A Future Small Business Infrastructure

The current business infrastructure includes many schools of business that study large businesses, explore new ways for their better functioning, and provide training for their future managers. This infrastructure has “angel” investors, rich folk that will invest large sums in start-up ventures. Venture capitalists provide ongoing financing to such start-ups making progress toward an IPO (an initial public offering). Investment bankers provide the support needed to market the IPO. Large banks then provide commercial loans that support the expansion of the business. No private sector offering this kind of support is currently available to small privately owned businesses.A new infrastructure needs to develop to supply the needs as described above, for a new, more competitive, small business sector.

Business schools need to add new departments focused on the study and exploration of how small businesses can better function and train people to run their own small businesses. Having the professional credentials of a recognized small business MBA will give credibility to these people, that will help secure start-up financing.

Rather than angel investors, a new class of investors will come into being. These will be “involved” investors. They will be people willing to make modest investments in those small businesses where their own experiences would be available in an advisory, coaching or mentoring sense. They would not be anonymous investors, but would add their experiences and skills to foster the success of their investments.

Local banks seeing the professional credentials and the support from involved investors, would soon develop profitable loan portfolios to further support small business start-ups, without requiring tax-payer funded SBA loan guarantees.

Modern technology makes feasible a new means to enhance small business functioning through the use of collaboratives. This will connect small businesses into a global network of other small businesses, making it feasible to explore the means for small businesses to increase their marketing reach and gain new efficiencies by collaborative arrangements with other small businesses. One consequence of the use of collaboratives is that it offers an alternative model to the IPO destination by which entrepreneurs can better satisfy their ambitions. Access to such a collaborative global network will become an important piece of the infrastructure to support the expansion of this new small business sector.