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April 30, 2009
Being based in Massachusetts, we tend to pay attention to developments, facts and trends that reflect our local environment. Though it's somewhat old news at this point, the SBA released an updated Small Business profile for Massachusetts earlier this year that contains information most will find surprising. For a state that boasts a big number of large companies (think EMC, Fidelity, Gillette, Raytheon, and Bose to name just a few), it's small businesses (counted at almost 142,000 strong) that employ 98% of our entire workforce. 98% -- that number is truly staggering.
Now here's some even more impressive statistics:
Now, the not so good news :: creating a sustainable small business is a tough row to hoe.
Sources: U.S. Small Business Administration Office of Advocacy, September 2008
University of Maine School of Economics (microbusiness statistics compiled by Prof. J. McConnon, Jr.)
the realities of main street
Angel investors, venture capitalists, and similar sources of private capital only invest in companies with high revenue potential. If a significant return isn’t possible at the end of the day, there is simply no incentive for the investment to be made. Because of the risk / reward potential, most portfolio companies are supported by significant services to enhance their chances of success.
Similarly, communities will often devote substantial resources and effort to attracting large companies. While landing the “big fish” creates a splash that grabs headlines, the total economic impact to the community is probably far less than if the same resources were diverted to supporting the creation and sustainable
operations of 20 microbusinesses.
Most of the businesses we see along main street don’t fit the “investment” profile of these organizations. With most destined to build a business that will be lucky to generate revenues of $1-2 million annually, this backbone of our local and national economies are essentially left to fend for themselves.
Being a resourceful bunch, most new entrepreneurs and small business owners make good use of the resources that are available:
Source: American Express
Unfortunately, while these resources bring the ability to create solid business strategies within the reach of main street businesses, there are scant resources available to help the entrepreneur or business owner with actually executing against those strategies. Thus 80% of all businesses failures get tracked back to poor management, poor marketing, or lack of capital.
For the past several weeks we've been working with local businesses, organizations and a few academic institutions to create a truly innovative program that just might bring some much needed help to "main street." Right now, we're looking for input from small business owners -- what help do you think you need most? Let us know.
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