Business runs in cycles. Just like seasons flowing in a repeating pattern, hiring, sales, marketing, manufacturing, and even taxes all follow a repeating loop of ebbs and flows, up’s and down’s.
But there’s one business cycle that no one talks about, one that almost no one even knows about. And this one silent, hidden loop makes or breaks your entire business.
I’m Brian James Rawson, from Owl Street Studio, and today let’s talk about the silent, hidden Business Scarcity Loop. What is it? What’s the big deal? And what we can do about it.
The Business Scarcity Loop is our term to describe the cycle that starts when you don’t have enough seed resources for your business or nonprofit. To help explain this loop, let’s look at the key words of “seed” and “resources.”
And let’s start with “resources.”
Just like a garden needs good water, sunlight, and soil to sprout and thrive, every business and nonprofit needs high-quality resources to grow. But where a garden needs water and sunlight, a business and nonprofit’s needs:
Money / Social connections / Time / Energy / and Labor.
These business resources flow into each other and then flow out to nourish every aspect of a firm.
Here’s an instance of how they flow into each other. Imagine you need supplies for your business. To get those supplies you need the resource of money. And to get that money you need social connections to secure a business loan. And to get those connections takes using your time, energy, and labor.
And of course, money, social connections, time, energy and labor help you get a lot more than just business supplies. In fact, it takes these resources to grow every aspect of your firm.
For example, without time, energy, labor, connections, and money, your business or nonprofit cannot acquire or create high-quality:
Products and services / Marketing / Web Design / Social Media / Branding / Graphic Design / Messaging / Accounting / Legal protection / Human Resources / Management systems / and Customer service.
That’s a long list (and there’s still a lot more we could add to that list). But, to get even half of the things we just listed, takes a tremendous amount of money, connections, time, energy, and labor. It takes a tremendous amount of resources.
But without resources, you cannot get any of those high-quality aspects. And without those high-quality aspects, your business or nonprofit cannot start, cannot grow, and cannot survive.
And if you need all of these resources just to start, how do you even get these resources in the first place?
To get those resources takes seed resources. To help further explain this, let’s look at just one business resource. Let’s look at money.
Once a firm moves from startup to established, it begins to create its own resources. Looking at money, once a business becomes sustainable, it creates its own money through sales. But, that’s only at the sustainable phase. But how does a business even get to that sustainable phase so that it can create its own resources, so that it can create it’s own money?
To get there, to get to that sustainable phase, you have to actually start your business or nonprofit. But starting even the smallest of businesses takes resources, takes money.
And if a business can only get money in the next phase, in the sustainable phase, and it takes money to start a business, how do you get the money you need to simply start (without traveling to the future and then back in time Marty Mcfly style)?
Said another way, if you have to “spend money to make money,” how can you spend money - when you don’t have any money?
Well, to do that, someone, somewhere must supply you with money you need so you can start “spending money to make money.” Someone, somewhere must give you the seed resources you need to plant and grow your dream.
Staying with money, this seed money may come from personal savings, from investors, from loans, from a second job, from winning the lottery, etc. But no matter where it comes from, just like garden seeds coming from outside flowers, this seed money must come from outside of the firm, from outside of you.
But what if no one will give you the seeds you need? And what if you can’t get the seeds all on your own?
And this is where the Business Scarcity Loop starts.
The Business Scarcity Loop is a big deal because it blocks so many people from starting businesses and nonprofits because it’s in the Business Scarcity Loop where intersectional systemic barriers collide with your business and your dream.
Many people, in many explicit and implicit ways, are barred from the money, resources, and connections they need to grow their business or nonprofit. And even more people are barred from even being able to start a business at all. So many people with great ideas, skill sets, strength and diligence can never grow. Because how can you grow what was never planted? And how can you plant if you don’t have any seeds?
To see an example of how people are blocked and denied seed resources, let’s go back to money and look at business loans.
To get a business loan today takes much more than good savings, good credit, and good business ideas. It takes knowing the “right” person and being known by the “right” people.
To be blunt, to get a business loan today requires getting past favoritism and explictly and implictly oppressive social systems.
And this isn’t us just being passionate. This is shown in the numbers.
For example, a joint study done by Washington University in St. Louis, Boston College, and the University of Geneva found that, with the recent Paycheck Protection Program loans (PPP Loans) given out during the COVID-19 pandemic:
“A business with a previous lending relationship enjoyed a 57% greater chance of obtaining a Paycheck Protection Program (PPP) loan, with 75% of ‘relationship-borrowers’ gaining a loan compared with only 18% of ‘non-relationship firms.’”
Further, the study found that:
“A personal connection [emphasis added] between the lender and top management of the borrower — such as shared education, prior employment or ties to nonprofits [emphasis added]— increased the likelihood of obtaining a loan amid the COVID-19 pandemic by more than 7%.”
And lastly, Xiumin Martin, one of the researchers in the study, summarizes it the best:
“Not only does our research provide unequivocal evidence of favoritism [emphasis added] in bank lending during the initial round of PPP funding, it also suggests that banks deviated from the stated objectives of the program for their connected borrowers [emphasis added].”
To be fair, this study looked at PPP loans, and these loans are different from traditional business loans. However, these PPP loans were given out at the height of the pandemic panic. In other words, they were given out in a truly real-world “push comes to shove” situation, in a situation where politeness could no longer hide internal motives and biases.
It’s because the PPP loan scenario is so extremely different that it can shed such a light on how knowing the “right” person and being known by the “right” people makes all the difference between being given the seed resources you need to plant your dream or having those resources and all of that potential ripped and torn away from you.
Even with the favortism and discrimination of today, there are ways we can interrupt and break this Business Scarcity Loop. In fact, it doesn’t even take that much to break it. We can break this Business Scarcity Loop with seed investment.
Where withholding starts the scarcity loop, generosity ends it. In other words, to break the cycle, someone, somewhere must give you the seeds you need to plant and grow your dream. Someone, somewhere must supply you with the resources of money, social connections, time, energy and labor that you need to start your business or nonprofit. Someone, somewhere must invest in you.
And both Synergy Coworking and Owl Street Studio are here to do just that. We’re both here to help supply you with the seed resources you need to plant and grow your dream. We’re both here to invest in you.
We are both here to invest in you because we both believe the inequality in our society is flat out wrong. And we can’t hold our beliefs, see this inequality, and sit still and idle. So, for both Synergy and Owl Street, in everything we do, we do all that we can to right this wrong, to tear down the walls, to unlock the gates, and to give you the resources you need.
So, no matter if it’s helping you start your own business or nonprofit or if it's helping you grow your existing business or nonprofit, we’re here to help your dream take root, bloom, and thrive.
That’s why we’re so excited to announce the new partnership between Synergy Coworking and Owl Street Studio.
This partnership works to remove the intersectional systemic barriers that produce social inequality by providing you with a new service at Synergy Coworking - Synergy: Consultant.
The Synergy: Consultant service provides Synergy Coworking members with specialized expertise at a discounted rate. And Owl Street Studio is honored to be the first consultant in this new Synergy Coworking service.
We are honored to be able to share our marketing and design expertise with you and to be able to help you start and grow your business or nonprofit.
By working together, we can reverse the Business Scarcity Loop and turn it into a Business Positive Loop.
With Synergy Coworking providing you with office space, a business mailing address, and more; and with us, Owl Street Studio, providing you with support in all of your marketing, branding, web design, graphic design, social media, and more; you can come to one place and find the support and resources you need to plant and grow your dream, and to truly find the space to be you.
And you can start using Synergy: Consultant right now. To start, schedule your first meeting here - Synergy: Consultant Open Calendar
And to learn more about Synergy Coworking and our special consultant service, visit their website - Synergy: Consultant
And if you're not a Synergy Coworking member, you can always schedule a free get-to-know each other meeting directly with us.
*References:
Who You Know Matters Even When Applying for PPP Loans
Study on Favoratism in Paycheck Protection Program
PPP Loan Favortism Research Paper
