Saturday, December 6, 2008

So what is the Small Business epidemic anyway?

Here goes my inaugural blog post (I know, it’s about time): There are two economies out there. The one we hear about all the time, every single day, from every conceivable direction. The economy that includes names like Paulson, Bernanke, CitiCorp, Wall Street, GM, Ford, Chrysler, UAW, Congress, etc. And then, there’s the one that we hear virtually nothing about, at least not at a national media level. Obviously, I am referring to “Big” (scoff) Business on the one hand and on the other hand of course I am referring to small business which, interestingly enough, represents the majority of our economy on multiple levels. We’ll get to what that means in just a moment (actually, I’ll grind on that forever).

The sub-heading on this blog really says it all. I am personally and professionally committed to overcoming the small business epidemic. We’ll get to the definition of what exactly that means in just a bit as well. Everyone needs goals, although most people don’t have them, and this happens to be one of mine. I refer to this statement of ostentatiousness, overcoming the small business epidemic, as my BHAG (beehag) or Big Hairy Audacious Goal. The term BHAG was originally posited by James Collins and Jerry Porras in their 1996 article entitled Building Your Company's Vision. They also incorporated it into their book, Built To Last - Successful Habits of Visionary Companies, a great read for sure.

I realize that permanently changing the face of small business in America may seem somewhat brash, but hey, that’s who I am. A manager (small business owner) once referred to me as Brash so, I looked it up and came up with the following definition; aggressively self assertive. Yep, that’s me. Now, I’m not one to apologize for who I am and I certainly don’t mean any offense to anyone but, I will not hold-back, kowtow or bend to conventional wisdom in this medium, or any other. Therefore, I will be forthright and truthful about what I know, what I see and what I hear in support of small businesses or in criticism of them in order to accomplish this goal.

No question about it, I will have plenty to keep me busy for my entire career. I doubt seriously that I will ever accomplish this goal based on conversations that I have had with thousands of entrepreneurs and small business owners over the last ten years or so.

Overcoming the Small Business Epidemic will require a radical new way of thinking about business and here’s why. As I mentioned earlier, small businesses in this country, not big businesses, represent the majority of our economy on several levels. According to the SBA – Small Business Administration small businesses:

1. Represent 99.7 percent of all employer firms!
2. Employ about half of all private sector employees
3. Make up 97.3 percent of all identified exporters…
3. Have generated 60 to 80 percent of net new jobs annually over the last decade
4. Create more than half of all non-farm private gross domestic product (GDP)

Here’s the gist of it; these small businesses that have such a marked and profound impact on the US economy, employing the majority of our workforce, are failing at an alarming rate! More statistics from the SBA: In 2007 there were an estimated 637,100 new businesses started. Approximately 560,300 small businesses were closed with approximately 28,322 ending in bankruptcy. Do the math… And here’s the epidemic part. It’s been this way for a very long time and it’s getting worse!

Here’s something else. Again according to the SBA a full one third of new businesses close their doors within the first two years. Fifty six percent close their doors after just four years and sixty nine percent go out of business by year number seven.

In summary, our economy is dependant to a very large and growing extent on small businesses, more than half of whom never make it to their five year anniversary. This as I’ve said is a problem of epidemic proportion and demands attention. I will endeavor in this blog to provide information, tips, methodologies, concepts and plans, resources, contact information, success stories and critical thinking in an effort to overcome the small business epidemic in America. I thank you in advance for your interest and consideration and welcome your comments – It’s going to be an interesting trip!

3 comments:

  1. And now you know what I intend to devote at least 67% of my billable hours on, and why. ;D

    Great inaugural post!

    Welcome to blogville, Charles.

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  2. Bravo! Great post.

    Why do so many small businesses fail?

    How about this for a brief opinion (your milage may vary):
    Because, although the U.S. is supposedly a "capitalist" country, the teachers in our schools subscribe to and teach "socialist" mentality. Most of our teachers have never worked in the "business world" (they went right into academia after getting their degree from a different academic institution). Students (who later become "citizens") learn to sit in their little chairs and behave themselves, to be afraid of failure, to toe the line, to do what the "authority" at the front of the room tells them to do, and not draw outside the lines. Later, they get *jobs* that require them to sit in their little cubicles, behave themselves, be afraid of failure (so they never do anything creative), toe the line, do what the "authority" (their boss) tells them to do, and not "think outside the box". These folks are ill-prepared to enter the business world other than as "employees".

    Most of the poor souls who do try to break away from the cubicle world to start their own business (whether it be a sole-proprietorship homebased business or a S-Corp employing staff), face almost insurmountable bureaucratic paperwork (federal, state, county, city, regulatory agency, etc.) and other issues. Most haven't had any "business training" (not that the "theories" taught in college-level courses would be worth much in the real world anyway.

    So, things like "balance sheets", "profit-loss analysis", "business plan", "employment guidelines", and other critical business concepts are lost upon them. "Goals"? Wow.. Now that's a concept.

    Then, our economy is whip-sawing folks such that they are scrambling to get into home-based businesses in droves--and scam artists take advantage of this to really fleece folks. Once folks have been burned a few times by the scam artists, they just crawl back into their box and refuse to try anything else ever again.

    The economy is hurting right now. Rather than bailing out the automakers, force the CEOs to contribute some of their obscenely huge "profits" and "income" based on their poor decisions NOT to bail out their failing factories, but to retrain their laid-off workers to do other things--like running a business. The big corporations are letting their cubicle workers go in droves. Where do these folks go to get work? Where do they go to bring in an income? Even the media companies are canning much of their employees. And sending the work overseas (aka "offshoring") to save a buck. The quality of what they get will suck, but hey, they're saving a buck for their "stockholders". The only advantage of being a writer is that when you get canned, you "hire yourself" and create some valuable information product to sell. There's a trick to this as well... (as with any business)--and there's a steep learning curve. Ah well.. that's another story.

    Anyway, this is my rant on what's wrong with small business and the economy. Partly has to do with the general education of those getting into business, partly because of unlearned business practices, and partly because of the whole perception and attitude of business by the government and the rest of the population. Sorry about the rambling... If I had a few days to work on this it would have been more focused.

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  3. Congratulations on starting the blog.

    That's a phenomenal goal you've set for yourself.

    You're right. For all we keep hearing about bailouts for financial institutes and car makers, we don't hear much coming out about helping out "small" businesses.

    I've always worked with small to medium sized businesses to develop better ways of doing things. Unfortunately almost all small to medium businesses have to be tied to bigger financial entities and so when they are hurting all of the small to medium businesses hurt too.

    You have to wonder if there aren't other ways to help them out.

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Please give me your comments. I will look them over and post them as soon as possible! Thank you!