Black Enterprise Mad Because They Cannot Break Down Hood-Based Circular Economics for Brothas and Sistas

With micro-finance technology, brothas and sistas can create solutions for the hood to conduct complex micro-transactions and exotic streams of revenue using existing hood resources. While circular economic theory is not new, we now have the capability to fully embrace the concept to streamline hood hustles and create new ones based on the theory. In this article, we will discuss circular economics for brothas and sistas to better understand and how we can apply this theory to the hood. What is Circular Economics? This is a snippet from Wikipedia about circular economics: In their 1976 research report to the European Commission, "The Potential for Substituting Manpower for Energy", Walter Stahel and Genevieve Reday sketched the vision of an economy in loops (or circular economy) and its impact on job creation, economic competitiveness, resource savings, and waste prevention. The report was published in 1982 as a book Jobs for Tomorrow: The Potential for Substituting Manpower for Energy.[3] Considered as one of the first pragmatic and credible sustainability think tanks, the main goals of Stahel's institute are product-life extension, long-life goods, reconditioning activities, and waste prevention. It also insists on the importance of selling services rather than products, an idea referred to as the “functional service economy” and sometimes put under the wider notion of “performance economy” which also advocates “more localisation of economic activity”.[4] In broader terms, the circular approach is a framework that takes insights from living systems. It considers that our systems should work like organisms, processing nutrients that can be fed back into the cycle—whether biological or technical—hence the “closed loop” or “regenerative” terms usually associated with it. Right now, the current economy in the USA is driven by the industrial method of manufacturing, consumption and disposal for the next version or newest product. You got the iPhone 4 and you throw it away because the iPhone 5 came out. Wall Street like to report on the number of iPhone sold as a barometer of Apple stock price so Apple is motivated to keep producing a latest version. Because African-Americans are currently a docile consumer class voting for President Obama and expect nothing in return, Black people participation in the current “make-take-dispose” part has to be defined. Overall, African-Americans are hired to make, use their paycheck to take and dispose of material items once they are out of favor. We all know this is not a good position to be in, especially during an economic downturn as unemployment among our people is twice the national average. In the circular economy, instead of bragging about how much African-Americans spend on make-take-dispose items, we should focus more on how much Black people utilize a product/service, return it and have that item renewed to create a sustainable economic ecosystem that supports jobs, quality of life and generational wealth. Here is a secret – this is what rich people do all the time! They don’t go buy a private jet, they use fractional ownership plan like NetJets and use if only for the time they need it. The same for a yacht or a vacation home on an exotic Pacific island. This is the same circular economic practices we want to apply to the hood. How the Hood Can Apply Circular Economics In the video below, they discuss several business models and how business can interact with customers using applied circular economics: To be honest, I’m going to act like we talking about this subject for the first time but we are not. I have been speaking on using service models that focus on utility all the time here on Dream and Hustle. For example, we talked about avoiding the banking model in the Black community and focus on mobile payments were the focus is on the transfer/utilization of cash in our community. In fact, I hate physical cash and cats want to argue with me over paper cash but I love transactions, not physical cash. What brothas and sistas should be thinking about in terms of 21st century business models is how can we facilitate the returning of and renewal of resources and monetize off the functional service of materials. Here is a secret – circular economics is how the hood can create a sustainable economic engine off the existing items we have in our own community without a SBA loan, without help from someone who says he is not the President of Black America or validation from outside groups. You want to know the sick part as we begin to break it down? Any brotha or sista, I don’t give a damn you on probation right now or got a felony on your record – you are fully capable of starting the circular economic cycle in the hood. The reason why you can’t find a damn job is because you cats are focusing on the make-take-dispose cycle and once you understand the circular economic theory being talked about, your status or degrees mean little because you are basically following an economic system that resemble the biological cycle of nature. Now let’s talk about business models we can apply to the hood. Overall, we focus on providing materials and services that can be renewed and design systems that can be returned and refurbished and renewed. Instead of selling an item to someone, we focus on providing items as a service for them to utilize. When you think about create a global empire and doing for the motherland like Africa, then you want to definitely to think circular economy models as opposed to make-take-dispose models. Pop-Up Store as a Service Model If you look at our commercial zones and how dilapidated it look, take a closer look at the buildings that are shut down. The original owners of that building used that building as a “trophy” of their business and thought it would last forever. This is the old way of thinking a business operation would last forever in a fixed building. But the truth is, business do not last forever and now we got empty boarded up commercial buildings in the hood and no economic activity. How about we design these buildings in the hood to be perpetually reusable and renewable from the beginning? We refurbished these buildings in our hood to accommodate pop-up retailing models? When the pop-up retailing model goes out of style, we facilitate moving them out and quickly moving in a new model. We don’t wait for business to fail and let the building go empty, we constantly renew the building structure to accommodate all kind of pop-ups and create a constant cycle of new businesses and excitement in our community. In terms of job creation and economic impact, think of a convention center that host all kind of conferences and trade show exhibitions year round. You have a dedicated staff that can install exhibits and displays for retailers. If a celebrity want to launch their own brand of boutique for the spring, that would be a draw in the hood. Cats in the hood will be hired to install the exhibit, we can use cloud-based software to setup a point-of-sale that also process payments to the cloud or they can use their own mobile tablets with Square and just plug in play. No more one business opening up and closing down creating an empty space in the hood, instead we create a natural lifecycle of the launch of a retailer, the peak of the retailer and facilitate the end of life and accommodate a new retailer to replace. Never again will we need to see empty buildings in our hood because no one ever packed up and left because the building is a reusable component of the hood. Transportation as a Service Model It is widely known owning a car is the biggest contributor to the struggle of the middle class. The cost of owning a car, maintaining a car and licensing, parking fees and tickets makes vehicles nothing more than a revenue generator of business and governments at the expense of the consumer who had the need to own a vehicle to show off as a status symbol. Transportation can be transformed from an ownership to utility service to benefit everyone in the hood. What we can do is create private transportation services that allow the flow of traffic from residential to commercial zones as well as corporate/industrial parks. Most city bus and train services do not provide this level of service in the hood and even so, charge a very expensive rate for that short distance using flat-fees. Imagine if someone has a bus service that is accurate and can charge .75 to get from their community to the commercial zone. Now here is the thing, you can use the same micro-payment model where users can use prepaid cards to pay on these buses or even light rail service. The hood used to have street cars in case you didn’t know that. Another good model is to force the local councilperson to create bike routes. More people can travel on bikes to a commercial center for example, increasing GDP in the hood for spending. Bikes can be rented also to travel when needed. The jobs and revenue opportunities are people who can manage these transportation routes, drive the buses or start the company that rent bikes. In terms of bikes, it is trivial to add GPS and RFID along a route to make sure a rider is safe and not interrupted and if so, an alert is immediately recognized. But the biggest benefit is creating routes for kids to travel back and forth to school, people to travel back and forth to work and recreation all in a tight circle and keep money in people pockets by not owning a car but utilizing transportation on demand. Furniture as a Service Model When many people want furniture, they turn to a rent-to-own firm because they are just starting out, living in an area temporarily and so on. But the entire rent-to-own is the service model where a person is paying for the use of that furniture in their household. But most rent-to-own focus on providing new, generic looking stuff that is overprice. Furnished apartments tend to use dingy looking furniture and unattractive. But there is a lot of people in the hood with old and classic furniture. One of the biggest untapped opportunities is an entrepreneur can create an operation to take used furniture in the hood from families and rent it to others on the family behalf. In other words, if some family have a couch and instead of donate to Goodwill or throw away in the alley, someone can pick it up, refurbish the couch and offer it for rent for $5/week to someone young who just moved into the community. The operation can take $3/week and pay the original family $2/week giving them additional revenue stream. The sharing agreement with households to lease their furniture out is an incentive for people to reuse and renew furniture and create additional income stream. So if a young couple move into the hood with no furniture, they find a vintage dining set that has been refurbished and look good – they rent it for $5/week or $25/month and the original owner of that vintage dining set get a payment of $10/month when their item is rented out, creating a renewal system and personal income stream. Micro-payments and micro-transactions allow small payments to be swept into people bank account or prepaid accounts in a local area so no cash is necessary in this business model. While you think this is crazy, someone providing a couch and dining set and get $20/month is generating income and that’s a lot of money and an ego boost, trust me. In addition, this allow people to move into the hood and get affordable furniture from their community and neighbors and they know when they pay for this furniture, they are empowering someone in their community. Jobs can be created to help move the furniture around and refurbish the furniture. A warehouse or showroom can be established in a commercial center to drive traffic. This model will allow the renewal and reuse of a product in the hood and at the same time, provide revenue in the hood and that revenue, even $20/month can be spent locally in the hood, creating economic empowerment. Clothing as a Service Model We spoke of the clothing model before on the blog where we create a shoe store that allow people to rent the latest sneakers for $10/week or interview suits for $20. The reason why is some clothing is for utility and not needed for permanent ownership. Why own a wedding dress? Why own a suit to defend yourself against a vehicular manslaughter charge? You can just utilize these items for that event and allow someone else to use these items and you keep the rest of your money and don’t pay for manufacturing cost. However, I noticed something about Japan and Harajuku culture. I noticed their stores is full of used clothing and the girls buy the used clothing and you know what they do next? They do their own alterations and modifications to those clothes to create their own style in Harajuku. In other words, they are reusing fashion and not buying new items to look like everybody else who got the same Old Navy top. We can create a retailer in the hood that specialize in used clothing for this same purpose like a Plato Closet but bigger. We can allow people to sell us their clothing and buy new clothing but rent it and go beyond the simple tuxedo, bridal wear setup. They can wear these clothing and return them as a rental or we can sell them used and perform alterations for them to wear as new fashion styles. I remember when my mother would buy these “patterns” packages from the store and sew her own clothes. This is the kind of skill they do in Japan to create unique fashion that sistas can bring back a new fashion scene. There is plenty of economic development opportunities from buying and selling and renting used clothes to refurbishing used fabrics to sew new and existing pattern styles to sell to eccentric sistas and brothas who don’t want to look like anybody else. In fact, it is probably possible to create a new fashion scene like Harajuku in the Black community using this same concept creating an economic driver and the birth of fashion designer houses that can export skills worldwide. How Can We Start Applying the Circular Economy to the Hood? Because of the decades of Black people doing make-take-dispose consumer behaviors, the hood is filled with plenty of materials that can be renewed and reused to create transactions and economic activity without any assistance from the outside world. This is not the same as pawning used stuff, thrift shop but instead create a business model that focus on micro-payments or even virtual currency like Bitcoins and monetize existing items that are sitting around in the hood not being utilized. Think about it – no one need to buy furniture in the hood, they can just rent it for 24 months, none of that crazy installment plan. No one need to have a car just to get broken into, they can take transportation or rent a bike to go to work and other destinations in the hood. We do not need to celebrate the opening of a store only to see it close down after 2 years – we own the buildings and accommodate pop-up store models to keep the commercial district fresh. We don’t need to buy the latest kicks and clothes, we can create unique patterns and rent the latest fashion and return it. That saves a lot of money in our community, allow us to enjoy the use of material goods and it also create jobs, real jobs that can expand out and grow. Entrepreneurs can apply circular economic models in the hood and if they want, they can push the gospel out to emerging markets and economies like China. Cats can create the software to accommodate circular economic models to provide sharing and reuse of items. Because this model moves away from the existing make-take-dispose method, cats in the hood are creating a new opportunity and remove the element of worrying about what some bigot thinks or employers don’t like cats with a felony or whatever. We reuse what’s already in our community, create new revenue models where everybody participate and see the benefit and create an economic ecosystem where we all can do for self, our people, our community and our future.

6 thoughts on “Black Enterprise Mad Because They Cannot Break Down Hood-Based Circular Economics for Brothas and Sistas

  1. great info. That Goodwill model definitely needs to be challenged. I’ve seen some of the prices they charge from product that was donated. I personally have donated a ton of items to them and when I think about it, it is only because it was convenient and my personal network didn’t consist of anyone who needed donated goods. I wonder how many people unconsciously see them as an entity that takes your goods and donates them to others, as oppose to what they actually do – sell them.

    1. Clinton, I think it will be better goodwill if a local community renew the use of goods within their own community and create a monetary stream from it.

      Most people moving to a new area get’s a paycheck and cannot spend that whole paycheck on furniture and have to either do without or rent-to-own furniture. However, there is plenty of furniture in our community that can be refurbished like they do at goodwill and instead of sell, create a revenue stream using technology to pay the previous owner to rent it to a new member of the community.

      This will lower the cost of new families moving into a community and establishing oneself, create revenue streams for existing families in these communities and the money generated, even $10/month can be used to shop at local businesses. But the biggest benefit is what Goodwill does not teach is how we can turn physical items meant for eventual disposal like furniture into a money-producing asset and I think the hood will jump on this circular economic model as well as the clothing model very fast.

  2. Ed,
    I wish someone had the furniture business going right now. People like me, who are not “settled” yet would love to rent furniture instead of dragging it all over the country. I still have furniture in my grandmother’s garage 14 hours away. Somebody needs to get on this ASAP.

  3. Ed, I like the business models you have presented, but would like to know how you would handle “deadbeats” using the rental plan. I understand that you will have them regardless of any business, but specifically, towards renting where there is a high potential for exploitation. For example, to rent and re-rent items how can its care, maintenance, etc. be communicated before a transaction to somewhat guarantee that it is returned in its original state and reused and if not, how can it be rectified? It still is a business model that has to be sustainable to benefit community and owners and if a profit isn’t made, then the community is void once again. Again, great article, you have an awesome vision that I can relate and help contribute to. Thanks!

    1. Dre,

      I think the deadbeat factor is minimal in circular economics as the focus is on service and utilization.

      For example, the original owner had little value on the furniture as it sat around their house and this is the furniture being offered for rent. There will be cost in refurbishing and that refurbish cost is to be recouped through the rental. But this is risk that has to be mitigated like any business.

      Scenario planning is probably what you are looking for – this is having an spreadsheet with formulas where you put in the number of furniture, the number of customers, the amount of revenue and you have in the expense part the “deadbeat” rate – how much you are not getting back. The spreadsheet should give you a scenario on how much it affects the bottom line and the threshold.

      So if you see around 8% defaults, then you have to take measures but what we should not do is make assumption that cats in the hood will get over on the model. Our research show that the hood will participate heavily in genuine collective economics if it is fair and home grown.

      With a security deposit, the original owner can get paid off the security deposit and we can have the renter miss 30 days but they have to make up the security account. We don’t need to be moronic about the business model as again, we are making something (rental revenue sharing) from nothing (zero-value furniture) and because this is within the community, i think people will be a lot more responsible knowing they helping each other.

  4. Scenario planning is exactly how I was thinking in my last reply. I never want to assume anything, but at times they are needed for strategic purposes until more specific data is collected and analysed to reduce risk.

    Business models (in early stages) are full of assumptions until (if taken seriously) tested to prove the assumption true or false. As we both stated, all businesses take loses from unscrupulous people, no matter who they are. A security deposit is a great idea and have no doubt that anyone willing to put a security deposit down on an item will take care of it.

    The “measures”, I guess, is what I am referring to. Those measures are costs as well, especially if renter is AWOL or depreciates the value of the item to zero (nobody wants it/sees value). Strict financial analysis is definitely in order in which specific price points would be needed as well as start-up and operational expenses (such as storage).

    Again, I like the model you presented (a very boot-strapped approach) and don’t think there is nothing moronic at all about analyzing information that we are given, if it is to be used in a meaningful and effective manner. Reading your blog has helped me readjust and rethink a few approaches to some ideas that I have. Thanks again.Great resource

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