Note: Our Blog post was inspired, with thanks, by a recent article in Entrepreneur Magazine, The Entrepreneur Economy, by Jason Daley.

Mega corporations are no longer the backbone of our economy. An entrepreneurial climate is taking hold as small enterprises become more competitive, and are starting to beat out their larger scale counterparts. Smaller, more adaptable, and more innovative businesses are using an economic downturn as a leg up.

Extraordinarily, recession seems to propel start-ups and entrepreneurs. Studies show that self-employment rates are growing and the number of small businesses created during the recession has increased slightly. Enrolment in entrepreneurial university programs and privately held seminars, such as our very own 90 Percent Rule Seminars , is increasing dramatically. Government programs on both sides of the 49th parallel are popping up as politicians are recognizing the importance of small business. In Canada, for example, the Federal Government is working on passing a bill to offer Employment Insurance benefits to self-employed individuals for parental, illness, regular and compassionate care leave. This dramatic move will particularly encourage more young women to consider self-employment as a practical career choice. In the U.S., The Commerce Department is establishing a new Office for Entrepreneurship and Innovation to help entrepreneurs bring their great ideas to market.

Unexpected positives for entrepreneurs have included cheaper office space, increased negotiation room with suppliers and the facilitation of outsourcing. Internet based services to manage inventory, project planning, accounting, shipping, direct marketing, human resources and other services have facilitated and made affordable many aspects of starting a small business. Further, it’s no longer necessary to hire a large pool of specialists, who require large office spaces, when web-based services and the use of occasional consultants will do the trick. Due to the upsurge in unemployment rates, more qualified professionals are available to do freelance consulting for reasonable rates while they look for permanent employment. And, more of these qualified professionals are deciding that consultant work is a viable and desirable career path and are continuing on.

Smaller entrepreneurial enterprises are taking the lead with more agile business strategies. For example, as cited in Jason Daley’s article in Entrepreneur Magazine; Vizio, the number one manufacturer of flat screen monitors, has taken an agile and scalable business model. Their approach has been to keep their workforce small by purchasing the cheapest high quality parts possible from overseas manufacturers rather than concentrating their efforts on expensive in-house research and development and high-end self-hosted manufacturing plants. The employees that Vizio does have on payroll are mostly marketing and sales driven. They also use a low-inventory model which means that they can change the focus of their business quickly when market conditions dictate the need. These elements make it difficult for larger scale players, like Philips and Pioneer, to compete against them.

In difficult times, smaller and more agile companies are gaining ground, and sometimes surpassing, the mega corporations of old who used to be able to crush the small scale competition. The key is finding ways to follow an agile business model by continually changing and adapting in business culture and technology. Our economy was based on a market of a few large players, now it’s made up of a large patchwork of smaller entrepreneurs.

- Ken Tencer

Tags: competition, entrepreneurship, recession, small business

This entry was posted on Tuesday, January 5th, 2010 at 9:40 am and is filed under Entrepreneurial Thinking, Innovation, The 90% Rule, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.