Small Business Manufacturers: The Key to New Job Creation!

Small business manufacturers are a key component in CREATING NEW JOBS and I have written this article for the masses, not just for those with advanced business degrees, to help all readers understand its significance.


I know that for most, the subject of economics is very boring, however before I go on, it’s important that I briefly touch on a very basic economic principle and I promise to simplify my explanation, so please stay with me.

“… First and foremost, for any economy to be truly prosperous, it requires that products be produced locally and exported globally, which then generates new dollars being imported back into the local community where the products were manufactured, thereby helping to create jobs and fuel growth… “.

What did he just say???

Well the EASIEST EXAMPLE is to think of a shoemaker in say Miami who makes and sells (i.e. exports) his high-end flip-flops to fashion stores in New York City. The stores there, on Fifth Ave, buy the shoes and in return pay the shoemaker with dollars. The shoemaker uses the earnings (i.e. imported dollars in exchange for flip-flops sold) to pay for their business overhead (i.e. insurance, utilities, etc.), pay for employee salaries and hopefully take a profit for them self. The salaries paid and the profits earned are then spent in the local economy (i.e. in this case Miami), and includes buying homes, dining out at local restaurants, shopping, child care, purchasing groceries, etc.

This is obviously an oversimplified example, but the main idea is that we need the creation of new manufacturing businesses that will produce and export tangible products, which in turn will help create new employment and positively develop our local economic quality of life. This is the simplest way to drive dollars from outside the community straight back into our local economy.

This product driven economic concept is contrary to how our economy has been functioning for almost the past two decades. From the time of the internet revolution in the 1990′s to the most recent housing crisis of the mid 2000′s (both bubbles), America’s economy has been based on the artificial inflation of the dollar by speculative investing. Almost half of all recent profits in corporate America came from the financial services industry, which operates on money trading business models and do not really produce any beneficial tangible products which can be physically exported. There are of course many arguments to the contrary, in support of Wall Street, however for the most part; our overall economy in recent years has been undeniably operating on pure speculation by automated day trading systems (i.e. betting on the financial markets in hopes of a profit).


So with that said, here’s the back-story; I have been an industrial real estate broker and small business owner for many years and through my career I have represented numerous small business tenants in the manufacturing, warehousing, and distribution industries. A good portion of these small business clients have been start-ups, with solid product ideas, however due to the credit crunch, it has been difficult for them to obtain additional working capital to afford larger industrial spaces for expansion, purchase machinery/equipment, hire more employees and keep up with product demand. Like these small businesses, there are numerous more throughout the country with incredible growth potential that can help create jobs and fuel local economic growth in their respective communities.

Now these once struggling brilliant entrepreneurs may finally have an answer. The recent passing of the JOBS Act, allowing for crowd funding, has relaxed many of the strict requirements for entrepreneurs and private small businesses interested in raising funds for their ventures from the general public. Although the ACT itself has been approved, the portion pertaining to publicly soliciting investors to contribute capital in exchange for an equity stake in the opportunity is being thoroughly reviewed by the Securities and Exchange Commission (SEC). This is a necessary step, as is the reality, there will always exist individuals who will attempt to defraud well-intended investors and some sort of regulations must be in place to protect the general public. I do however take issue when banks and the larger Wall Street type firms get involved and lobby law makers and regulators to not allow such leniency on Main Street, thus allowing small businesses to find funding through their own means. While during the short run, crowd funding will not necessarily impact these financial institutions, over the long run it can certainly pose a threat to the sometimes generous fees mandated by many of these firms and cause a shift in the business fund raising landscape as we know it.


What exactly does industrial real estate have to do with small business manufacturers; well it has everything do with them really! The manufacturing, warehousing and distribution sectors operate in an intertwined model and none can exist without space, lots of space. In fact this deserves a slight swerve off topic; even major retailers have downsized their retail storefronts and are relying further on their online presence to sell products that they otherwise would have stocked on storefront shelves. These retailers are moving to a direct ship business model where their stores are being reduced to accommodate only the highest selling items and instead asking that customers visit their websites and order more specialty items online. These retailers, including well known brands in the office supply sector and large discounters, are making more and more use of industrial space to warehouse and distribute items worldwide. The driving force is the improvements in technology fueling the M-Commerce generation.

Now back to the main point of this article; small business manufacturers. Both here in South Florida where I am from and across the country, there are millions of square feet of old vacant industrial real estate just waiting to be placed back in use. Sure not all the space will be a fit for very sophisticated producers of advanced technology products, but for most small business manufacturers it can provide them affordable work space from which to operate their businesses. Another fact to consider is the up and coming Makers industry. If you haven’t heard of it, then I highly recommend you look into it. This is yet another industry that is small business manufacturing in nature and will require the use of industrial space. So where exactly is the opportunity for industrial real estate investors, well you’ve probably figured it out by now. Real estate investors are in a great position to ride, what I believe, will be the next upward growth trend in the real estate market. As the demand for industrial property increases, willing investors can acquire and lease rehabilitated manufacturing, warehousing and distribution spaces to small businesses at affordable rates. By doing so, investors have the ability of contributing to the growth of small business manufacturers and indirectly manufacturing jobs creation, by providing them the use of industrial spaces at reasonable rates. And all can be done while the investor enjoys cash flow and the potential of value growth from their industrial real estate investments.