Is Small Business Getting Discouraged?

Small businesses – defined by the Small Business Administration as those with 500 or fewerbigstockphoto_Employee_1344082 employees – have long proven to be heroes in our struggling economy. They account for almost two-thirds of all net new job creation according to an article published in the McKinsey Quarterly in November 2012 by John Horn and Darren Pleasance.

But, there are signs that these entrepreneurial entities are growing discouraged by the country’s weak economic recovery, and not generating nearly as high a percentage of jobs as they did back in 2007. To top it all, younger entrepreneurs are showing up in much fewer numbers, which doesn’t bode well for the next generation of serial entrepreneurs and risk-taking, startup venture leaders.

The good news is that although the majority may be struggling, a minority of small businesses are characterized by very high growth – some even doubling their revenues and employment every four years. They exist in every industry sector and across a broad geographic spectrum. Up until now it’s been almost impossible to predict which small businesses will end up as high growth entities, and which will fail – as a large number routinely do. There is several things that can help improve the mood and morale of small businesses:

  • Increase awareness of how larger companies in the private sector can support and nurture smaller businesses – many already do, it’s not just that well known.
  • Use effective tools that predict business growth and improve performance, such as the Growth Curve Strategy model with it’s Growth X-Ray Process. If properly understood, and implemented at an early stage, this model can indeed predict which small businesses are most likely to succeed.
  • Spread the word about mentoring – sharing the skills, expertise and knowledge that older entrepreneurs have gained with those starting out.
  • Encourage the inclusion of small high-growth businesses in traditional supply chain activities.
  • Re-orient venture capital to the earlier stage businesses that are finding it harder to access avenues of capital.

If we really put our minds to it – and why wouldn’t we want to find ways to strengthen our economy – there are so many ways to help.