High growth small businesses are often referred to as gazelles or cheetahs. These firms attract venture capital, grow very rapidly and hire lots of people. They are very innovative. Google and Facebook are gazelles, as were eBay and Yahoo before them. Although they comprise less than 1% of all small businesses, gazelles are considered by many in business, government and academia as the key drivers of economic growth and innovation.
I agree that gazelles are very important to the U.S. and global economy. But our research on small business has convinced me that the economic contribution and importance of traditional small and personal businesses (one person businesses) is underestimated. I also believe this sector of the U.S. economy will become increasingly important over the next decade.
There have been two interesting posts on this topic over the last few weeks. Jeff Cornwall's Entrepreneurial Mind blog has a post called "The Real Economic Hero." Key quote on the role of traditional small businesses:
"Those boring little entrepreneurs who toil away with only their own investment -- maybe with a little help from their family and friends -- is what really drives today's entrepreneurial economy. It is these small businesses that now generate about 50% of the US economy and have created 77% of new jobs for the past twenty years."
Tim Berry chimes in on this on his Planning, Startups and Stories blog with the post "Does Investment Make the Venture?" Tim's point is that you don't have to have venture funding to be a real business. From his post:
"However, when we're talking about business in general, let's give bootstrapping its due. There is a lot to be said for managing to get it going on its own power, scraping a lot at the beginning of course, but eventually building a business that doesn't depend on the big investment."
Gazelles will continue to be important, but traditional small and personal businesses will increasingly provide new jobs and economic growth.
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