As a child growing up in the Bahamas, Rhys Powell would climb trees in his neighborhood with his cousins and eat the fruit plucked from the leafy branches. The mangos, bananas, and pineapples weren’t a special treat because they were organic or locally grown—they were simply the delicious reward of an afternoon adventure under the Bahamian sun.
When he was 17, Powell moved to the United States, where greasy fast food could be found at seemingly every corner, but he nonetheless held on to his homegrown dietary habits. As he grew older, Powell’s natural inclination toward local and organic foods led him to assume the role of the healthiest eater in his social circle.
So it wasn’t a big surprise when, in 2005, Powell’s close friend asked for healthy food advice for his 4-year-old. The question wasn’t the first, or the last, that Powell would field on the matter. He noticed a pattern among his friends and started looking into it further. He called local New York schools to learn about their lunch programs, and began dialogues with dietitians and food experts.
Soon after, Powell began drawing up plans for a business that would address the lack of healthy food in his community. He wasn’t thinking about creating jobs or transforming into an entrepreneur or stimulating the economy. He was thinking about creating a solution to a problem he had witnessed.
Yet as he did so, Powell was steering himself toward a critical segment of the American economy: small-business owners.
On the first Friday of each month, bankers, stock traders and financial analysts around the world eagerly await the clock to strike 8:30 a.m. Eastern, the precise moment when the United States Bureau of Labor Statistics releases its monthly jobs report. Published just an hour prior to the opening bell of the New York Stock Exchange, the report commands the attention of countless financiers, along with journalists, economists and the world at large. Though the report is filled with various insights, two statistics stand out for their relevance and immediate discernible impact: the number of jobs that were added to the economy and the unemployment rate.
The national jobs numbers are analyzed and marshaled for a wide spectrum of interests. But at times overlooked in these two hotly debated numbers are the American workers and business owners whose lives and careers determine the outcome of the jobs report. The numbers are a reflection—however abstracted—of the millions of choices made by U.S. businesses and individuals.
What happens when a job is created? How are candidates found? How do business owners grow their companies with new hires? Where does a “job”—the economic shorthand for the exchange of an individual’s talents and services for compensation—begin and end?
In partnership with the Goldman Sachs 10,000 Small Businesses initiative, we examined job growth both from the ground up and the top down, meeting individual entrepreneurs whose hard work and unique approaches to doing business directly contribute to the overall health of our local and national economy.
To those around him, Rhys Powell had everything figured out by the time he was 25. In seven years in America, Powell had earned a degree in computer science from M.I.T. and had landed a high-paying corporate job to start his career. His path to success was all but mapped out. So when Powell decided to leave his job in 2005 and start a business selling healthy lunches to New York City schools, which he named Red Rabbit, his friends and family were predictably shocked.
“My family was quite perplexed for a while,” said Powell, now 35.
Part of Powell’s job as president of Red Rabbit is designing a weekly menu that features locally grown fruits and vegetables—an approach he bases on his childhood experience of sharing communal meals featuring local ingredients.
“The real decision was moving toward something where I was having a more tangible impact on my community,” Powell said. In 2008, Powell’s plans came to fruition with the opening of the Red Rabbit kitchen in Harlem. In February the following year, Red Rabbit delivered its first meal to a local private school.
While the bulk of Red Rabbit’s operations are centered around making nutritious meals, Powell also spends considerable time teaching students about food. Through coordinated lessons and workshops with schools, kids learn about the basics of gardening, how to cook their own meals and the benefits of eating healthy.
Powell also educates school officials about the importance of serving healthy meals to students, an especially critical need in school districts located in areas known as food deserts, where there’s limited opportunity for fresh, local food.
“No one’s learning when they’re hungry,” Powell said. “If schools don’t provide quality food for their students, they won’t perform well. They won’t learn, they won’t be present when they need to be present.”
A big turning point for Powell was to persuade schools to take advantage of the National School Lunch Program, a federal initiative that reimburses schools for meals they provide to students in need. But to meet the federal reimbursement amount of around $3 per meal, Powell had to overcome the challenge of reducing the price of Red Rabbit's lunches—which included an entree, vegetables, a side of fruit, a drink and cutlery—from his standard price of $5.50 without sacrificing on quality.
In 2010, two years after Red Rabbit began serving both private and public schools, the company was delivering 1,000 meals a day and employing 10 full-time staff. The product was working and in high demand—Powell’s original intuition and vision was validated.
“Healthy meals weren’t just an issue of parents not wanting to get up an hour early,” Powell said. “There’s a huge systemic issue affecting our society, and the kids were getting the short end of the stick.”
Leveraging an infusion of investment dollars, in 2011 Red Rabbit moved out of an 800-square-foot kitchen into a 10,000-square-foot facility. “That school year … we went from 10 employees to 50. It was a big jump,” Powell said. The investment paid off. From serving 59 schools in 2011, Red Rabbit has increased its customer base to 153 as of 2015, a growth of 260 percent.
Small businesses like Red Rabbit are often thought of as one of the great pillars of the American economy, and they remain a popular talking point among presidential candidates. But just how important are small-business owners to the economy, especially when compared to big corporations whose employees number in the hundreds of thousands?
Turns out, they’re pretty important.
A 2015 report by the U.S. Small Business Administration showed that small businesses (defined as firms with fewer than 500 workers) account for 56 million employees annually, or almost half of the nation’s private workforce. More than two-thirds of these small businesses have fewer than 100 employees, and the largest pool of small businesses are those with 20 or fewer employees.
Although large corporations are responsible for the lion’s share of employment in the United States, when it comes to actual job creation, the picture is very different. According to a 2010 study by the National Bureau of Economic Research, smaller businesses created more jobs than larger ones did between 1992 and 2005. Likewise, a U.S. Census report from 2012 showed that up to 70 percent of gross job creation is attributable to startups and new firms.
Intuitively, this makes sense; once a company reaches a certain size, it will slow down and eventually stop growing, which limits its ability to take on new hires. The economic factors at play vary from company to company, but the usual culprits that lead to stagnation, according to Ron Ashkenas, a financial consultant from Schaffer Consulting, are market maturity, where demand ceases to outpace supply; a lack of innovation; and the law of large numbers, where each percentage of increase in overall revenue requires a much larger customer base. Small businesses have a much easier time growing because each new client represents a much higher percentage of a vendor’s overall revenue, which often allows the firm to grow at an exponential rate.
When Michael Antaran looks to grow his team of developers, he doesn’t look in the obvious places. Antaran, the founder of Marvel Apps, a Detroit-based startup that makes mobile games for iOS devices, forgoes job listings in favor of a more personal approach.
“I mentor kids at the University of Michigan for their senior design course; I hire them as interns, then from there, as full-time employees,” Antaran said.
This method has proved fruitful for Antaran, who has been instructing UM undergrads for the past three years. Marvel Apps grew from two to four employees in 2014, and by late 2015 had a staff of nine, with no signs of slowing down.
Marvel Apps develops products for clients but also has a portfolio of its own apps devised and developed in-house: a word puzzle game, a utility that measures the speed of a golf swing and several fantasy football apps. Antaran’s most recent endeavor, Carrot Pass, rewards users with points they can use for discounts and free merchandise at participating stores. The app has started to pick up steam, and Antaran expects it to be a great stepping stone to further grow his company.
As robust as the company’s growth has been in the past few years, for most of Marvel Apps’ history (the company was founded in 2008) Antaran was the sole employee—and for much of that stretch he ran it in his spare time. A father of three, Antaran hesitated quitting his day job at Chrysler, and later on at General Motors, out of concern for his family, despite the growing success of his apps. In 2012, Antaran decided to follow his wife’s advice to turn his hobby into a career, and rented out a co-shared office space in Royal Oak, a town 15 minutes north of Detroit.
Although a mechanical engineer by training, Antaran taught himself how to code software during his 11-year career at Chrysler, where he developed programs that tested engine performance. When Apple’s App Store opened in 2008, Antaran jumped at the opportunity to put his programming skills to use. He developed one of the store’s first 500 apps.
“It was a very simple fantasy football app where it just took information and helped people decide which players they should play each week,” Antaran recalled of Marvel’s first Apple-approved product, “that’s where it all started off.”
Antaran attributes the success of his startup partly to the recent economic downturn in Detroit, which went bankrupt in 2013. Capitalizing on the combination of Detroit’s high unemployment rate and the availability of local talent at institutions like University of Michigan and Lawrence Technological University, Antaran was able to quickly grow his team without sacrificing on quality or budget. With skyrocketing rents in tech hubs like New York and San Francisco, it’s easy to see why talented programmers would opt to settle down in cities like Detroit, where homeownership is more affordable.
“The resources that are available, [they’re] almost untapped,” Antaran said. “It’s a rebirth in Detroit: the cost of living is down, and you can get highly qualified employees [who] are as good if not better than those in Silicon Valley.”
Whenever small-business owners like Powell and Antaran decide to add new employees to their companies, those new hires get a salary that lets them purchase goods and services from others. Since this income is also taxed, it helps fund the local, state and federal governments, which provide crucial infrastructure and services to residents and businesses, such as fire departments and highways.
Important policies, such as the Federal Reserve’s interest rate—which ultimately determines how freely banks can borrow and lend money—largely depend on the state of employment. When the Great Recession unraveled in 2008, the Federal Reserve lowered its interest rate to a historic low of 0.25 percent while the unemployment rate climbed to an eventual peak of 10 percent in 2009. The lowering of interest rates gave banks easy access to much-needed capital that small-business owners like Powell needed to get their companies off the ground.
Through this complex, cascading engine, the economic impact of adding one job can lead to the creation of many more.
How do we track these fluctuations? The task of counting exactly how many people have gained or lost jobs in a country as large as the United States on a monthly basis sounds impossible—and that’s because, in large part, it is.
Enter the next best thing: estimates.
The Bureau of Labor Statistics (BLS), the government unit responsible for the jobs report, conducts two massive surveys each month to determine the level of overall employment.
The first, the Current Population Survey, which is conducted jointly with the U.S. Census Bureau, gathers data from a sample group of 60,000 households each month by asking residents questions regarding their employment status. As many as 2,000 Census Bureau representatives collect this data from as many as 110,000 individuals—a sample that is over 55 times larger than privately conducted public opinion polls.
The second survey, known as Current Employment Statistics, measures employment directly from employers by contacting roughly 146,000 businesses and governmental agencies about new hires and employees they’ve let go. These businesses account for over 600,000 individual worksites that cover a mind-boggling number of sectors, which include conventional ones like real estate and waste collection, to more unusual ones like specialized freight trucking and flower wholesalers.
The data from both surveys is lined up to create what is officially known as the Employment Situation Summary, or jobs report, which gives the most accurate picture on the current state of employment and, consequently, the current state of the economy.
In recent months, the report has been signaling a U.S. economy in healthy recovery, in which employment has rebounded to 2008 levels. According to numbers released by the BLS in June 2016, as part of its latest report, the employment rate continued its decline to 4.7 percent. This is after the watershed jobs report in October of 2015 saw the total unemployment rate fall to 5 percent, the lowest level since April 2008.
While it’s true that small businesses create more new jobs than large corporations do (to the tune of up to 70 percent of all new jobs, according to the 2012 study by the U.S. Census Bureau), it’s important to note that these new jobs aren’t as stable as those created by big companies. As discouraging as this may sound, however, the total number of jobs created by startups is disproportionately higher when compared to the volume created by older companies.
According to the same U.S. Census study, when looking at net job creation, startups and small businesses that are 10 years old or younger account for 40 percent of overall job creation, even though they represent just one-fourth of the total employers. Once startups make it past the five-year hump, their chances of survival get much better, and they will typically grow at a much faster rate than older companies, adding on additional jobs.
“Let’s face it, jobs get created by entrepreneurs,” said Jeff Carr, a professor of marketing and entrepreneurship at New York University. “Jobs aren’t being created by large corporations.”
Carr, who teaches at NYU’s Stern School of Business, argues that small businesses are more connected to their local economies. “You have to make money whether you’re a large corporation or a small business, but I think the motivations of small businesses are often bigger. They’re more inclined to be engaged in their communities, and there is more personal relationship between the employees and the owner,” said Carr.
Michael Brown, the CEO of a Philadelphia-based HVAC company founded in 2010, is no stranger to growth. In its first year, Brown’s company, Environmental Construction Services Inc. (ECSI), had a little over $35,000 in contracts and just a handful of employees. In the following years, Brown would aggressively pursue bigger and bigger projects, including one retrofitting the Philadelphia Convention Center’s cooling towers, a deal that turned his firm into a million-dollar business after just two years.
Spending his early childhood years in his mother’s native Spain, Brown moved with his family back to the United States after his father, a U.S. Air Force service member, was transferred to Pennsylvania. Brown, who was 8 years old at the time, vividly remembers the challenges of leaving his friends behind and moving to a foreign country.
Brown, a restless student, would ask his teachers why a particular law of thermodynamics was a law to begin with, and then he would diligently work to find if there was something that could break that law. This insistence on testing his teachers and questioning why things were the way they were would later help Brown sow the seeds of his future company.
After earning a bachelor’s degree in engineering, Brown moved back to Philadelphia and began working for a regional office of a family-owned construction company based out of Ohio. He worked up to a managerial position and was poised to take over business development, prompting his employer to sponsor him in an MBA program at Saint Joseph’s University. Everything was looking up for Brown; his years of hard work were aligning to land him one of the most senior positions at the company.
And then the Great Recession happened.
“When I was ready to exit out of my MBA program, my company was not ready for me to take over business development,” Brown said.
Feeling miserable at this impasse, Brown consulted with his pastor, who encouraged him to leave his job at the construction company and start a business of his own while his wife would pursue a higher paying job. (Brown had a business plan that he developed while pursuing his MBA already in hand.) Inspired by his pastor’s advice, Brown gave his employer an ultimatum: either let him lead business development, or let him go.
Brown said that a few days later he received a phone call from the owner of the company. They had decided to let him go. Brown remembers immediately calling his wife, who was overjoyed by the news. With the support of his family, Brown teamed up with a former competitor, Dominic Menta, and 14 days later, ECSI was incorporated.
Today, ECSI boasts more than 30 employees, multiple projects in the pipeline and a projected revenue of up to $10 million. Brown credits his company’s success to an inner resilience when faced with situations where others don’t see an easy solution.
“The biggest frustration I have is when someone tells me something can't be done,” said Brown.
Looking back, Brown is even amazed at his own determination. Early on, Brown said, “We had $10,000 in the bank. I don't know how we ever did this … [but] we brought over … a president, a senior estimator and two head BIM [Building Information Modeling] guys”—a bold investment in top-level talent. “I still don't know how the math on that worked because that was a $400,000 payroll, but it worked. We brought them, and that helped really catapult the company.”
Brown adds, “Now that we have all of the leaders in place, what we are going to do is go to colleges and hire young people that then can come and train underneath this solid group.”
Watching his company grow from a two-person partnership into a thriving business centered around energy efficiency is something Brown takes great pride in. But he never lets pride become complacency. “You never really make it,” Brown said of the elusiveness of “success.” “I would consider where we are as finally getting to the starting line. We bought our sneakers, we put on our shirts. We qualified for the meet, and we are starting to get onto the blocks and take off.”
While new small businesses are credited for adding a sizable chunk of jobs to the economy each year, that doesn’t mean older ones can’t keep up. Jessica Johnson’s family-owned business, Johnson Security Bureau (JSB), has been around since 1962, and although it has seen ups and downs in workforce and revenue over the decades, it has still managed staggering tenfold increases in both its revenue and size over the past eight years alone.
“We had to really re-think our strategy,” says Johnson, 42, whose Bronx, N.Y.–based company had suffered a downward turn since her grandmother Dorothy Johnson, the previous matriarch of the family business, passed away in 2003, followed by her father in 2008. “We had to realize that how we did things in 1962 or 1972 wouldn’t necessarily be what the trade needed in 2012,” she said.
Johnson, along with her brother Charles, led the company on a path to resurgence by participating in Goldman Sachs 10,000 Small Businesses workshops and seminars, where she would develop an overarching strategy to put JSB back on a growth trajectory. A part of this strategy was going after bigger contracts that provided security for construction firms, which meant going up against much larger firms. Although her company couldn’t compete with the size and resources of her competitors, Johnson realized that her security firm had decades of experience over them—an advantage that proved to be a useful bargaining chip at the negotiating table.
When a contract was too big for her company to handle, Johnson would partner with bigger firms as a subcontractor, allowing her to have a stake in projects that would otherwise be out of JSB’s reach. Likewise, she leveraged her woman-owned minority business certification, which gave her a chance to bid on government contracts that were also previously beyond her reach.
“I thought that if we grew 20 or 50 percent in the next five years, that would be good, but … I realized that was an arbitrary limit that I had placed on myself and my business. The opportunity is really limitless,” Johnson said.
Today Johnson Security Bureau has nearly 150 employees who, in addition to supporting the operations of the business, provide armed and unarmed guard services for office buildings, industrial facilities, transportation hubs as well as armored car services. As Johnson looks to the future of her business, she foresees her company growing at an even faster rate.
No business exists in a vacuum—and businesses, like the people who work for them, belong to an industry that is largely defined by its members. When small-business owners like Powell, Brown, Johnson and Antaran enter the private sector, they represent thousands like themselves who bring more than just jobs to their communities. They bring new ideas and energy, which allows them to take risks and innovate. The result raises the bar for the industries these small businesses enter.
Last year, Brown’s construction firm began further differentiating themselves from their competitors by incorporating building-information modeling into its workflow. This process, which involves designing 3-D replicas of the buildings ECSI is hired to work on, saves clients thousands of dollars down the line, and also helps Brown complete his projects much faster. Nature gets a break, too, since most of Brown’s projects are focused on creating energy-efficient systems, which are easier to install when following a 3-D model.
Seeing the positive results that building information had had on his business, Brown decided he needed to further grow his team in 2015. Having an intimate knowledge of the construction industry, Brown aggressively pursued Eric Krout, an expert in the field, from Victaulic, a multinational pipe manufacturer based out of Easton, Pennsylvania.
“When you are doing interesting stuff, it is easy to hire people,” Brown said. “With [Krout] here now, our R&D, the people we already have in the department, they are now exponentially better.”
Outside the speculative realm of venture capital, turning a profit is necessary for any small business to thrive. Purely profit-driven companies, however, run the risk of losing touch with their customers; and in a time where every business has the potential to become the subject of ire on social media, how one’s company is perceived by the public can have a critical impact on the company’s success.
Johnson primarily hires her employees from her home borough of the Bronx, giving many otherwise disadvantaged job seekers a chance to get back into the workforce. Powell has worked hard to get his company certified as a B corporation, a distinction that commits Red Rabbit to providing a social and environmental benefit to the community he serves. Antaran’s walking app, Brown’s green-construction firm, Powell’s healthy meals, and Johnson’s local recruitment efforts all serve the public interest while the companies remain profitable. It’s a business model that can easily get set aside in the pursuit of purely monetary goals.
“As a business owner,” Powell said, “it’s difficult for me to advocate that businesses should do things just for social good. That said, I’m also a member of a community, so when the needs of business and the needs of a community don’t align, who takes the hit for that?”
As important as profits are to the lifeline of any business, they alone don’t guarantee sustained success. Entrepreneurs who make meaningful investments into their communities guarantee themselves a healthy foundation to build their businesses on, which in turn allows them to add more employees to their payrolls, benefiting the economy as a whole.
Goldman Sachs 10,000 Small Businesses gives small business owners a business education, access to capital and business support services. Michael Brown, Rhys Powell, Jessica Johnson and Michael Antaran helped improve their businesses by completing the Goldman Sachs 10,000 Small Businesses program.
Created by Huffington Post Partner Studio. Photography and videography by Minesh Bacrania, Jacob G. Nazarian IV and IDK Media Group, Various Pressures, Michal Rzepecki. Videos supplied by Goldman Sachs.