The Decade of the Entrepreneur

Jeff Connally, Professor at the Acton MBA in Entrepreneurship and President and CEO, CMIT Solutions

Over the past 40 years, the American economy has undergone a massive restructuring and American workers have weathered extraordinary amounts of change. From 1970s stagflation to the roaring 80s, through the defenseindustry bust and the Internet boom, through wars and the worst downturn since the Depression, we have lived through tumultuous times, with uncertainty the only constant. In the most recent recession, it became painfully apparent that former pillars of the economy had lost touch with the market. The Big Three automakers fell behind their overseas counterparts in product innovation and workplace management. The mortgage and banking industries lost their focus on helping individual consumers, instead creating abstract financial products that eventually crashed the financial system.

These disconnects between large institutions and their customers have had devastating effects on both the economy and on the national morale. Millions have been left jobless for months or even years. Baby Boomers were driven out of retirement, or forced to delay it, in order to recoup lost savings. The labor market, already struggling to accommodate a huge imbalance between the number of jobs and the number of job-seekers, has not been kind to mid- and late-career professionals, who have sometimes had to settle for dramatically reduced wages or lower-tier positions if they are to have jobs at all.

This latest injection of turmoil comes on top of a long-term trend away from employment stability. Very few people can expect to work for a single employer for the length of their career and then retire with a pension. In a sense, weve all been forced to become entrepreneurs, promoting a business of one.

The Failure of Large Institutions

Its no surprise that amid all this uncertainty, many Americans feel let down by the large institutions that used to provide some measure of macroeconomic stability. Recent polls show a marked lack of confidence in large businesses, large banks, and Congress. First, a Gallup poll from mid20091 shows the percentage of respondents with a great deal or quite a lot of confidence in various institutions:

The military
Small business The police The church/Organized religion The presidency

Banks
Organized labor HMOs Congress Big business 0% 20% 40% 60% 80% 100%

http://www.gallup.com/poll/121214/americans-confidence-military-banks-down.aspx

A Zogby Interactive poll from the first quarter of 20102 reflects a similar sentiment. This graph shows the combined percentages of respondents who have a lot or some trust in various institutions. Once again, the federal government and big banks garner little trust.
Small business Local bank Colleges

Organized religion Federal government

Big banks Labor unions Wall Street News media

0%

20%

40%

60%

80%

100%

In both of these polls, one American institution is still overwhelmingly wellregarded: small businesses. Why this high degree of trust at a time when people are unlikely to trust almost anyone? Because small businesses never lost touch with the market. They cant afford to. Small businesses develop an intimate understanding of their customers, through continually searching for and filling customer needs that evolve over time. Small businesses dont have far-flung corporate headquarters. Their CEOs are not insulated from their customers by layers of bureaucracy. Small businesses generally dont have to answer to Wall Street or shareholders. Freed from top-down corporate mandates, theyre better positioned to negotiate with clients in distress or find creative solutions to client complaints. All of these factors contribute to many peoples sense that they are better understood, and better served, by a small business than a larger one. Additionally, small businesses likely enjoy high public regard because theyre one of the most reliable generators of jobs in a recession. For example, in the four years following the 2001 recession, firms with fewer than 20 employees created 5.1 million jobs. In that same time period, the biggest businesses those with 500 or more employees shed 3.2 million jobs.3 According to the
2 3

http://www.forbes.com/2010/02/17/big-business-government-voters-opinions-columnists-john-zogby.html The Small Business Economy: A Report to the President. SBA Office of Advocacy, 2009, p. 104. http://www.sba.gov/advo/research/sb_econ2009.pdf

Small Business Administration, during the past two recessions, firms with fewer than 20 employees were the only ones with positive net job growth.4

Small businesses have always been the engine of the American economy. And theyre one of the few institutions in which people still maintain a high level of trust. In a turbulent economy, risk is everywhere. But while uncertainty may make you want to cling to whatever position youre currently in, consider this: it may ultimately be safer to go into business for yourself, building lasting equity in an effort youre proud of.

Small Business Advantages

Agility. Small businesses have little to no bureaucracy, so theyre better able to reconceive a marketing strategy or formulate a new approach to a problem without having to go through the management layers that are present at a larger business. Its hard to turn around a barge; its easy to turn around a kayak. Personal relationships. Customers of big businesses have to deal with call centers, confusing Web sites, and an unending rotation of customer service personnel. Customers of small businesses see their vendor in person, frequently deal with the owner, and often develop a relationship with a single point of contact. Better service. In a commodity business, larger companies will use their buying power to gain price advantage. But in a solutions-oriented business,

Ibid, p. 10.

tailored recommendations and custom implementations from a small vendor will win over the cookie-cutter approach of a larger vendor. Trust and confidence. Through frequent, one-on-one contact and an ability to consistently deliver the best solution to the individual customer, small businesses strengthen their position with both the customer and the community at large.

Whos Ready to Be an Entrepreneur?

Another set of data supporting this comes from the Ace Hardware Survey of Small Business Entrepreneurs. As the chart below from the study shows, small business owners feel they have more job security than being an employee by almost a 2-1 margin.

The Decade of the Entrepreneur will present huge opportunities for individuals who are finally ready to strike out on their own. Maybe a corporate restructuring has hastened a decision theyve been mulling over for years, or maybe its simply the right time to make the leap. Whatever the case, owning a small business can be the right decision for people who have: A strong desire to be their own boss. Many people considering business ownership have spent their careers making other people a lot of money. Theyre ready to start earning for themselves, and theyre ready to reclaim control over their schedule and priorities. A passion to help others. Small business owners, particularly those in a consultative or service-oriented field, need to derive a sense of genuine satisfaction from helping their clients. They thrive when they can see the positive effects their work has on the day-to-day lives of others. An ability to build relationships. The best entrepreneurs are curious and truly care about the success of their potential clients. They dont have to be

social butterflies; in fact, sometimes the most successful business owners are introverts. But their sincere interest in their clients makes them able to establish fruitful, long-term relationships. One thing a small business owner doesnt necessarily need is a groundbreaking invention or a radically new approach to a problem. The amount of energy, time, and expertise to create a business from scratch is enormous. If an individual is attracted to the relationship-building and operational aspects of small business ownership rather than the development of a product, theres simply no need to invent a better mousetrap. By joining a franchise organization, individuals can enjoy all the benefits of owning and running a business with a head start in the development of products, backoffice systems, and sales and marketing processes that could otherwise take years (and a significant amount of cash) to build. Franchising gives new business owners a tremendous organizational and operational advantage over sole proprietors. Particularly in the technology field, in which product development is a full-time job and collaboration is a necessary element of problem-solving, a franchise can provide the technical resources and the support of a nationwide network of entrepreneurs thats a critical component of success. As we say at CMIT, The strength of the wolf is in the pack, and the strength of the pack is in the wolf. Now might be the time to join the pack.

CMIT Solutions franchise owners leverage the training, marketing, and technical support of a respected national brand to help fellow small business owners take the worry out of IT. Founded in Austin, Texas in 1996, CMIT Solutions has grown into an award-winning national IT services franchise with approximately 125 locations across the country. CMIT franchise owners give the company consistently high ratings in the annual Franchise Research Institute Survey, an independently administered survey that measures owner satisfaction. To learn more about the company, please visit www.cmitfranchise.com. 500 North Capital of Texas Highway Building 6, Suite 200 Austin, Texas 78746 (800) 710-2648
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