A recent report from the U.S. Small Business Administration's
Office of Advocacy titled The Third Millennium: Small Business and
Entrepreneurship in the 21st Century provides new trends on the
rapid evolution of e-commerce and changes in communications
technologies. But many trend lines -- long-term demographic changes
and gaps in working capital -- look much as they did in 1995.
The four themes originally explored in the 1995 document The
Third Millennium: Small Business and Entrepreneurship in the 21st
Century were revisited in the present edition:
* Theme 1: Rapid change will continue and a sense of impermanence
* Theme 2: Heterogeneity, diversity, and complexity will continue
to be hallmarks of the small business sector.
* Theme 3: Small businesses will continue to face barriers to
entry and inhibitors of growth.
* Theme 4: The small business and entrepreneurial sector will
continue to be strong.
The Office of Advocacy recently conducted two focus groups to
examine these very themes. One involved delegates from the 1995
White House Conference looking at today's small business environment
and what the delegates expect will be the small business environment
in the year 2010. A second focus group of futurists examined trends
most likely to affect small business at the beginning of the new
These groups found the predictions of the 1995 Third Millennium
report to have been largely valid, but noted that many technological
advancements had occurred even more rapidly than anticipated. Rapid
technological change was seen as having both positive effects and
potentially negative repercussions. Small businesses may now compete
more effectively, as technology allows them access to a larger
audience and gives them some advantages even over larger
corporations that may not be able to move quickly enough in the new
fast-paced marketplace. The most worrisome issue, in the eyes of
these focus group participants, is that many in the work force may
not be prepared to make effective use of the new technologies at
The American economy and society -- the setting for both large
and small businesses -- are undergoing rapid and fundamental
changes, expected to continue into the 21st century. The rapidity of
change and its fundamental nature have engendered an essential sense
of impermanence and time pressure. Such pressures have brought into
question basic elements of how businesses, society, and the economy
* Insight 1: Downsizing signals restructuring.
The downsizing phenomenon in manufacturing has spread to other
large organizations in society, specifically, parts of government
and the communications sector. Downsizing in larger corporations and
the outsourcing of many functions previously performed internally
offer new opportunities for small businesses. The "social contract"
that many large firms and governmental units had with their
employees --white collar, blue collar, and pink collar -- held that
their loyalty, commitment, and diligence would be rewarded. They
would receive opportunities for advancement, increased wages, and
the security of career-long employment, buttressed by a full panoply
of fringe benefits, including a pension.
As some employees of such national companies as NationsBank, U.S.
Steel, IBM, AT&T, and even large local banks and public utilities
have found, many of the promises in the implied social contract have
been eroded in the corporate reorganizations and downsizings of the
mid-1900s. Suddenly, the attractiveness of careers in large
businesses has changed drastically in comparison with the rewards
associated with entrepreneurship and working in the small business
Self-employment, the starting place for many entrepreneurs, has
increased rapidly over the last three decades, particularly in
nonagricultural industries. …