The Small Business Opportunity

Small businesses are viewed by economists and administration officials as the highest potential drivers of growth in the U.S. recovery. For companies that support small to mid-sized businesses (like consulting or technology services firms), there is lots of space to serve them.

Consider how small to mid-sized companies (let’s say up to $1 billion in revenue) have a heightened vulnerability to image issues because of expansive social media, which has the potential to destroy their brand. And in the current economy, there is a huge potential for small and middle market companies to miss opportunities in foreign markets, particularly the ones that are outperforming North American and Western European economies. It seems that most companies would benefit from better analysis and advice on political, economic, and market shifts, as well as the technology to support their growth and expansion.

One working hypothesis, related to the second point, that I have bounced off of a few business leaders is that companies that can and do export and invest abroad usually do so out of fear rather than revenue growth potential. Namely, the fear that a competitor will crop up abroad and then come to their home turf. I have heard from several company leaders that this is consistent with their experiences. Indeed, new behavioral economics research indicates that our brains may just be wired this way.  

Companies of all sizes, but especially the smaller ones, are extremely vulnerable to operational and political risks abroad and usually lack the in-house expertise to manage these effectively on their own. Small businesses are more prone to missing risk, lack negotiation leverage with foreign governments, and face the risk double whammy of being more vulnerable to market shifts and missteps because they aren’t diversified (e.g., GE).

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