The importance of small businesses in strengthening the U.S. economy has gained greater recognition since the early 1990s. A key area of economic activity targeted by The Network Journal, the sector has grown exponentially, producing three-fourths of the economy’s new jobs between 1990 and 1995 alone. While corporate America has been “downsizing,” the rate of small-business “startups” has grown and the rate for small-business failures has declined. Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs, according to the U.S. Small Business Administration.
Three developments in the past two decades dramatically changed the country’s business environment and created new challenges and opportunities for Black professionals and business owners. First came the launch in April 1993 of the World Wide Web into the public domain. Occurring six months before the birth of TNJ, it triggered a tidal wave of information technology, ushered in an era of e-commerce and e-business that allowed entrepreneurs to do business on a national stage as never before, and gave professionals access to information that helped them to better chart their career paths.
The second major business-impacting development is globalization, with the emergence of — and competition for — lucrative markets, suppliers and investment opportunities in the developing regions of Africa, Asia, Eastern Europe, Latin America and the Caribbean. The combination of faster methods of transportation and instantaneous information turned the world into a giant marketplace, with increasingly mobile pools of skilled workers.
The third major development, the financial crisis that began in the latter half of 2007, led to the failure of key businesses, a decline in consumer wealth, and an economic recession from which the country is recovering slowly. Cost-cutting resulted in massive layoffs, tightened credit, fewer contracts for small contractors. From this harsh corporate climate came a surge of entrepreneurship, with women and minorities accounting for the biggest increase in startups.
Over the coming years, innovations in big data and social media will transform marketing strategies of companies at home and abroad. Look for the following trends as TNJ begins its next chapter.
The global scene. The global financial system remained fragile in 2013, but economies around the world began to move toward recovery, accounting firm Ernest & Young said in a study. After a shaky start, China’s economy stabilized midyear, while the eurozone economy bounced back and the U.S. economy made modest gains, although October’s government shutdown could impact growth. Latin America is expected to grow 4.8 percent, while Africa’s GDP is seen rising 5 percent. However, capital flows to emerging markets could fall in 2014 amid expectation that the U.S. Federal Reserve will unwind its $85 billion monthly bond purchase program.
Africa. If they succeed, regional integration and free trade zones offer new opportunities for East and Central Africa. The next 10 years could be Africa’s decade, as was true of Asia in the last 20 years. New oil discoveries in Ghana and Uganda, gas in Tanzania and Mozambique, and the growth of the tech sector in Kenya and Rwanda could transform economic prospects for these nations. Planned upgrades or construction of airports and seaports would boost efficiency and better business returns. Global fashion and clothing brands that used to be established only in the West are looking to expand in the continent beyond South Africa, dipping their toes into countries with the highest potential, such as Nigeria, Ghana and Kenya.
Technology. New technologies are transforming the way we live and do business. Social media is increasingly replacing the telephone for networking and communications between individuals and companies, and cloud computing is increasingly becoming the way to store data and other information. That would promote efficiency and better returns, but it also makes us more vulnerable to system failures, sabotage and intelligence-mining by business rivals.
Big business. Big companies and industries have become versatile and adaptable to changing market conditions, maximizing their economics of scale and laying off people when they have to. Already, a number of major companies — Wells Fargo, Caterpillar and Cisco, for example — have announced plans to reduce staff, a move that ends up increasing the ranks of entrepreneurs.
Entrepreneurship. With the power of the cloud and social networking, smart people can spin up businesses that reach around the world in a more cost-effective way than ever before. This year clearly marks the rise of the entrepreneur, and innovation is the name of the game.