Even though many won’t understand the level of analysis required to make the following assumptions, I submit this information as an example. This paper was part of a business marketing discussion for a course taken about 3 years ago. This first part introduces the topic of how a business creates shared value for a community like Hip Hop.
In 2013, the figure for sole-proprietorships was 21 million businesses which grossed about $991.8 million dollars. That seems like a lot of money, but the number isn’t even represented on many business charts because its only 3.4% of the total gross of firms which employ 2 or more people which is $30.7 billion. In other words, sole proprietorships account for about $1B while corporations make about 30.7B per year. I think that “over-comparing” numbers like this make us lose perspective sometimes. In many financial scenarios talking about trends, these substantial numbers are minimized when ranked against each other. $991.8m is $47m on average for 21m sole proprietorships. That is a huge number for a sole-proprietorship. How is that not significant? It’s made irrelevant by the comparison to 28m firms which make $30.7 billion which is an average of $1.09 billion per firm. (Census Bureau)
This study will be used to extrapolate further that niche markets and emerging markets can be compared to standards other than the total economy for information about growth or sustainability. Just as markets are compared to others only in their field with some methods, comparing economic growth with standards of living can be another method. I will show that by separating the revenue stream from the total market, you can better analyze the benefits to ones standard of living.
One aspect of my proposed Hip Hop Business course would be to show the benefits of emerging or niche markets like Hip Hop and their ability to create new revenue streams which would not have initially looked profitable when compared to existing markets. Certain markets are devalued when compared to others, when in their own right, those markets are substantial. For example, the economy of so-called Black-Americans ranks low when compared to so-called White-Americans, but ranks high when compared to the rest of the World. Comparing the economy of one group of people whose lineage comes from the enslavement of the other is a false comparison. Comparing the total economy includes companies which have existed for hundreds of years compared to ones which have existed for less than five. Growth and profitability have other intangible assets to a community than can be gleaned from certain statistical analysis.
- You can’t predict the impact of a market by analyzing its impact on the total consumer market. The impact locally in shared value may be substantial.
- Niche or emerging markets cannot be compared to existing markets. New markets foster faster innovation. New markets create innovation that serves the unmet needs of underserved consumers.
- The impact a market has on the standard of living cannot be compared to the best-case scenario. The difference between the two is too extreme. Markets are compared in billions. Sole proprietors don’t need billions to have extremely satisfactory standards of living. Comparing sole proprietorships with corporations is misleading.
Terms and Definitions
- originates from the French word entreprendre that means “to undertake”
- Merriam Webster – One who organizes, manages, and assumes the risks of a business or enterprise
- Dictionary.com – A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk
- Howard Stevenson (HBS Professor) – One who pursues opportunity without regard to resources currently controlled
- Albert Shapero – One who takes initiative, accepts risk of failure, and has an internal locus of control
In line with the Schumpeterian entrepreneur, the definition of the entrepreneur as being a market entrant (or a young firm that has recently entered the market) is straightforward and these definitions – entrants or young firms – are often employed in entrepreneurship research
(Pragg and Versloot)
Sole-Proprietor(ship) – A firm or establishment with no employees or formal payroll other than drawing of the owner.
(U.S. Census Bureau)
Value – The value that’s created and captured by a company is the profit margin:
Value Created and Captured – Cost of Creating that Value = Margin
(Porter’s Value Chain)
- Accounting: The monetary worth of an asset, business entity, good sold, service rendered, or liability or obligation acquired.
- Economics: The worth of all the benefits and rights arising from ownership. Two types of economic value are (1) the utility of a good or service, and (2) power of a good or service to command other goods, services, or money, in voluntary exchange.
- Marketing: The extent to which a good or service is perceived by its customer to meet his or her needs or wants, measured by customer’s willingness to pay for it. It commonly depends more on the customer’s perception of the worth of the product than on its intrinsic value.
- Mathematics: A magnitude or quantity represented by numbers
An initial exploratory search of studies analyzing the ‘value of entrepreneurship’ showed
that the foremost benefits analyzed in the literature pertain to employment, innovation, productivity and Employment.
(Pragg and Versloot)
Definition – Larger concept which includes social capital as well as the subjective aspects of the citizens’ well-being, such as their ability to participate in making decisions that affect them.
Read more: http://www.businessdictionary.com/definition/social-value.html#ixzz2V5qq2gBr
Definition – Integrating societal improvement with economic value creation