Analysis of The End of Work By Jeremy Rifkin – Part IV: The Price of Progress

This section of The End of Work covers the topics of potentially permanent job loss, a dramatic farewell the working class, how automation effects all of the nations, and rising crime rates. At this point in the book, it seems it is Rifkin’s belief that automation will surely destroy life as we know it. It’s almost as if he is telling us the world is going to come to an end, and it’s all because of automation.

High-Tech Winner and Losers

When talking about high-tech winners and losers, Rifkin means that the corporations of the manufacturing sector are the winner and the workers who have lost their jobs, due to automation, are the losers. According to his research findings, in an effort to yield bigger profits, many manufacturing companies jumped on the “trickle-effect” train and never looked back. The trickle effect occurred when businesses saw the need to “keep up with consumer demand,” while “reducing the costs of products.” (Rifkin, 1995) While this created a number of jobs in the industry, those who were uneducated or undereducated found themselves out of work. David Autor, professor of economics at Massachusetts Institute of Technology (MIT), has a different perspective on automation. While he is no stranger to the effects of automation on the workforce, he says that predicting automation will eventually destroy all jobs is an “arrogant” assessment of the situation. (Autor) History shows there have been many times when our country has faced job loss as a result of technology; however, he says, “There’s always new work to do.” (Autor)

To watch Professor David Autor’s TED talk on automation, click here.

Requiem for the Working Class

Merriam-Webster defines requiem as “a mass for the dead.” (Culpepper, 2012) Clearly, the title of this section implies that the day of the working class citizen is all but gone. Rifkin paints a grim picture of displaced workers who are part of “the other world”—“workers who are experiencing rising levels of stress in high-tech work environments and increasing job insecurity…” (Rifkin, 1995) While, this is a matter not be taken lightly, I feel his statements are a bit overdramatized. This goes back to David Autor’s argument that we have always advanced right along with new technological advances. I would also like to point out, no job is stress free. Furthermore, the jobs of yesteryear—physically demanding manufacturing and service jobs—were much harder on the body.

The Fate of Nations

In this chapter, Rifkin discusses how automation has effects the rest of the world, including manufacturing plants in Mexico and India. Basically, he gives the same automation scenario for third world countries. Consistent with his argument of how computers have changed the American landscape, Rifkin also argues that “machines are replacing workers in every developing country.” (Rifkin, 1995) A 2015 study, conducted by the Oxford Martin School, corresponds with this argument; however, although “the majority feel automation poses a major challenge to societies and policymakers,” they are “optimistic that automation and technology will help to boost productivity over time, and believe that investment in education will be the most effective policy response to the potential negative impacts of automation.” (This:; et al., 2016) In contrast to Rifkin’s claims, it seems people still have hope that we can continue to progress and thrive in a computerized world, and that can be accomplished by planning ahead.

A More Dangerous World

The final chapter in Part IV, focuses on the rise in teenage violence. The reasons for this are “rising unemployment and loss of hope for a better future,” which, in turn, is causing more and more teenagers to “turn to a life of crime and violence.”  (Rifkin, 1995) While Rifkin may have a plausible argument here, is there more to it than that? Quite possibly, bad parenting could also be a dominating factor in this trend. An article published by the American Society for the Positive Care of Children presents an alternative argument to Rifkin’s theory. Bad parenting can also cause a child to go astray. Some symptoms of bad behavior are the inability to have long lasting friendships, psychological disorders, depression, low self-esteem, and a tendency toward violent behaviors. (2018)

Conclusion

The information presented thus far paints a picture of gloom and doom for the future. The more I read of this book, the more I keep hoping Rifkin will at least touch on a solution. Hopefully, in my next blog, I will be able to report he does exactly that.

Resources

Bad Parenting for a Child | Negative Effects. (2018, October 17). Retrieved February 27, 2019, from https://americanspcc.org/2014/07/17/effects-bad-parenting-child/

Culpepper, J. C. (2000). Merriam‐Webster Online: The Language Center0011The Staff of Merriam‐Webster. Merriam‐Webster Online: The Language Center. 47 Federal Street, PO Box 281, Springfield, MA 01102; Tel: (413) 734‐3134; Fax: (413) 731‐5979;: Merriam‐Webster, Inc c1999. Free. Electronic Resources Review, 4(1/2), 9-11. doi:10.1108/err.2000.4.1_2.9.11

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

This:, S., 2019, 2. F., 2019, 2. F., 2019, 1. F., 2019, 0. F., 2019, 0. F., . . . 2019, 0. J. (2016, January 27).Impact of automation on developing countries puts up to 85% of jobs at risk. Retrieved February 27, 2019, from https://www.oxfordmartin.ox.ac.uk/news/201601_Technology_at_Work_2

Analysis of The End of Work By Jeremy Rifkin – Part III: The Decline of the Global Labor Force

I must admit I was pretty excited to read this section of Rifkin’s book. I come from a long line of farmers, factory workers, and service workers, so I can identify with these particular groups of people. Indisputably, I have noticed a drastic decline in the farming and factory sectors in the state of North Carolina, since the 1980s. I have, indeed, saw a few of my family members lose jobs in recent decades. Yet, I am not sure automation is completely to blame for this dynamic.

Mo More Farmers

When Rifkin wrote this book, back in the 90s, he claimed that, even though half of the world’s population still farmed land, “new break throughs in the information and life sciences threaten to end much of the outdoor farming by the middle decades of the coming century.” (Rifkin, 1995) What Rifkin is saying here is my children and grandchildren may know a world with effectively little to no farmers. I do feel like some of the information Rifkin shared does contradict his claims, such as the development of agricultural software. Although this software has alleviated the need for manual methods for such things as soil evaluation, in turn, it has given farmers the ability to devise more complex, yet quicker and more effective, ways of doing prep work. This means they now have a better way to prevent soil erosion and the ability to predict how often crops should be rotated without waiting for several crop cycles to pass, before being able to pinpoint any issues. Also, the fact remains, plants still need soil, light, and water to reproduce. The location dynamic of location may have changed, but the fact remains automation has yet to take the place of the essential elements a plant needs in order to thrive.

Hanging Up the Blue Collar

In this section, Rifkin discusses the effects of automation on the automotive industry. Over time, robotics with the ability to create tasks much quicker than humans has emerged to the forefront of the trade. According to the author, “Robots are becoming increasingly attractive as a cost-cutting alternative to human labor on the automobile assembly line.” (Rifkin, 1995) If you have been keeping up advancements in the automotive industry, you have also probably noticed this trend. After reading an article in Business Insider, I learned the fear of robotic breakthroughs is not a new things. According to the article,  “Here’s How Robots Could Change The World By 2025,” every time there has been a shift in technology, people often wonder where new jobs will come from when previous jobs are lost. Contributor, John Mauldin, states:

“As I’ve noted more than once, in the 1970s (as it seemed that our jobs were disappearing, never to return), the correct answer to the question, ‘Where will the jobs come from?’ was ‘I don’t know, but they will.’ That was more a faith-based statement than a fact-based one, but whole new categories of jobs did in fact get created in the ’80s and ’90s.” (Mauldin, 2014)

If we look back on history, one thing looks certain, when jobs were lost, due to the creation of more innovating technologies, new jobs were created which filled the need for employment by those displaced workers.

The Last Service Worker

Extending on what I said in the last section, we have always found a way to create new jobs. Look no further than the service industry. In the past, when manufacturing workers lost their jobs, due to changes in the industry, those workers were able to find employment in the service industry. Rifkin argues that this will soon be a thing of the past, because automation has also had a huge impact on the service industry. For example, Mutual Benefit Life (MBL) “re-engineered” the way the company processes claims, cutting the processing time down from 22 days to just four hours, by finding more effective ways to do the work. (Rifkin, 1995) Of course, this new process eliminated the need for many positions in the company. But, a I previously stated, the birth of new technology has always created other opportunities in other areas of work.

Conclusion

Job loss in any industry is always a contentious subject to tackle. Rifkin is directly saying that eventually automation is going to destroy most jobs in every sector, if not all of them. Such a development could be detrimental to the human race. Are we really heading in that direction? What do you think?

Resources

Mauldin, J. (2014, August 20). Here’s How Robots Could Change The World By 2025. Retrieved February 26, 2019, from https://www.businessinsider.com/heres-how-robots-could-change-the-world-by-2025-2014-8

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Analysis of The End of Work By Jeremy Rifkin – Part II: The Third Industrial Revolution

This week’s topic of discussion is Part II of Jeremy Rifkin’s book, The End of Work. In this section, Rifkin covers his thoughts on artificial intelligence and how it has effected African-Americans and Fordism. In my previous post, I established that Rifkin’s claims on the evils of automation have been met with much skepticism. As you will discover, as I further discuss his reflections on the subject, there are certainly two sides to every story, and, depending on who you talk to, there could be even more sides to an argument

Crossing Into the High-Tech Frontier

According to Rifkin, we are now living in a “near-workerless society” which is the direct result of “a great shift in economic paradigms.” (Rifkin, 1995) Basically, he blames automation for the transition into our dependence on non-renewable resources, such as the machines that were essentially created to make our work much easier. While it is true we have become very dependent upon technology, I have to wonder if this is such a bad thing. Marianna Glynska, contributing writer for Huffington Post and a teacher, would probably whole-heartedly disagree with Rifkin. In the article, Can Technology Make Our Lives Better?, she discusses how the Lazertouch mini projector has changed how people deliver presentations. These handy gadgets can help users create a presentation without the hassles technical issues and without having to lug around a lot of heavy equipment. (Glynska, 2017) This example seems to deflect Rifkin’s claims a bit, as the device still requires human interaction to create the finished product.

Technology and the African-American Experience

In this section, Rifkin talks about how automation created a “permanent underclass in the inner cities.” (Rifkin, 1995) It is his belief this all started with the creation of the mechanical cotton picking machine. Although this invention was imperative in the downfall of slavery, it created another problem for African-Americans who were unskilled to do anything else. While the freed slaves were finally allowed to live a life free of oppression, Rifkin argues that automation is the reason for a continuing economic racial divide. These new workers did find solace in the manufacturing industries, however, as Rifkin puts it, once “automation began taking its tole on the nation’s manufacturing sector, “ those workers found themselves displaced once more. When looking into this subject a little further, I found there is a growing African-American presence in the technological fields. According to Wayne Sutton, an African-American entrepreneur, “there are tons of African-Americans throughout the country doing amazing things in the field of technology, but a lot of people just haven’t heard about them.” (Dickey, 2013)

For a list of The 25 Most Influential African-Americans In Technology, click here.

The Great Automation Debate

In the mid-1960s, there was a huge debate over automation. There were those who were against the “cybernetic revolution,” citing it required “an immediate government response,” and there were those who “argued that technological displacement was a normal outgrowth of economic progress and would eventually be absorbed by a robust economy.” (Rifkin, 1995) In other words, one group wanted the government to intervein and put a stop to the technological advancements, or at least slow them down dramatically, while the other group argued that the people who were being displaced could learn new skills and be integrated into a new industry. While this latter may be true, is it really that simple? The article, How Technology Creates Jobs for Less Educated Workers, by James Bessen, uses the example of LPNs to show how technology has changed the field of nursing. Bessen points out that “employees gain much critical knowledge about new technologies through experience on the job and such learning often does not require a high degree of education.” (Bessen, 2014) Meaning, one could argue that automation is not the downfall of the workforce; it is just the catalyst for changing the way workers are hired and trained.

To read the full article, click here.

Post-Fordism

First of all, what is Fordism? Brittanica.com defines Fordism as “the system of mass production that was pioneered in the early 20th century by the Ford Motor Company” or “the typical postwar mode of economic growth and its associated political and social order in advanced capitalism.” (Jessop, 2016) On the surface, that doesn’t sound like such a bad thing, does it? If you were to ask Rifkin, he would say yes. As stated by Rifkin, following the Fordism model led to the development of a work force that allows “less and less room for independent decision-making at the lower levels of the command structure.” (Rifkin, 1995) I do agree that independent thinking is an essential life skill. That said, there is also a such thing as having too many people in charge. You know, too many chiefs in charge. Although we have since moved into the post-Fordism era, one thing is certain, having a clearly defined authority/worker dynamic is still an essential part of today’s work force.

Conclusion

Rifkin’s has touched on some pretty touchy subjects in this section of the book—how automation has made us more dependent on non-renewable resources, how it has created an ethnic divide in our nation, and how it has created a new generation of non-thinkers. These are all very big claims. What do you think?

Resources

Bessen, J. (2014, November 02). How Technology Creates Jobs for Less Educated Workers. RetrievedFebruary 26, 2019, from https://hbr.org/2014/03/how-technology-creates-jobs-for-less-educated-workers

Dickey, M. R. (2013, April 04). The 25 Most Influential African-Americans In Technology. RetrievedFebruary 26, 2019, from https://www.businessinsider.com/most-influential-blacks-in-technology-2013-4

Glynska, M. (2017, December 07). Can Technology Make Our Lives Better? Retrieved February 24, 2019,from https://www.huffingtonpost.com/marianna-glynska/can-technology-make-our-l_b_10477870.html

Jessop, B. (2016, May 17). Fordism. Retrieved February 26, 2019, fromhttps://www.britannica.com/topic/Fordism

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Analysis of The End of Work By Jeremy Rifkin – Part 1: The Two Faces of Technology

It has been well over two decades since Jeremy Rifkin wrote The End of Work. In this book, he explores the concepts of automation, corporate downsizing, and job losses associated therein. He theorizes that the technology which helped with modern industrialization will actually lead to the downfall of the world’s current workforce. Since first publishing the book in 1996, many of Rifkin’s theories have proven to have a substantial amount of merit, but not without challenge from other theorists. He is “credited by some with helping shape the current global debate” surrounding these issues. (2019) For the purpose of this analysis, I am going to review the key points from Part 1: The Two Faces of Technology.

The End of Work

In this section, Rifkin discusses the concepts of substituting software for employees, re-engineering, and a world without workers. According to Rifkin, “the new computer-based technologies promise a replacement of the human mind,” “re-engineering could eliminate between 1 million and 2.5 million jobs a year,” which leads to “worry about where the new high-technology revolution is leading us.” (Rifkin, 1995) While Rifkin still stands by his assessment today, there are some who agree with him and there are those who challenge this way of thinking. David Rotman, editor for The MIT Technology Review, conducted research on the effects of automation and he discovered information which coincides with Rifkin’s take on the topic and information which contests his beliefs. Dr. Erik Brynjolfsson, a professor at the MIT Sloan School of Management, believes “rapid technological change has been destroying jobs faster that it is creating them, contributing to the stagnation of median income and the growth on inequality in the United States.” (Rotman & Rotman, 2016) Another of Rotman’s colleagues, David Autor, an economist at MIT, provides information that points to a “sluggish economy” as the culprit for the sudden slow down in job creation.” (Rotman & Rotman, 2016)

(To read the full article, click here.)

Trickle-down Technology and Market Realities

Here, Rifkin tackles such topics as mass consumption, the post-war world, and the shrinking public sector. Rifkin argues that the “new labor saving technologies,” of the roaring 20s actually led to the great depression of the early 1930s, when the unemployment rate jumped from less than one million to 15 million, at its peak. (Rifkin, 1995) He goes on to point out, in the past, “new products—especially television and consumer electronics—helped cushion the blow and provide jobs for workers displaced by machines in other industries,” but, he believes this is a thing of the past as “the new economic realities… make it far less likely that either the marketplace or public sector will once again be able to rescue the economy from increasing technological employment and weakened consumer demand.” (Rifkin, 1995) Melanie Swan, of the Perdue University Philosophy Department, disputes such claims. She concludes the issue is not technological employment itself, rather, “The problem is that those who become unemployed by technology are not being reabsorbed or planned for comprehensively in today’s society.” (Swan, 2017) In essence, this means that we could technically avoid this phenomenon by strategically planning ahead. Even though it seems Swan could be oversimplifying a solution, it does make some sense in the bigger picture of things.

(To read the full article, click here.)

Visions of Techno-Paradise

To wrap up Part I,  we are given a overview of how the field of engineering changed the scope of the American landscape, from the invention of electricity in the late 1800s, to the launching of the Russian space satellite in the 1950s. These were, indeed, exciting times in history. Still, Rifkin believes those great historical feats, and the ones that followed, “hold out the long-anticipated promise of a nearly workless world…” (Rifkin, 1995) Mark Paul, a Fellow at the Roosevelt Institute, and a Postdoctoral Associate at the Samuel DuBois Cook Center on Social Equity at Duke University, argues that automation is not the end of the world. He reckons that, although “technological change has the potential to create job loss in the short term,” “job gains from technology often outpace the losses over time and allow workers to focus on better, high-productivity jobs.” (Paul, n. d.)

(To read the full article, click here.)

Conclusion

Clearly, Rifkin’s theories are open to interpretation and argument. While researching automation, I found many pros and cons. There seems to be as many proponents as there are opponents. I will leave you with this question to ponder: Who is right?

Resources

Jeremy Rifkin. (2019, January 17). Retrieved February 3, 2019, from https://en.wikipedia.org/ wiki/Jeremy_Rifkin

Paul, M. (n.d.). Don’t Fear the Robots. [online] Rooseveltinstitute.org. Available at:http://rooseveltinstitute .org/ wp-content/uploads/2018/06/Don%E2%80%99t-Fear-the-Robots.pdf [Accessed 3 Feb. 2019].

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Rotman, D., & Rotman, D. (2016, September 01). How Technology Is Destroying Jobs. Retrieved February3, 2019, from https://www.technologyreview.com/s/515926/how-technology-is-destroying-jobs/

Swan, M. (2017). s Technological Unemployment Real? An Assessment and a Plea for AbundanceEconomics. [online] https://www.researchgate.net. Available at: https://www.researchgate.net/publication/315217034_Is_Technological_

Unemployment_Real_An_Assessment_and_a_Plea_for_Abundance_Economics [Accessed 3 Feb. 2019].

Organizational Creation and Growth Strategies: Interrogate and Extend Concepts

ENT 630 – Co-written with Essence Walton 

Why is it important to consider the implications of veil piercing in the planning stages of an organization; and how can a company maintain the “corporate veil?”

Veil piercing can be detrimental to the owners, stockholders, and employees of a business entity. For this reason, it is imperative for entrepreneurs to examine the consequences of such occurrences before launching a new venture. In doing so, the risk of future lawsuits can be minimized.  Once a business has been established, there are ways to avoid veil piercing. According to Matthew A. Griffith, Senior Attorney, Griffith Law Group LLC , “Maintaining the corporate veil is not difficult, but it does require business owners to complete some simple tasks and stay vigilant;” and, those tasks include, but are not limited to:

  • “Never commingle personal and corporate finances.
  • Create and maintain a company record book, which should include minutes of all company meetings.
  • Learn and follow any requirements unique to the state where your business operates.” (Griffith, 2017)

To read Griffith’s full article, click here.

Is an exit strategy needed? How does an owner’s exit strategy affect the decisions they make regarding their business?

Not all business owners create an exit strategy; however, it is important to have one in place when looking for investors. An exit strategy shows an investor how they can get a return on their investment. From the time an owner sets an exit strategy, the decisions they make are usually in alignment with this choice. For example, selecting a legal structure is done in the early stages of a startup. An owner with plans to remain in complete control of their business may prefer a sole proprietorship or limited partnership versus forms that are heavily regulated by the state like a corporation. Although an exit plan is subject to change as businesses grow, it is easier for an owner to change from particular structures to another such as switching from a corporation to a sole proprietorship. To avoid these complexities, it is highly recommended that owners develop an exit plan as soon as possible and get legal advice when doing so.

Referring once again to Noam Wasserman’s trade-off theory, if a business owner prefers to maximize their wealth rather than their control this will even influence their decisions on cofounders, investors, whom they hire, whether or not they will have a successor and other factors (Wasserman, 2013). Owners more interested in keeping their control will be less likely to hire people who are specialists in their fields so that they can do all of the decision makings. So to recap, an exit strategy is not necessary but is recommended because it influences the choices an owner will make regarding their business as they aim to reach their goals.

For a video synopsis of Wasserman’s book, click here.

Works Cited:

Griffith, M. A. (2017, July 17). A Checklist for Maintaining Your Corporate Veil. Retrieved November 24, 2018, from https://www.legalzoom.com/articles/a-checklist-for-maintaining-your-corporate-veil

Wasserman, N. (2013). The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr.

Organizational Harvesting Strategies

ENT 360 Organizational Growth – Co-written with Merida Bohanemus

All good things come to an end, right?! It is important for businesses to write into their agreements and plan/ an exit strategy. Market Business News defines a harvest strategy as “a business plan for either canceling or reducing marketing spending on a product,” (Nordqvist, 2018) A harvest strategy is used when a product or a business is underperforming and “the objective is to produce higher profits to fund expansion in other areas.” (Henricks, 1997)  As Charles Crawford describes in his What is a Harvest Strategy in a Business Plan? “When a business plan contains a harvest strategy, equity investors and lenders are assured that the owners intend to…eventually sell it…” (Crawford) This is especially true when dealing with a partnership of any sort. Thinking of the end, at the beginning, can signal confident and competent approach. Better yet, it can also help garner support from investors and loan officers.

Just because it is an important step, however, doesn’t mean it will be a simple procedure to manage from within the business. “A harvest strategy is difficult to manage but includes an attempt to optimize cash flow.” (Raza, 2017) There are two harvest strategies most commonly utilized by businesses—“the outright sale of a company or division,” or “sharply cutting investments in assets, labor and other costs of a slow-moving product line or business.” (Henricks, 1997) When it seems a company or product has reached it’s maximum potential peak, selling the business could make the most sense. On the other hand, if there is potential for the resurgence of growth, it may be best to take things more slowly. Historically, for “a business on the wane has been a “harvest” strategy—eliminate investment, generate maximum cash flow, and eventually divest.” (Harrigan, Porter, 1983) Although this is not to discount the ability to weather a storm, or reinvent with funds from a mature product, it is a healthy place to start, and to discuss upfront in business partnerships. This provides maximum clarity to all parties involved and helps build the trust needed for any successful endeavor.

Works Cited:

Charles Crawford, What Is a Harvest Strategy in a Business Plan?, Retrieved 18 November 2018, from: https://smallbusiness.chron.com/harvest-strategy-business-plan-52874.html

Henricks, M. (1997, September 01). Harvest Time. Retrieved November 20, 2018, from https://www.entrepreneur.com/article/14594

Kathryn Rudie Harrigan; Michael E. Porter, End-Game Strategies for Declining Industries, retrieved on 18 November 2018, from https://hbr.org/1983/07/end-game-strategies-for-declining-industries

Nordqvist, C. (2018, July 29). Harvest strategy – definition and meaning. Retrieved November 20, 2018, from https://marketbusinessnews.com/financial-glossary/harvest-strategy/

Sheeraz Raza, Four Strategies For Firms In A Declining Industry, Retrieved on November 18, 2018, from https://www.valuewalk.com/2017/12/declining-industry-moats/

 

 

Organizational Growth Strategies: Franchise Agreements, Support systems, and Obligations

ENT 630 Organizational Growth

Growth strategy is “Strategy aimed at winning larger market share, even at the expense of short-term earnings.” (https://businessdictionary.com) When it comes to taking a business to next level, there are many strategies which can be used to promote growth. However, one particular strategy is usually at the forefront of this topic of discussion: Franchising. This tried and true method has proven to be successful for many decades. Think NAPA Auto Parts and McDonald’s. Such franchises require a lot of planning, and those who are interested in such an undertaking would be wise to explore the ins and outs of franchise agreements, support systems, and the obligations which will be involved throughout the process.

Franchise Agreements

A franchise agreement is a legal and binding contract between a franchiser and a franchisee. According to Kerry Pipes, contributing writer at franchising.com, there are “10 fundamental provisions outlined in some form or fashion in every franchise agreement,” which includes the following provisions:

  1. “Location/territory.
  2. Operations.
  3. Training and ongoing support.
  4. Duration.
  5. Franchise fee/investment.
  6. Royalties/ongoing fees.
  7. Trademark/patent/signage.
  8. Advertising/marketing.
  9. Renewal rights/termination/cancellation policies.
  10. Exit strategies.” (Pipes | 68,923 Reads)

To read the full article, click here.

Support Systems

Having a solid support system as a franchisee is essential for success. The franchisee should evaluate franchise opportunities thoroughly, making sure they have access to crucial resources such as training and ongoing support from the franchiser. The article, Franchise Support: What you can expect, is a good resource for those who are considering franchise opportunities as it conveys very valuable information on what to look for in franchising opportunities and how to evaluate those opportunities in an effective manner. The article challenges “prospective franchisees” to do “research,” beyond talking with a representative of the franchise; it also suggests having “in-depth conversations with other franchisees in your investigation because if they have been satisfied with the franchise support system, you most likely will be as well.” (Franchise Support: What you can expect) One of the most important questions any potential franchisee can ask is, “How much is this really going to cost me?” However, this can be a loaded question. Franchisees must learn “whether or not the fees and costs that must be paid to a franchise are fair, reasonable and appropriate.” (Elgin, 2006) To find answers to these questions and more, click here.

 Obligations

The franchiser and the franchisee are legally bound to one another to create a successful and profitable business venture. Each has their own unique set of obligations, and these obligations may be different from company to company and from state to state. Some of the “ongoing responsibility a franchiser may have” are “marketing strategies,” “financing,” and “brand building.” (Franchiser Responsibilities) According to Franchisedirect.ie, the franchisee’s responsibilities may include, but are not limited to, “financial responsibility, business responsibility, and personal responsibility.” (Dawson, 2017) As previously stated, the responsibilities of both parties will be defined in the franchise agreement.

Works Cited:

Dawson, A. (2017, December 19). Home. Retrieved November 20, 2018, from https://www.franchisedirect.ie/information/the-franchisees-rights-and-responsibilities

Elgin, J. (2006, August 14). Is the Price Right? Retrieved December 02, 2018, from https://www.entrepreneur.com/article/164820

Franchisor Responsibilities. (n.d.). Retrieved November 20, 2018, from https://www.franchiselawsolutions.com/franchising/franchisor-responsibilities.html

Franchise Support: What You Can Expect. (n.d.). Retrieved November 20, 2018, from https://whichfranchise.co.za/franchise-support-can-expect/

Pipes, Kerry | 68,923 Reads. (n.d.). The Franchise Agreement. Retrieved November 20, 2018, from https://www.franchising.com/guides/the_franchise_agreement.html

What is growth strategy? definition and meaning. (n.d.). Retrieved November 20, 2018, from http://www.businessdictionary.com/definition/growth-strategy.html

 

Taking Risks: The Investor’s Side

There may come a time in a founder’s journey when he or she must admit the financial resources have been tapped out. Of course, there is no shame in this as many startups would not be able to get very far without the help of outside investors. After weighing the risks involved, that founder may decide securing funding from an outside source is, indeed, the best recourse. While this is a potentially risky move for an entrepreneur, investors also face the risk of uncertainty when it comes to investing in a startup. Investors can come in the form of friends and family, angel investors, or venture capitalists. Each of these types of investors stands to lose money if they do not chose wisely. One wrong investment could prove to be catastrophic.

A lot of entrepreneurs turn to their friends an family as a means to raise money for their venture. On the surface, this seems to be the less risky option. These investors are more accessible, because founders “have frequent contact, long-term trusting relationships, and an emotional connection” with them (Wasserman, 2012.) There is much less pressure involved and a lot less leg-work to get funded in this manner. However, this type of arrangement can have a bleak outcome. Alicia Syrett, Founder and CEO of Pantegrion Capital, cautions against this practice citing “ they may be unsophisticated investors,” meaning “they may not know how to negotiate fair,” “the lines between your work and family relationships may become blurred,” and “you may not want the stress of letting your loved ones down” (Syrett, 2017.)

The next option for an investment is an angel investor. While angel investors are tougher to sell than friends a family, getting funding from an angel investor is easier than getting it from a venture capitalist. However, according to author, Murray Newlands of startupgrind.com, using an angel investor can have a few cons. For instance, angel investors usually have “higher expectations,” “you hand equity over in your business as a portion of the deal,” and they rarely take a “hands off approach” when making an investment (“Pros and Cons of Using an Angel Investor to Fund a Startup.”) While this may sound risky for the founder, these things are good for the angel investor, although those benefits do not come without risks. “Early stage investing is inherently risky;” furthermore, “high-level risks,” such as  “financing risk, technical risk, and market risk” are prominent and should be in the forethoughts of every angel investor (“Key Risks of Angel Investing.”)

When all else fails, a founder may be able to secure an investment from a venture capitalist. Venture capitalists “focus on investing in high-potential startups” (Wasserman, 2012. ) There are not as many risks for venture capitalists as compared to other investor; still, there are potential risks. Some venture capitalist firms are funded by outside resources. When one of these firms make a failed investment into a startup, it causes a ripple effect to those who invested at the time. So, while the risks are not as great, there are still some hazards involved in this type of investing.

When a startup is successful, all parties involved reap the benefits. When it fails, the loss can be felt by founder and investors alike. Not only should entrepreneurs choose wisely when it comes to investors, those investors should also weigh their options as well.

Resources

“Key Risks of Angel Investing.” Angel Investing Returns – A Guide to Exits for Angel Investors | Seraf-Investor.com, seraf-investor.com/compass/article/key-risks-angel-investing.

“Pros and Cons of Using an Angel Investor to Fund a Startup.” Startup Grind, http://www.startupgrind.com/blog/pros-and-cons-of-using-an-angel-investor-to-fund-a-startup/.

Syrett, Alicia. “What You Need to Know Before Letting Friends and Family Invest in Your Company.” Inc.com, Inc., 8 June 2017, www.inc.com/alicia-syrett/what-you-need-to-know-before-letting-friends-and-family-invest-in-your-company.html.

Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton, N.J: Princeton University Press, 2012. Print

Rolling with the Go-Getters

Emotional detachment can be viewed as a harsh character flaw under certain circumstances. Let’s face it; it is tough to deal with someone who seems uncaring and unapproachable at best. It is also fair to say we have been conditioned to only accept things that have been properly sugar-coated to our liking. Under these conflicting conditions, it can be tough for the leader of an organization to fill the necessary rolls in that organization with employees who not only can go the distance with them, but actually aspire to do so. This is where different hiring approaches come in to play. Hiring dilemmas are the norm, and the type of hiring blueprint a founder chooses can mean a world of difference.

Will the model for hiring employees be based on the desire to build “a family-like culture,” or will it be based on the objective of building a “formal hierarchy,” which calls for employees who are well-equipped with “functional skills” (Wasserman, 2012)? Both of these approaches have good points and drawbacks. Being treated like family at work can be beneficial. In this type of environment, employees may be willing to settle for less pay, do more work, and have an overall better attitude toward their jobs. The drawback is that allowing employees this type of freedom can create workers who are less likely to respect the authority of their superiors, causing a breakdown in the employee/supervisor dynamic. Some would say the formal hierarchy would be the better approach of the two. Afterall, this method promotes a higher sense of executive and management control and a structured work environment more prone to enticing those who “can make big contributions and achieve significant goals” (Herrenkohl, 2013.) Unfortunately, the problem here is it can be tough to establish clear lines of communication between founders and their employees.

The approach used to establish the model for hiring employees relies heavily on the vision of the founder and how objective and emotionally involved, or aloof, he or she tends to be. Notably, there is no flawless plan for recruiting and keeping key employees. Avoiding the pitfalls of hiring dilemmas is tricky and requires a lot of planning. Acquiring top-notch talent is a necessity for a business to grow in leaps and bounds. How a founder and his or her team goes about this process can mean the difference between finding bodies to fill positions and finding talented candidates who are all in.

Resources

Herrenkohl, E. (2013). How to Hire A-players: Finding the Top People for Your Team- Even if You Don’t Have a Recruiting Department. Hoboken, N.J.: Wiley.

Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton, N.J: Princeton University Press, 2012. Print

Who’s in Charge, Anyway?

I am sure just about everyone has heard the term “too many chiefs” and may have even experienced this phenomenon at school or on the job. While this is almost always an unpleasant situation, it can be very detrimental to a new startup. Choosing who gets the title of CEO in a company can be a daunting task. One idea person would not dream of letting anyone else hold the coveted title, while another could avoid it all together. Deciding who will take over the top positions is not something that should be taken lightly. There are may factors that goes into making the final decision. Sometimes the end result yields success and, sometimes, it produces disastrous results.

Evan Williams and Meg Hourihan of Blogger, the blogging website that was created for the novice blogger, found themselves in a very sticky situation once the company began to take off. According to Noam Wasserman, author of “The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup,” there was “ambiguity about who was really in charge,” which “caused disagreements” and led to Meg’s untimely exit from the business (Wasserman, 2012.) Shortly after, all of the employees in the company were laid off. Cleary, the blurred lines of imprecision did not pay off for Blogger in the early days. Both Williams and Hourihan wanted to be chief, or CEO. As we can see, that model simply did not work. Although the blogging platform went on to be successful, it’s hard not to sit back a reflect on what could have been achieved if they had only thought more about how their roles impacted the company, their employees, and themselves. Desire alone does not make for a great leader.

One can only imagine the issues that arose when Williams and Hourihan got to the point where they needed to hire employees. Under the circumstances, it seems it would have also been very trying for them to choose their staff. For the sake of argument, let’s assume their creative differences carried over into the hiring process. Maybe one wanted team members who were familiar with the industry, while the other wanted people with more life experience as opposed to skills that were acquired in corporate America.  Inevitably, “it only makes since to find a pool of people who already possess the hard-to-teach skills that are vital to your company” (Herrenkohl, 2013.) That’s probably a feat best conquered by founders who do not “adopt overlapping day-to-day tasks” as did the founders of Blogger.

Deciding who is in charge and defining roles may not cause a rush of excitement for even the most seasoned entrepreneur, but it is a necessity, nonetheless. I think it is fair to say no one wants to find themselves in the middle of such a heated conflict as did Evan Williams and Meg Hourihan. The impending implosion of what was once a thriving venture is a scary thought. It makes me want to ask: “Can’t we all just get along?”

Resources

Herrenkohl, E. (2013). How to Hire A-players: Finding the Top People for Your Team- Even if You Don’t Have a Recruiting Department. Hoboken, N.J.: Wiley.

Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton, N.J: Princeton University Press, 2012. Print