It seems as though you can’t turn on the television or pick up a magazine without coming across a politician or pundit extolling the virtues of small business and the role it plays in the U.S. economy. It’s easy to see why small business is such a popular topic of conversation. As of today there are about 27 million small businesses in the U.S., 6 million of which actually have employees. These businesses account for over 50% of total U.S. GDP and 75% of the net new jobs in the U.S.
It’s clearly a big deal, but I for one, think that this renewed focus on small business is only the beginning. There is strong evidence to suggest that we’re witnessing the beginning of a major social and economic shift. As a result, I’ve become convinced that while the 20th century was dominated by the Fortune 500, the 21st century belongs to the Fortune 5 Million.
There are three key drivers of this shift.
1. Structural changes in the economy
2. Increasing interest in niche products
3. Ever lowering barriers to entry
Structural Changes in the Economy
We lost over 8 million jobs during the great recession, and the sad reality is that many of these jobs are never coming back. There are two reasons for this. First, we simply have the wrong people in the wrong places with the wrong skills. Second, businesses are becoming more efficient. In some respects, the recession simply hastened the inevitable: the dismissal of millions of people whose skills were displaced by advances in technology and international trade. This leaves us with a pool of skilled, experienced individuals who are positioned to become “accidental entrepreneurs" by creating businesses out of necessity.
Increasing Interest in Niche Products
Next, we have a dramatic increase in demand for niche products and services. The vast reach of the internet as a distribution channel and low-cost advertising through social media has made it possible to cater to the most obscure tastes.
Ever Lowering Barriers to Entry
Finally, traditional barriers to entry are almost non-existent because of the relentless advancement of technology. In the past, if you wanted to start a business the difficulties of incorporating, developing a storefront, and getting in front of customers was a herculean task. Now, a motivated entrepreneur can get up and running in a matter of hours because of innovative technologies such as Etsy.
But there’s a problem...
The trouble is that entrepreneurial ventures, and small businesses in particular, have a nasty habit of failing. In fact, over half of small businesses fail in the first five years. It’s a huge problem that’s only set to grow as we see an influx of new, unprepared entrepreneurs come into the economy.
This problem isn’t an insurmountable one. In fact, I believe that by focusing our attention and resources on three simple initiatives, we can ensure that we prepare current and future entrepreneurs for long-term success.
We start off by working to include basic business education as part of students core curriculum throughout their education. We have to ensure that the education we provide to our students prepares them for life in the real world. We also need to provide established business owners with the educational resources to get them the information we need, when they need it, quickly and easily. Instead of forcing entrepreneurs to conform to structured content, we need to provide resources that structure the content to conform to the entrepreneur.
Next, we need to encourage innovation and development in the field of small business technology to help entrepreneurs do more with less. Small business owners must be empowered to handle their sales, marketing, accounting, and finances with ease and understand how these functions interact. The Fortune 5 Million will be comprised of an educated workforce empowered by technology, working independently to create exceptional value.
Finally, we must change our cultural expectations, particularly in regards to careers. In the past, we’ve encouraged people to build lifelong careers at a single company in one particular field. Success was defined by simply meeting the expectations of bosses and keeping one's head down in order to advance over time. In doing so we’ve fostered a tragic result - passive, mediocre employees could find career success simply by going through the motions. No longer: the economic realities of the new normal require a different approach. We are all entrepreneurs now.
Fostering a culture of entrepreneurship across all demographics will redefine how we as a society define success. A focus on individual motivation, financial literacy and business acumen will become the new norm, ushering in a period of exciting economic development.
The Future Belongs to the Fortune 5 Million
We know that the world is changing.The old assumptions of what we should expect in regards to our careers and how we define success have gone out the window. Whether we like it or not, we must all be entrepreneurs now.
Yes, there are challenges that we will face along the way to this brave new economic world. But if we strive to rethink the our approach to education, continue to develop and adopt new technologies, and reaffirm our cultural commitment to the entrepreneurial spirit that made America great, we can and will overcome those challenges.
The future belongs to the Fortune 5 Million and I, for one, can’t wait.
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Chris Myers is the co-founder & CEO of BodeTree, the leading support tool for small businesses. Learn more at www.BodeTree.com.