January 24, 2017

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Too Big To Innovate

In my post earlier this week, I described small businesses as a vital part of our economy, and integral to innovation. I also presented some startling facts demonstrating small businesses’ role in innovation.

Well, I’ve got one or two more startling facts, if you’re interested.

This comes from an August entry on the New York Times’ Economix blog, entitled, “America’s (Very Small) Small-Business Sector,” written by Catherine Rampell:

The Center for Economic and Policy Research, a liberal research organization in Washington, recently published a study looking at the rates of small business employment around the world.

The finding: “By every measure of small-business employment, the United States has among the world’s smallest small-business sectors.”

Rampell explores a number of potential reasons for this, everything from Health Care to Income Taxes.

Could be, could be.  It could also be, as I’ve suggested before, that people are reluctant to start businesses simply because they’re afraid to fail.

Then again, maybe people who are afraid to fail shouldn’t be going into the self-employment game in the first place. From the research I’ve done for Why Didn’t I Think of That?, I’ve found that true entrepreneurs, while they can vary in almost every other way, have at least one thing in common: Their willingness to endure failure, and to “keep on keeping on” until they find success.

And failure does come. Most of you are probably aware of the astonishing failure rate for startups.

I’ll admit, I’m curious– Any of you who have ever owned a small business and had it fail, how do you feel when you see the government stepping in to prop up some of these incredibly bloated, “too-big-to-fail” corporations?

Here are a few more (not necessarily rhetorical) questions:

If small businesses account for more than 90 percent of innovation in so many industries, and if America has such a pathetic looking small-business sector, at least compared to the rest of the world, what does that mean for us as a country? Would growth in the small business sector equate to an increase in innovation? Would it have any effect on the failure rate of start-ups?

Also– Is the government doing enough to help small businesses? Or are they just doing too much to help big businesses? Both? Come on guys, I want to hear what you think. Post a comment below letting me know what you think. And feel free to email me anytime at bc@thinkofthat.net.

I’ll leave you with this thought, from Mike Clough’s blog entry, “America Runs on Small Businesses.

I believe it is small business and innovation that will breath new life into our economy; not businesses that are too big to fail. The big question is what kind of impact it would have on the American economy if the billions of dollars given to the automobile manufacturers that are too big to fail were made available to our small businesses. Sure there might be a lot more business that start and fail. But, there would also be a lot more innovation.

Until next time…

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  • http://bestbizpractices.org Mike Clough

    Benjamin, thanks so much for blogging about this topic and for mentioning my blog in your post.

    I am afraid that much of what I see our government doing will slow our economy at a time when we desperately need growth. Although I choose to believe that our elected officials have the best of intent (“The highway to hell is paved with good intentions.”), I also believe that there is only one thing that will turn things around (remember the “one thing” in the movie “City Slickers”?).

    That one thing is job creation and it seems to be the last thing our elected officials are really focusing on. With low unemployment, there is more spending by consumers which stimulates more jobs. It also goes a long way to increasing home values as there will be fewer foreclosures. It increases our governmental tax coffers (without raising taxes) and reduces our national debt. If you really sit down and take the time to think about it, your readers can come up with a long list of problems that meaningful job creation will solve.

    This being the case, combined with the fact that over 70% of all jobs in America are created by small businesses, has caused me to take on the cause of small business success. I have volunteered for SCORE (http://www.score.org) offering free consulting to small businesses and started my own blog that you mentioned (thanks for that) to help small biz. I highly recommend to others that are in a position to do so to volunteer their time as well as there are very few causes that can turn the economy around faster than focusing our efforts on helping small biz succeed.

    Thanks so much for doing your part.

    Mike Clough
    http://bestbizpractices.org
    http://twitter.com/bestbizpractice

  • http://www.thinkofthat.net/blog benjaminchristopher

    Mike-

    Thanks so much for the comment. With 70% of jobs being created by small businesses, as you pointed out, it seems crazy that small businesses aren’t getting more grants, aid, or even attention.

    It seems pretty intuitive, to me at least, that it’s not the giant corporations that will get this country out of the recession. It’s job creation, thriving small businesses, and courageous, smart entrepreneurs.

    You’ve got a great blog, (http://bestbizpractices.org) and I recommend everyone reading this has a look at it.

    Best,

    B.C.

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