Someone once wrote that, “Small business isn’t for the faint of heart. It’s for the brave, the patient, and the persistent. It’s for the overcomer.” When you consider what small business owners face, it is no wonder that only the overcomers succeed. While many large businesses have the luxury of embedded capital, tax write-offs, and economies of scale, small to medium-sized businesses inhabit a space that is very sensitive to the increasingly prominent threat of technological disruption and the unpredictable peaks and troughs of the business cycle.
Technological disruption seems to be ubiquitous both as a topic of discussion and as a presence in the marketplace. For small businesses, technological disruption tends to manifest itself in one of two ways. First, technology has increased connectedness across the world, which has created an arena of heightened competition over prices and increased specialization of products. Technology allows consumers to compare prices instantly and find specific products from anywhere in the world. While this has a multiplicity of positive effects for consumers, it simultaneously mandates that small businesses actively seek to make themselves known through online marketing, an endeavor that can cost substantial time and money. Second, technology has rapidly created a range of new business practices and new markets that require rapid entry. Although there are many ways one can witness this seismic technological shift, the performance of the tech industry may be the best indicator, as the five biggest tech stocks in the U.S. have a combined market capitalization of over $2 trillion.i Small businesses may find it substantially more challenging to quickly adapt to changes in their current market or enter new markets and may find that their previously occupied market space has been deemed antiquated and unnecessary.
In addition to the challenges posed by technological disruption, business cycles prove to be an additional obstacle for small businesses to overcome. Business cycles can both drive growth and wreak havoc on companies; unfortunately, it is extremely difficult to forecast which possibility will unfold, creating an inherent uncertainty for businesses. In the most recent recession from late 2007 to mid-2009, few economists predicted the severity of the downturn which ultimately impacted hundreds of thousands of businesses. The graphic below depicts U.S. aggregate production levels over time; the gray bars indicate recession periods, and the blue line indicates percent growth over time.
The sheer volatility demonstrated in the chart above is enough to make any business leader or owner nervous, but it is especially troubling for small businesses who lack the luxury of easy access to capital in times of financial strain.
Despite the challenges, small business owners continue to overcome. In a report by Constant Contact, 84 percent of small business owners surveyed said that, if given the opportunity, they would start up all over again.ii Their tenacity and relentless pursuit of excellence is something we can and should all admire.
i Momoh, Osi. “FAANG Stocks.” Investopedia. Investopedia, 12 June 2017. Web. 20 June 2017.
ii Weiss, Geoff. “What It Takes to Be a Small-Business Owner (Infographic).” Entreprenuer, 4 May 2015. Web. 18