From Unicorns to Main Street: Why Small Business is the Next Big Thing
After the 2001 Dot Com Crash, our country’s best and brightest talent flooded Wall Street. The Great Recession of 2008 then precipitated a widely documented Wall Street brain drain, the re-emergence of Silicon Valley, and the rise of the tech unicorn. The unicorn cycle now appears past its peak. Tech startups and venture capitalists continue pulling back. This has left me wondering: what’s next?
Because I refuse to let our lives be defined by presidential politics, and find the “Post Unicorn Era” a depressingly unsatisfying moniker for our current business climate, I’ve been left searching for a more inspiring direction for our collective economic pursuits.
Fortunately, I believe there’s a compelling case to be made for a hopeful and exciting economic future. I’m calling it the “Main Street Revival”.
The “Main Street Revival” is both the literal and figurative economic revival of our country, fueled by Main Street businesses. The evidence that this is not only possible, but likely, is compelling. The macro-economic conditions are ripe. Millennials are hungry for a different way of life. And unlike opportunities of yore, this one has the potential to include broad swaths of our country, regardless of geography or economic status.
The Macro-Economic Opportunity: Entrepreneurship Through Acquisition
Seventy million retiring Baby Boomers are expected to transition $10 trillion worth of wealth held in 12 million private companies in the next 20 years, according to CABB. This colossal wealth transfer creates private sector opportunities of epic proportions.
The Main Street Revival will be born of this transition, and fueled by the entrepreneurs prepared to capitalize. It is these entrepreneurs-by-acquisition who will find and acquire the best established, successful, and largely humdrum businesses of their parents’ generation. Those entrepreneurs who are successful will inject these businesses with the fresh energy needed to realize newfound potential. Interestingly, this brand of entrepreneurship demands the skills resembling those of yesteryear entrepreneur-heroes like Ray Kroc and Sam Walton, rather than those of more recent tech icons like Mark Zuckerberg and Bill Gates.
In light of the current media focus, it may be worth pointing out that this trend has almost nothing to do with Trump or populism. Rather, it will be fueled by capitalists pursuing the raw economic opportunity to build one of the many millions of thriving small businesses into a modernized company.
Successful Main Street Revival companies will leverage and apply new technologies to deliver products and services in more customized, local, and socially connected ways. Instead of creating new technology titans rivaling Google and Amazon, businesses of the Main Street Revival will augment, customize, and apply the democratizing tools from the tech sector. Armed with such tools, they will locally out-compete larger businesses on service, quality, and cost by carving out durable and profitable niches. The goal of such businesses will not be to become unicorns or multi-national companies, but to thrive as small giants who do well for their customers, employees, partners, local communities, and owners.
We’re Ready To Change Our Own Lives
Millennials now comprise the largest generational group in the US workforce at 53 million strong. Their share of the workforce will grow until 2036, peaking near 65 million. The oldest of them turns 36 this year, the youngest turns 20, and nearly 2 million are becoming new parents each year.
Older Millennials have now been in the workforce long enough to bring more than just a cheerful willingness to learn. In recent studies, 35% of working Millenials report starting their own business to supplement their income, and 54% either want to or have already started a business.
Starting a business is often an enticing way out of the full-time daily grind. But, it is not easy, especially for workers entering the early years of parenthood. Notwithstanding the long term trend indicating failure rates are declining, the facts remain: only about one third to one half of new businesses survive 5 years. Starting with zero customers, no business infrastructure, and no employees is hard. Doing so with kids to care for is even harder.
With so many businesses becoming available for sale, acquisition presents a viable path of least resistance to obtain the benefits of entrepreneurship with greatly reduced risks. Owning a company (or working in one that is closely held) can offer unmatched flexibility, control, wealth-building and legacy-building possibilities. As importantly, owners and workers in such businesses stand a much better chance of setting and adhering to the values they hold dear, especially as their personal and family priorities shift through the stages of adulthood.
As a new father, and the son of a telephone-guy- turned-business-owner, I recently had my epiphany. I don’t need to start or join a unicorn (or Facebook, Amazon, or Google) to build a great career, and a great life for my family. Instead, if I pour my passion into building a business that’s mine, I can make the income I need for my family, work with the people I like, focus on building enduring value, and do it all on my terms.
I believe it’s only a matter of time before a wave of talented workers comes to the same realization that I’ve had. When they do, many more people will set out on their own to acquire and build a company that supports the life they want.
Why This One is Different, And Better for Everyone
Because of the origins of the opportunity — 12 million companies scattered across the country operating in every imaginable industry sector — the Main Street Revival has potential to be highly inclusive. It can provide a refreshing departure from the previous sector-specific and geographically-limited growth binges of our past several decades (e.g. Wall Street finance and Silicon Valley tech). It will be more far-reaching in terms of the sectors it impacts, with manufacturing and services taking a front seat. It will positively impact a much larger number and greater diversity of workers, managers, and owners, as there are many more companies to participate. With greater inclusiveness, it has potential to greatly enrich our social and economic fabric.
The compelling allure of a Main Street Revival is that it offers hope for an economic framework that rewards the Main Street ideals of trust, social-connectedness, and simplicity. The second half of the last century showed us how unforgiving capitalism and the immutable laws of economics truly are. The rise of offshoring, the multi-national corporation, and the globally competitive marketplace all conferred a massive unfair advantage upon large companies. Now, small companies, with resources like UpWork, Alibaba, Zenefits, and Facebook at their disposal, can play the global-local game with the same adroitness as their larger rivals. With structural economic disadvantages greatly eroded by the availability of powerful new tools, trust and social connection become more significant drivers of success. Fortunately, this is what small business does best.
Path Forward: Let’s Not Blow It
The bottom line is this: twelve million privately-owned businesses across the country will need a new owner in the next 20 years, or will be forced to fold. It will take a massive number of entrepreneurs to step up and fill the void by acquiring and positioning them for another generation of success. If these entrepreneurs never step forward, we risk letting a $10 trillion opportunity evaporate into the ether, condemning an entire generation of successful, hard-working entrepreneurs to an unnecessarily impoverished retirement. Just as tragically, at some point 20+ years in the future, those who miss the Main Street Revival are sure to wonder if they could have lived the life they envisioned for themselves in their early adult years.
The hard part has been done for us. It’s up to us to carry the torch forward.
I really hope we do.
