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Weathering the Storm: A review of the
shifting economy
Business has been slow for the past
couple of years, to put it mildly. Businesses have been
in survival mode, not so focused on increasing profits
or developing products as with meeting payroll, paying
rent, and trying not to lose money. However, there are
rumblings that indicate that the great economic slumber
in this country is about to stir. What may surprise
people is that small, privately held companies are
playing a major role in this recovery.
For example, in 2000, privately
held businesses accounted for less than one-half of the
country’s operating profits, whereas the latest figures
show them accounting for closer to two-thirds of that
total. More than 300,000 jobs have been created since
last summer, most of them coming from small businesses.
Meanwhile, large corporations have continued to lay off
workers; 1.2 million jobs were lost in the past year.
Many people have grown tired and
frustrated at chasing non-existent jobs, and have taken
matters in hand by creating their own job. The number
of self-employed people in the US has surged, accounting
for 7% of all jobs, nationwide. And they are getting
paid fairly well, too, as proprietors’ income accounts
for 9% of all income, nationwide.
But what do these statistics really
mean? These are people who have seen the business world
changing, and have adapted to that change by taking
matters into their own hands and seeking creative ways
to provide products or services not sufficiently
addressed by existing means.
This adaptability is driven by an
awareness of what is important to those purchasing the
products and services, whether in the
business-to-consumer or business-to-business markets.
There is an old saying, “If you want to catch fish, go
where the fish are.” Similarly, in business, if you
want opportunity, go where the opportunities are.
For example, in the two-plus years
since that fateful September 11, Security has become
hugely important to businesses, in a variety of
applications. Systems security – can you keep out
hackers and viruses? Data security – who has access to
what data? Building security – located in safe, clean,
well-lighted area? Personal security – how are
employees and visitors identified? Security is now a
crucial element to every aspect of business, and is
considered fertile fishing grounds for business
opportunities.
Opportunities also exist in
business acquisitions, on both the buying and selling
ends. A business may be struggling, but still have some
attractive elements, such as intellectual property,
proprietary technology, strategic location or key
personnel. The sale of such a business, even in a tough
economy, can still fetch a decent price. The
acquisition of such a business can provide missing
elements to an existing business that can take it to the
next level.
Similarly, opportunities exist in
strategic partnerships and alliances, where two or more
businesses combine their expertise to reduce costs,
broaden scope, and increase sales. On a large scale,
Duracell, Oral-B, Braun, and Disney have combined
efforts to create a battery-powered toothbrush for
kids. Each brand brings it own core competence:
Duracell for battery life, Oral-B for brushing, Braun
for electronics and Disney for design and
entertainment. On a smaller scale, businesses can
partner to save marketing or production expenses,
increase visibility in new markets, or simply to inject
some new life into old products or services.
There is still a long way to go in
terms of economic recovery, but privately held
businesses with creative solutions and ideas are doing
their best to lead the country out of its slumber and
back into vibrant, thriving commerce.
© 2004 RossFialkow Capital Partners, LLC
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