“Success is the sum of small efforts, repeated day in and day out.”

Robert Collier

There are two agreed upon facts of life regarding the future of the American economy:  (1) the bulk of our jobs are going to come from small businesses, and (2) small business failure rates are appallingly high. Taken together, these facts tell us that more Americans will need to acquire the competencies required of entrepreneurs as we move further into the 21st Century. For many, that will require a distinct shift in mindset, which is something that we all need to think about.  

Like many older Americans, I started my career working for big organizations. My first real job was in the mailroom of former corporate giant Bethlehem Steel. Several years later, I worked my way up to the position of industrial engineer. But the world in which corporate giants made jobs plentiful no longer exists. So what’s next?  

The future of jobs lies in the small business sector

While there will always be a place for large organizations, their roles in providing the jobs we’ll need will be severely limited in the future. According to Businessweek, 65 percent of new jobs are generated by the small business sector. So, to stimulate job growth, we’ll need a much higher ratio of entrepreneurs to “worker bees” than we currently have.

To a certain degree, the die is cast— we’ll be counting more and more on people who are capable of successfully operating small businesses as we move further and further into the 21st Century. This is quite different from having legions of specialists working in large companies. 

Specialized knowledge will certainly be in demand in areas such as healthcare and technology, but since we’ll need more entrepreneurs, a lot more people will be expected to “wear many hats” and be capable of addressing broader ranges of problems than in the past. 

Complicating this situation further are additional trends that we’ll have to adapt to. A few of these are discussed below (this list is suggestive, not exhaustive):

Accelerating rates of change: Decades ago, we were warned that “change is the only constant,” which was viewed as a troubling trend. Now, the rate of change itself is increasing at a rapid rate, making it anything but a constant. It can be dizzying and difficult to keep up with.

Rising costs: Inflation is driving the prices of everything through the roof, driven in part by increasing demands and competition for energy.

Shrinking budgets: The economic downturn has left most of us scrambling for ways to cope with increasing costs with less and less available cash. We all have to figure out how to do more with less.

These are but a few of the challenges that tomorrow’s entrepreneurs will have to manage effectively.

A skill set for meeting the challenges

The role of entrepreneur has always demanded an individual be able to operate in a diverse array of modes. What will truly be different about the future is the number of people that will have to be able to do so. What then, should people be preparing for? 

Those who have been lifelong entrepreneurs are well aware of what it takes to succeed, but what about those who never figured on running their own businesses? What follows is a discussion of just a few of the domains in which more people will have to become proficient.

Strategic planning 

In business, knowing where you’re going is essential. Equally important is a clear understanding of exactly how you’re going to get there. In a more benevolent economy, this wasn’t as crucial as it is today, but fewer things can be left to chance than in any time in history.

I’ve dealt with lots of highly skilled individuals (e.g., architects, engineers, IT specialists) who are great within their areas of expertise, but terrible at operating businesses. Being a great cook doesn’t mean that you can run a restaurant. A lot of good specialists are finding themselves bewildered.  

The essence of strategic planning is the ability to understand the “big picture” within which your business will have to operate, but that’s an oversimplification. It involves much more.  Please read on.

“SLOT” analysis 

A component of the strategic planning process, a “SLOT” analysis consists of an honest accounting and acknowledgement of the Strengths, Limitations, Opportunities, and Threats associated with any business enterprise. This requires the willingness to be exceedingly thorough and realistic in regard to what will allow a given enterprise to survive and thrive.

Beware pop psychology, which so often cultivates the illusion that we should be focusing only on positive thoughts. We also need to be able to avoid the inevitable snares and pitfalls which will always be in abundance. 

Sound market analysis (vs. “location, location, location”)

This is the “O” (Opportunities) in the “SLOT” analysis, providing entrepreneurs with information regarding how their business should perform in terms of sales. This goes far beyond the simplistic notion that “location, location, location” is the primary determinant of business success, as has so often been voiced. Location is important, but it’s only one of many considerations.

I recall a restaurant (called “Mr. Baked Potato”) opening in one of the best locations possible— right next to a busy state university with 43,000 students. The location was truly ideal. The restaurant, however, offered only one product, its owners putting all of their finances into procuring the best possible location. Predictably, it closed a few months after it opened.

The Internet has further undermined the “location” factor, particularly for retailers. 

Ability to deal with obstacles and frustrations

These are important business skills, and they will become even more valuable as chaos, complexity, and change increase. Unfortunately, there are few curricula designed to teach these skills. 

Our society, which currently overemphasizes self-indulgence and immediate gratification, is cultivating a sense of entitlement. As any successful entrepreneur can tell you, we’d all better learn to adjust our expectations and keep cool heads if we’re going to be running businesses.

Leadership/teambuilding

Most people rate their own “people skills” as being quite well developed, but research shows otherwise. Actually, the most effective leaders tend to express more modest views of their social skills than the masses, primarily because they are wary of becoming overconfident.

The most effective leaders tend to be those that consistently put others first and try to do the best for the greatest number.  Yes, they tend to be confident and determined, but it’s a quiet confidence and determination that is laced with a heavy dose of humility.

This is a combination that is perplexing to most people, because it appears so contradictory. In leadership seminars, it’s common to get each participant to think of a real person they regard as a great leader and to write down three or four attributes that would account for the leader’s success.

When these are compiled and displayed in front of the group, it always appears as a set of seemingly contradictory tendencies. The point is this. In order to be more effective leaders, we’ll all have to become better at being walking contradictions. Our preoccupation with being consistent within ourselves makes this difficult to grasp and implement.

Understanding the sales process

Despite the Internet, the bulk of business done will still require the ability to cultivate and develop long-term relationships with others. Empathy (the ability to sense and respond to the emotional states and needs of those around us) will continue to be an essential ingredient for success. 

Regardless of the proliferation of promises regarding technology based shortcuts, and high powered “multilevel marketing” schemes, we’re stuck with a reality— business is still about building relationships. This requires genuineness, consideration, caring, and patience. There are no end runs or juiced up tactics for short circuiting the process of “relationship selling.”  

There is a distinct “buying-selling” process that puts the potential customer’s concerns above those of the seller. Attempts to rush through the process and procure quick closes account for more failures in sales than ever get discussed. The lack of understanding in this area is astounding. Sales is a lot more than the “numbers game” that it is so often reduced to.

Wanted: Skilled entrepreneurs

What I’ve offered is only a small glimpse of the kinds of skills people will need to be developing in themselves, as small businesses increasingly become the key to our economic future. There’s a lot more to the story, and success within that sector is essential for the country. The stakes are high.

It’s going to be crucial that more people develop competencies beyond their areas of specialized technical knowledge. Fortunately, the country has always demonstrated an ability to generate entrepreneurs who are both driven and competent, but we’re going to need even more. The small business failure rate, always disturbingly high, needs to be drastically reduced.

The “heartbeat of America”

The conventional wisdom was once “as General Motors goes, so goes the nation.” A country once dependent upon corporate giants has witnessed a dramatic turnaround— corporate giants that now owe their survival to government bailouts.

The future “heartbeat of America” will be its legions of small businesses led by hearty, individualistic entrepreneurs. For many people, this is a major paradigm shift. The challenge is before us, but the possibilities are exciting.