Carrollton, TX

Wednesday, October 20, 2010

The quickest way to get us past this recession, and to get America prospering once again, is by job creation. What you're about to read may seem counter-intuitive: when it comes to the survival of new entrepreneurial businesses in the US, outsourcing is one of the best sources of job creation there is. How can this be?

Fact one: New job creation and employment growth in the American economy are driven by startups. Tim Kane from the Kauffman Foundation, said it this way: "startups aren't everything when it comes to job growth. They're the only thing." He also said, "without startups, there would be no net job growth in the US economy."[i]

Fact two: Startups and small businesses have a limiting factor during times of tight credit. For rapid growth, access to capital is required. US financial firms have kept much of the stimulus money to build their reserves. Other capital is taken up by deficit spending, flight to safety, and reduced consumer demand. For new businesses and entrepreneurs to survive and grow during times of tight capital, they need to reduce spending and stay profitable.

Fact three: Small firms can reduce their capital demands by outsourcing noncritical activities, and focusing on their core operations. When a growing company is able to focus on their core competence, they can improve their competitive advantage, sharpen their efficiency, and improve their profits. A profitable, efficient, competitive company will not only survive a recession better, they will grow and create new jobs in the area of their core operations.

Outsourcing provides small American businesses with a comparative advantage. This type of focus and growth provides positive effects on both job creation and the GDP. This is not a new idea. David Ricardo, a pro-free trade economist supported this understanding.

Corporate greed has created a problem in the past, when the focus of large companies has been solely on profits. Outsourcing does cost Americans jobs when large American corporations shut down plants and move operations overseas. However, during difficult financial times, it is not good to punish small businesses and entrepreneurs for the sins of their bigger brothers. When American businesses are struggling is the time when expenses need to be reduced the most. The outsourcing of non-core operations and administrative tasks can make a difference between barely surviving and fast growth and profitability.

Now is the time to help the largest job creation force in the US economy, new and small businesses, to survive, prosper, and grow. The surprising news is: The use of outsourcing is a positive factor to power job creation in America in the long term.

Why Outsourcing is GOOD for America:

http://www.bobbare.com

Read about the 5 Myths about outsourcing and how we can create new jobs for America!

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[i] see Kane, Tim. 2010. High-growth firms and the future of the American economy. Kauffman Foundation Research Series: Firm Formation and Economics Growth. Available at http://www.kaufman.org/uploadedfiles/firm_formation_importance_of_startups.pdf

Bob Bare

Director

SEGR Enterprises

Carrollton, TX

972-394-4370