Not so long ago, scholars and policy makers were worrying about the potential of small business to survive. The turbulence in the technology sector and the demise of many dot.com start ups heightened concerns about whether small companies can compete with big business. However, entrepreneurship and small business including high tech start ups are vital; dynamic and increasingly important parts of the US economy. Small business grew from 19 million in 1992 to 23 million in 2002. These firms account for a tremendous portion of the goods and services provided. Another interesting finding is that there are approximately 10 million Americans who make their living as solo professionals, those working out of their homes providing services to other companies. Entrepreneurship in other countries is also booming and a list of the most entrepreneurial countries in 2002- 2003 is intriguing. A project monitoring entrepreneurial activity around the world found that 29.3 percent of adults in the age group of 18 to 64 in Uganda for example, are either starting up managing new enterprises. The percentage in Venezuela is 27.3 percent and in Thailand, 18.9 percent India, Korea, Brazil, Mexico and China all had higher rates of entrepreneurial activity than the United States rate of 11.3 percent. Japan has instituted a new law that makes it possible to start a business with capital of just one yen. Structural reforms in Russia have spurred a jump in small business formation in that country and one economic study predicts a doubling of small business as a part of Russia’s gross domestic product between the years of 2004 and 2009.
There are a number of reasons why small business is such a dynamic part of today’s economy. These include economic changes, globalization and increased competition, advancing technology and new market niches.
Toady’s economy is like a fertile soil for entrepreneurs. The economy changes constantly providing opportunities for new businesses. For example, the demand for services is booming, and 97 percent of the service firms are small, with fewer than 100 employees. Since government deregulation removed restrictions that inhibited small business formation in the trucking industry thousands of small trucking companies have been started. In addition, long distance freight trucking has become the biggest industry for one person businesses accounting for about $12.5 billion. The trend towards outsourcing work to companies that can do it cheaper has also given entrepreneurs new openings, Ogio a small company based in Bluffdale, Utah, where engineers and manufacturers innovative golf bags for Callaway helping the smaller firm’s sales sky rocket from $8 million to $47 million in five years.
Globalization and Increased competition:
Even the largest of companies can no longer dominate their industry in a fast changing global marketplace. Globalization demands entrepreneurial behavior – companies have to find ways to do things faster, better, and less expensively. Large companies are cutting cost by outsourcing work on smaller businesses or freelancers and selling off extraneous operations. Globalization and increased competition also gives an advantage to the flexibility and fast response that small business can offer rather than huge companies with economies of scale.
Rapid advances and dropping prices in computer technology have spawned whole new industries, as well as entirely new methods for producing goods and delivering services. Unlike technological advances of the past these are within the reach of companies of all sizes. The explosive growth of the internet has created tremendous opportunities for entrepreneurs.
Other technological advances also provide opportunities for small business. Biotechnology aided by recent work in genomics is a growing field for small businesses. Five Prime Therapeutics for example developed a protein screening process that can accelerate the development of hit drugs for diseases like cancer, Type 2 diabetes and rheumatoid arthritis research into micro electro mechanical systems (MEMS), tiny machines used in numerous applications from biotechnology and telecommunications to the auto industry is being conducted primarily by small companies.
Source: New Era Management