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 defense-
industry 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, we’ve all been forced to become entrepreneurs, promoting a business
of one.

The Failure of Large Institutions

It’s 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 mid-
20091 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%

1 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 well-

regarded: 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 can’t 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 don’t have far-flung corporate headquarters. Their CEOs

are not insulated from their customers by layers of bureaucracy. Small
businesses generally don’t have to answer to Wall Street or shareholders.
Freed from top-down corporate mandates, they’re better positioned to
negotiate with clients in distress or find creative solutions to client
complaints. All of these factors contribute to many people’s 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 they’re
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

2http://www.forbes.com/2010/02/17/big-business-government-voters-opinions-columnists-john-zogby.html
3The 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 they’re 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 you’re currently
in, consider this: it may ultimately be safer to go into business for yourself,
building lasting equity in an effort you’re proud of.

Small Business Advantages

Agility. Small businesses have little to no bureaucracy, so they’re 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. It’s hard to turn around a barge; it’s 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,

4 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.

Who’s 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 they’ve been mulling over for
years, or maybe it’s 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.
They’re ready to start earning for themselves, and they’re 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 don’t 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 doesn’t necessarily need is a ground-

breaking 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, there’s 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, back-
office 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 that’s 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.