grew slowly, Graves applied for SNAP (food stamps) and Medi-Cal (for health insurance), programs that the family still uses.

“If it hadn’t been for that help, we would have been living at a relative’s house. No one is proud of being on his butt. I had spent 20 years working and paying into the system. My grandpa said never look down on a man unless you’re trying to help him up. There is no doubt that these programs have given us the ability to reinvest money into the business that we wouldn’t have been able to,” said Graves.

To get his first customers, Graves printed up fliers and business cards, and he and his family went door-to-door in Oceanside. Now many new ones come from referral. Amber handles the office administration, and he employs one part-time contractor.

Recently, he borrowed money to upgrade his equipment from Accion San Diego, a nonprofit small-business lender primarily focused on helping low-to-moderate income business owners who lack access to traditional sources of credit.

Graves’ story contains an important lesson.

Creating the opportunity to become self-sufficient is a core issue for the entrepreneur, and a helping hand, whether in the form of a mentor or in the form of financial support, is often necessary. Whether it is an SBIR (Small Business Innovation Research) grant to a scientist or food stamps to a lawn service, sometimes there really is a role for a government program. The entrepreneurial trapeze act is hard enough as it is, and having a touch of net at least lets you try without breaking your neck.

Rule No. 378

That first step is a doozy.

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