Comparison of economic impact based on size of business
Back in 1999, McKinsey & Company recognized the value of small business in an article entitled, "Think Small, Win Big" by Bob Davis and Terri Austerberry. What they discovered was that two-thirds of the jobs were created by 98% of the companies, contributing to 33% of the Gross National Product. Oh, and did I mention that these companies had fewer than 100 employees?
2007 SBA Report on Small Business
In a Small Business Administration report entitled, "The Small Business Economy For Data Year 2006 - A Report to the President", more than half of the 20 million small business owners spent most of their time producing the goods and services themselves and managing the daily operation of their businesses. These are hands-on entrepreneurs, 64% of which were majority owners. A little over a quarter of them had employees.
In other words, small business was big! before the recession. What about now?
We happen to think small on the topic and here are five reasons we believe small businesses will grow even faster coming out of the recession than they did before.
- Accessible Global Markets - It has never been easier to connect with anyone anywhere in the world, and social networks are just one example. News traves fast on Facebook, but getting "liked" is only the beginning. Connections can lead to collaborations, selling each other's products and services, and developing new ones, online, in real time.
- Digital Distribution - Sell it in an app store. You don't even need to have your own storefront or e-commerce site. We may not be paying employees in digital currency yet, but it is possible. Without barriers to entry, more and more good ideas can be tested in real-world situations and all those 99 cent apps, books, songs and who knows what else can add up to real money.
- Cyber Terrorism - Because of all the vulnerability to attack online, it is becoming safer to do more and more of your business in the cyber-sphere. I know it sounds crazy and risky, but it is a manageable risk today, and it will be even more so in the future. Too much is at stake. To be safe, get insurance.
- The Ever-Shrinking Attention Span - We all don't suffer from attention deficit disorder (at least not yet), but we are learning to process multiple streams of messages in fragments. We don't read as much as we absorb, so even here, less is more and more is bad.
- Old (Technology) is Out - While the old way of doing things may be gone, the experience of doing things the old way isn't. Most of the small businesses are being started by what we used to call "Senior Citizens" who are now the new entrepreneurs. Why? They have the time, some money, the knowledge of working in teams with other talented people, and they have the commitment to follow through on their plans. Retirees don't stay retired anymore, so it is possible to team up with someone who is a storehouse of knowledge and save all that time trying to learn what only experience can teach.
So, what does this all mean?
In the Nineties, big businesses saw the Internet as an opportunity to cut costs by shipping work to lower cost markets. Those markets are now growing, developing strong middle classes, demanding higher wages, becoming less attractive. But that's not all. By opening up the global platform, big businesses opened the door for entrepreneurs to compete against the Goliaths. With lower barriers and lower costs for all, niche markets take on a whole new dimension. We believe the future of innovation, quality products and services and economic growth lie in globally connected small businesses.
Won't you come play in the global sandbox with us?