Wednesday, September 21, 2011

American Small Business Entrepreneur

I love the American small business entrepreneur.  Always have.  By which I mean those millions of self-starting, self-reliant people who jump out of the (supposed) safety net of the weekly paycheck and opt to take a less certain economic path for myriad different reasons.  They get where they are going through very hard work, long hours and much worry, often combined with bursts of creative thoughts and methods.  My adoration may come as a surprise to some of my regular readers, given my frequent criticism of corporate America.  But I am differentiating between big mega-corporate America versus our dedicated band of small business owners and legions of self-employed workers.

We often hear of the “1000 new jobs” and the “10,000 new layoffs” from the big guys.  But the truth is that it is estimated that over 50% of Americans work in small businesses or are self-employed.  This includes the mom & pop retail stores, the franchisees, the individual tradespersons, and the artists and crafts people who toil independently in their studios.  Given that around 50% of new small business startups fail within 5 years, the continual never-ending march of idealistic and optimistic people into these independent business ranks is all the more amazing if not inspiring.

We repeatedly hear that American economic prowess has been, and likely will be, built on innovation.  In our earliest centuries, innovation came from colonizing, pioneering and settling North America, which gave almost everyone (African-Americans and some other minorities regrettably excluded) potential entry into a new “middle class.”  In the late 1800s/early 1900s, it was manufacturing innovation – steel, automobiles, textiles, oil, transportation.  In the post-WWII 1900s, it was computer technology, science and communications innovation.  And in the run-up to this century, it was financial innovation – which unfortunately has suffered from periodic bouts of collapse due to excessive greed with no “hard” products or services to fall back on (e.g. the collapse of the S&Ls in 1980s; the’s of 2000; and the subprime mortgages in 2008→2009).

While there are some exceptions (e.g. 3M, the old Bell Labs), most innovation does not come from big corporate America.  The big guys are great at volume low-cost production and broad-based marketing.  But they are too cumbersome and over-organized to support – much less encourage and nurture – the lean, fleet-footed, non-standard right-brain thinking that true innovation requires.  America’s innovation has been very much a bottom-up cascade of “the next big thing.”

The American folklore of the self-made man, the tinkerer building the better mousetrap, is all very real.  Thomas Edison, Alexander Graham Bell, and the Wright Brothers worked virtually alone in their labs producing what others could only dream of.  They spawned the spirit of Steve Jobs (Apple), Mark Zuckerman (Facebook), Larry Page & Sergey Brin (Google), and Bill Gates (Microsoft).  Yankee Candle, Chick-Filet, and Kentucky Fried Chicken all started as a 1-person shop that grew to be a major national corporation.  Advances in medicine and drugs are far more likely to come from scientists toiling in their individual university research lab than big corporate facilities – even if those university labs are funded by corporate or federal government (NASA, NIH, NIS) dollars.  The Sedgway; the many TV descendents of the classic 1950s Veg-A-Matic; Oreck’s twisting and turning rollerball vacuum cleaner; endless new gadgets in kitchen and hardware stores to solve needs we never even knew we had.

But it was not just innovation that is the province of the small entrepreneur.  It is the countless local people who provide the daily repetitive services that keep us all going, with or without occasional bursts of creativity.  Our day care centers; our local restaurants; our dry cleaners; our florists.  It is the army of carpenters, plumbers and electricians that opt to operate independently to maintain our homes.  As the 2009 debate about the Detroit auto bailout reminded us, it was not just about the GM/Ford/Chrysler corporations.  It was also about the innumerable local car dealers, auto parts stores, small parts manufacturers, service mechanics and car washes that keep hometown economies functioning – a network of millions of people supporting the thousands of “Big 3” automobile manufacturing workers.

Small business and individual entrepreneurs are still the backbone of our American economy, even though they struggle against difficult odds, artificial barriers to their success, and unfair (if not illegal) trade practices from the big corporations who seek to drive them out while they simultaneously proclaim the virtues of free enterprise.  Yet somehow the small farmer continues to grow things that we can buy at farmers markets and produce stands instead of chain grocery stores.  And the small manufacturer continues to make things even while big government, businesses and individuals frustratingly buy comparable (or less) products from China and other low-wage countries.

As ABC News has commendably pointed out in its “Made In America” series of reports, if Americans bought comparable (quality and price) products that were simply made here rather than overseas, we could literally reduce U.S. unemployment by millions of workers.  Help begins with self-help.  We need to support local businesses and entrepreneurs, whether down the street, across town, or (thanks to the internet) across the country.

I am lucky to have many friends and acquaintances who have taken the entrepreneurial route.  They all have my profound respect and admiration for their courage and efforts.  It is to acknowledge them that this blog posting is dedicated.