Future of Small Business

I had the pleasure of participating this past fall in a day long discussion conducted by the Institute for the Future on the future of small business. The first installment of the final report that began with that incredible day of dialogue has now been released. The Intuit Future of Small Business Report provides a fascinating look into the future of our entrepreneurial economy. I encourage anyone who is a small business owner, wants to be a small business owner, works in a small business, or does business with small businesses — OK, basically everyone — to read the full report.
The report begins with a discussion of three consecutive eras of transformation that have occurred in the US over the past 40 years — the social transformation of the 1960s and 1970s, followed by the technological transformation of the 1980s and 1990s, and finally the entrepreneurial economic transformation that began around 2000 and is still underway. Each transformation played an important role in the subsequent one, and together they have fundamentally changed the culture and economy of the US.
Three trends that are shaping the future of small business are examined in the first installment of this report.
The Changing Face of Small Business
There are some distinct demographic patterns in the current entrepreneurial economic transformation. Two age groups are showing significantly higher entrepreneurial activity: the Entre-Boomers and the Generation Y, or what I call the Entrepreneurial Generation.
For the Boomers, entrepreneurship is a form of “un-retirement.” According to this report, only 30% of Boomers mention financial needs as their primary reason to keep working. Personal fulfillment and longer production working lives seems to be a major drive behind their entrepreneurial propensity.
The Entrepreneurial Generation tends to reject the corporate world, favoring instead the independence and flexibility that an entrepreneurial career can create. Interestingly, they also tend to believe that an entrepreneurial career is more secure.
The changing face of small business is also reflecting more women entrepreneurs looking for the flexibility that business ownership can create — mompreneurs, as some call them. It is also being shaped by a growth in immigrant entrepreneurs.
Just as in the last great entrepreneurial age of the late 1800s, immigrants are playing an important role in this economic transition. Many immigrant entrepreneurs are pursuing a global approach with their small business.
The Rise of Personal Business
There are now about 20 million “self-employed” Americans. These are small business without employees. The explosion of this segment of our economy comes from several causes.
1- The traditional employment contract is fading away for many professionals.
2- Many prefer the life of a “free agent”, taking their skills from job to job.
3- People want more flexibility to create more work-life balance and see self-employment as the ticket to this change in lifestyle.
4- The accidental entrepreneurs, who did not plan to be self-employed, but come to that point through unplanned events in their lives.
The Emergence of Entrepreneurial Education
This trend is near and dear to this old professor’s heart. The IFTF authors say that entrepreneurship education will continue to expand well beyond the 1,600 US universities now offering courses. They see more programs embracing not only the high growth entrepreneur, but also small business owners. More attention will be paid to undergraduate students seeking entrepreneurship education. Several schools, including us here at Belmont University, are seeing a growing number of new freshman coming to school with businesses already operating. Entrepreneurship education is also moving into the trade schools, community colleges, and adult education programs.
More younger children will be exposed to entrepreneurial careers in primary and secondary education. This will create a generation that when they enter the work force, will be much more attuned to careers built on entrepreneurship.
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Thanks to the folks at Intuit and at IFTF for allowing me to be a part of this exciting look into the future of small business. I look forward to seeing the future installments of this report.