Are small businesses innovative? Does it matter?

I recently read an article in Slate that discussed the question of whether small businesses are truly “innovative.” Small businesses create millions of jobs and are often praised by politicians as the “backbone of the economy,” but the article argues that most small businesses aren’t truly “innovative” in the sense that they’re not trying to create something new. Most small businesses don’t grow much beyond their first few employees, and most small businesses don’t invest much on research and development.

Many small businesses are just providing an existing service for an existing market. Many small business owners don’t want their businesses to grow – they’re happy staying small. In this way, there’s a big difference between a “small business” and a more ambitious “entrepreneurial venture” that is going to become the next Google or Apple or Facebook.

According to the Slate article, different business owners have different reasons for starting a business: owners of entrepreneurial ventures tend to go into business with the goal of “taking a new idea to market” or creating something new and big that would create jobs for hundreds or thousands of employees.

On the other hand, “small business owners,” according to the survey mentioned by Slate, are more likely to start a business for lifestyle considerations: being their own boss, having a flexible schedule, and all the other things that make life so wonderful when you start a business for yourself.

It’s true that public policymakers need to analyze the differences between these different categories of small business: if we’re trying to create jobs for millions of people, we need more fast-growing, big-dreaming, high-flying startup companies.

America’s public policy needs to find ways to support the true “entrepreneurial ventures” that are trying to get big and create lots of new jobs. Perhaps we could give grants to companies that seek venture capital funding, since these are usually the companies with the biggest goals for growth. Instead of giving tax breaks and financial incentives to lots of small companies, perhaps the country would be better off focusing its financial support to a smaller number of companies that are trying to grow the most.

However, even if someone wants to start a business with no big ambitions beyond having a more flexible schedule and carving out a more comfortable lifestyle for themselves, I still think that is worthwhile and something to encourage. Just like I wrote in my response to the argument that solo entrepreneurs don’t really have a “business,” I think that on some level, this distinction between “small businesses” and “entrepreneurial ventures” doesn’t matter. Even if most small businesses aren’t “innovative” and fast-growing, they’re still worth having.

My small business as a freelance writer is not really “innovative,” but I believe I am adding more value (for myself, my clients and for the overall economy) than if I had stayed at my day job. My former employer now has an extra job opening that can go to someone else, and I’ve created my own new job that pays better than the one I had before. Isn’t that still a net “win” even if I’m not really “innovating?”

If you want to start a business, whether it’s a groundbreaking new idea to carve out a new market, or just a variation on a business model you’ve already seen before in a saturated market, don’t feel intimidated by the question of whether or not you’re “innovating” enough. America would be much better off if we had a lot more small business owners who were fully engaged and passionate about their daily work, finding more efficient and cost-effective ways to serve customers. When you’re in business for yourself, you find that there are lots of ways to “innovate,” every day.

 

2017-12-26T08:12:00-07:00 March 8th, 2012|Categories: Seed and Development|Tags: , |

About the Author:

Ben Gran is a freelance writer based in Des Moines, Iowa. He has written for Fortune 500 companies, the Governor of Iowa, the U.S. Secretary of the Navy, and many corporate clients nationally and internationally, from Los Angeles to New York to Washington, D.C., from Germany to Tokyo to London to Western Australia.

Leave a Reply