"Tiny" Entrepreneurship
Most Entrepreneurial Businesses Are Very Small--We Might
Accurately Call Them "Tiny"
Recent research published by the National Federation of
Independent Business (NFIB) has reported that approximately
one-third of small businesses with nine or fewer people are
located in someone's home (National Business Poll: Business
Structure, Dennis, 2004). Most small businesses (59 percent)
"are owned by one individual (including his/her spouse if
applicable)," and "twenty-seven (27) percent or over one in four
have two owners."
The U.S. Census Bureau identifies through its data a
classification it calls "nonemployer businesses" (which is based
on Internal Revenue Service (IRS) data obtained from annual
business tax forms that are filed). According to the Bureau's
latest available nonemployer data, it has indicated that there
are approximately 17 million nonemployers across all industry
sectors. To place this number of nonemployer firms in
perspective, consider this: there are a 5.7 million firms with
employees as compared to 17 million without employees (for a
total of 23.7 million businesses). As a whole, small businesses
with less than 500 employees account for 99.7 percent of all
businesses.
So what does this all mean, you might ask? Well for starters, it
means that although large corporations may dominate news
headlines, small businesses are the very "soul" of our economy.
It also means that despite any misconceptions that you may have,
most entrepreneurial small businesses are very small, indeed. We
might accurately call them "tiny," by virtue of their ownership
structure, number of employees, and other dimensions by which
they could be measured and described.
Overwhelmingly, Startup Businesses Are Founded by
Bootstrappers
Once one begins to construct a realistic view of
entrepreneurship in the U.S., it becomes apparent that there are
millions of businesses with quaint beginnings. Instead of
imagery that might be associated with the likes of Microsoft,
Dell, and Amazon, three that made it to the "big time," you
might consider more accurate imagery associated with the vast
majority of businesses as portrayed by the data. In provoking
these alternate images, I might suggest a small business owner,
whose condition is such that most of the assets of the business
ride around in the back of a pickup truck with a trailer in tow.
The majority of businesses are also founded by
bootstrappers--individuals who use creative financing, ingenuity
and hard work as a substitute for capital. While many
entrepreneurs clearly do complain about a lack of startup
capital, it is also the case that some individuals are driven to
succeed, regardless of the odds that are stacked against them.
This is the type of individual who, after "making it," is
invited to speak at somebody's annual meeting or a convention.
Their stories often have a similar theme: "Life handed me a
bunch of lemons, and I threw them back." They are walking,
talking, living, breathing business heroes who defied the odds
and snatched a piece of the American dream. In some other
cultures, it's an insult to point out that an individual is a
product of "new money" and the crassness of industry versus "old
money" and the "pedigree" associated with privileged classes by
birthright. However, in this culture, we very much admire and
cheer for underdogs who win against adversity. The more humble
the beginnings, the more these stories give the rest of us who
are stuck in the trenches, hope.
Now, we can crack open some textbooks on entrepreneurship, and
some will begin with arguments over "what is entrepreneurship?,"
or "who is an entrepreneur?" Among those who pose the arguments,
are some who discount franchise owners and the independently
employed in favor of the traditional model that is often taught
in business schools (and in elite schools, they can truthfully
boast that it works--of course it works when many of the
students have roommates with parents who hail from upper class
backgrounds themselves). The model looks something like this:
Have a great idea; write a business plan; present the plan to a
group of bankers, lawyers, investors, angels and well-heeled
friends; get the money; lease the space; fill it up with
inventory and hire the employees; enjoy meteoric growth and
profitable sales; cash out after an IPO (initial public
offering); and live happily ever after. Unfortunately, this
portrayal is largely a fairy tale.
You Can Pucker up All You Want
Most entrepreneurs are more like the frog hoping and waiting to
be kissed. You can pucker up all you want, but I would not
recommend closing your eyes. The good news is that there is a
great deal of hope to be found in the positive interpretation of
the data. There are literally millions of people who have their
own small business, working independently as compared to working
as an employee. I have phrased this last sentence carefully:
even business owners have a "boss"; there's no escaping the fact
that unless you are independently wealthy, you are going to have
to please somebody. Your new "boss" will be your clients and
customers. You will need to get along well with your suppliers
and build a cohesive team of individuals who are also dedicated
to this cause. (In instances where I have switched from
entrepreneurial roles to employment roles, I have sometimes been
aggravated by recruiters who did not recognize the ludicrous
stereotype of the entrepreneur as a loner, as compared to the
quintessential team builder that he or she must often be.)
You do not have to have a sophisticated business. You do not
have to have a business with extraordinarily high start-up
costs. You do not have to be an inventor, or otherwise generate
some sort of brilliant new idea. You do not need a college
degree. You do not have to create your own business plan from
scratch. With the right franchise or business opportunity,
assuming that it has created a successful pattern for you to
follow, you don't have to know much of anything at all, except
how to excel at following instructions and implementing the
directions that you have been given. Putting all academic
arguments aside as to what constitutes entrepreneurialism, you
can leave your employer behind and forge your own future, with a
small, "tiny" business.
How to Become a "Tiny" Entrepreneur, and Grow
Notwithstanding the above "good news" interpretation above, let
me continue by undoing, somewhat, a few of the inferences that
you may have drawn. While a business needn't be sophisticated,
as an entrepreneur, you must be alert and identify a need, even
if it is a simple one, which begs to be fulfilled. Thus, you
must keep your eyes wide open to opportunities that arise and
create an ability to provide that which is lacking in an
existing marketplace. It may be that this would entail doing so
at a better price, or with a smoother delivery process, or
better customer service. There's nothing particularly
earth-shaking about the concept of a local moving service in
terms of sophistication, for instance. Building brand name
recognition by providing customers with a stress-reduced or
stress-free moving day may require some innovation on your part,
however. You may need to pay your crew more, create an
employee-owned company, or introduce some other sharing
arrangement to increase sensitivity to the customer and his or
her experience.
Relative to start-up costs, one of the biggest expenses during
the initial stages of many businesses is the opportunity cost as
it relates to time invested by the entrepreneur (this is often a
"hidden" cost, because the entrepreneur fails to estimate or
track time that has been invested). I highly recommend taking a
long hard look at any entrepreneurial proposition before taking
the plunge. It is perhaps a very favorable omen when one finds a
little niche for him or herself that simply grows from a
part-time pursuit to a full-time passion. When one little
project that an individual services, perhaps while also holding
a regular employment position, is contracted for and delivered,
and then that leads to more projects, and more projects, a
certain momentum that foretells the future of the business
becomes evident.
Further, start-up costs become more inconsequential when
incremental investments pay for themselves. If a carpenter buys
$200 worth of power tools, and builds a deck for a customer, a
service for which payment in an amount that compensates for
time, tools, and other expenses is received, then that carpenter
is well on the way to making the start-up cost issue a moot
point. Thus, don't try to swallow your start-up costs in one big
gulp; you'll probably choke and croak.
Even though you do not have to have a brilliant new idea or
invention, it helps tremendously to have a unique twist in terms
of the value proposition that you have set out to offer
customers. This is otherwise known as a unique selling
proposition. Without one, how will you make your business stand
out from your competitors? You should strive to do something
differently and better. If customers can remember you for the
delicious "one-of-a-kind" slushy ice cone flavors that only you
have managed to formulate on your end of an island, you will
stand a better chance of being talked about and developing a
positive reputation, and repeat business.
As for a college degree, or any education and training that you
acquire--whether it is formally delivered or you are
self-taught--the more that you know, the better. A formal
education provides credibility to the extent that institutions,
programs, and courses are respected. While we can argue that our
education system has its flaws, as for myself, I am going to
continue to demand that my physicians have an M.D. degree, that
my attorneys have a J.D. degree, and that my accountants have a
C.P.A. credential (which requires an accounting degree). I would
also submit that anyone who points to the likes of Bill Gates or
Michael Dell to support the argument that college has no value
has forgotten to account for less optimistic stories associated
with the millions of other individuals who are asking questions
such as "Would you like fries with that?" for a living. The
plight of this latter group can often be traced to a failure to
pursue higher levels of learning and skills.
You should look at every possible avenue toward developing the
type of business and lifestyle that you want. If you need
guidance, start by reading "how-to" books and e-books. There are
typically several "nuts and bolts" books on how to start a bed
and breakfast, how to start a business for $1000 or less, how
become a professional graphic designer, dog-sitter, or just
about anything else under the sun that have already been
written. Go to the library, to a small business development
center, the Internet, or your local book store and read these
books. You can also read articles on the Internet as well as
offline (the fact that you are reading this is a reassuring
sign).
Many entrepreneurially successful persons I have met tell me
that they tinker all of the time. They also use combinatorial
methods. Oh gosh, what's that, you ask? This means that they
apply things that they learn from a variety of sources and
combine them to develop new ideas and opportunities. For
instance, an e-book might discuss online marketing, and an
article might discuss ten hot new product ideas; by using a
combinatorial technique, an entrepreneur might decide to market
a new product online, in a way that has not been tried
previously. I have invested in several Internet sites. One of
these sites offers domain names for sale, and I purchased the
privilege to provide this service under a turn-key arrangement
for less than two hundred dollars. (A turn-key arrangement means
that an entire system was already set up to sell these domain
names as well as provide customer service and technical
support.) Offline, I am an independent consultant for a rapidly
growing network marketing firm. I speak, teach entrepreneurship,
and write. I have combined several of these activities to not
only earn a living, but to do so while helping other aspiring
individuals achieve their own entrepreneurial ambitions.
Talk to other people. Observe other businesses. Form alliances.
Investigate business opportunities and franchises, or develop
your own ideas and inertia. Introduce yourself in social
situations, and let everyone know that your mission in life is
to become a "tiny" entrepreneur, and grow. Over 17 million
others have already become "tiny" entrepreneurs, and gained
their freedom from traditional employment, which had previously
been their only career alternative. Now you know that you can,
too.