Their early years are far from glamorous, often set in a garage or around the kitchen table. Yet small business owners are the heroes of America’s new economy.

Owning your own small business is part of the American Dream. Entrepreneurs are risk takers, innovators, and movers and shakers. While previous generations identified General Motors as the economic standard bearer, Americans now realize that “as small business goes, so goes the nation.” Entrepreneurs have finally gained the respect they deserve, partly through businesses which started small but have gone on to become icons of the American economy, such as: Intel, Apple, Nike, Ben & Jerry’s, Federal Express, Staples, and Winnebago.

The U.S. Small Business Administration (SBA) played a role in each of these so-called “corporate succes stories” which like so many other businesses, started small–with only an entrepreneur and a dream. But, while these stories of past small business success can be inspiring, the focus of any small business that wants to be successful must be on the future. By taking a look at a recent report from the SBA’s Office of Advocacy, The Third Millenium: Small Business and Entrepreneurship in the 21st Century, we can  see some of the trends that will shape the future of small business and in turn, our Nation’s economy.

Downsizing – The downsizing phenomenon, signaling restructuring of large organizations, will continue to offer new opportunities to small firms.

Globalization – Globalization will modify and mold the environment for small business and entrepeneurship.

Electronic Technology – The revolution in electronic technology will accelerate, but whether small businesses will prosper on the internet or come to view such technology as just another fixed cost is still in question.

Connectivity – Economic growth will rely on more and better connectivity among busineses and their customers, supplies, service providers, industry groups, governments, the media and other players.

More Heterogeneity – The heterogeneity that makes the small business sector strong, and difficult to quantify, will increase. Some firms will start and stay small, while fast growing “gazelles” and home-based businesses will multiply.

New Alliances – New types of firms will evolve. Clusters of competencies and strategic alliances among people connected primarily by computers will increase. Small U.S. firms will find international partners on the Internet.

Work Force Diversity – The labor force will continue to age and diverisify, with more minorities, immigrants, and women. Replacements for retiring “boomers” will be scarce as work force growth slows to below two percent annually.

More Women Owners – Women will continue to increase their show of small business ownership, although at a slower pace. How the economy will respond to issues of childcare, capital access and other concerns, remains an open question.

More Minority Owners – The number of minority owned businesses will increase. Minority business owners seeking expansion will continue to face challenges, including access to credit.

Financing Challenges – Adequate financing for rapidly growing firms will be America’s greatest economic policy challenge of the new century. The recent five-year economic boom has made access to credit continued downturns in the economy will generally fall more heavily on small, rural, and minority-owned firms.

Access to Equity Capital – Access to equity capital needed at various stages of a business’ growth also continues to be difficult. New seed capital initiatives may require more participation by state and local governments.

Work Force Training – Recent labor shortages have exacerbated the need for better education of the work force. Skills development must focus on the basics, as well as computer and other technical skills.

Regulatory Challenges – The extent, complexity, and uncertainty of regulation at all levels continue to burden small firms.

Small Business Data Needs – Today’s federal system of economic data collection, while improving, is still inadequate for accurate analysis of small business’ economic contributions and needs.

Job Creation – Small business with fewer than 20 employees have created most of the new jobs in the recent past, and it is expected that small firms will need to grow faster and generate more jobs in the future in order to survive.

Innovation – Small businesses will continue to contribute to innovation and technological advances–and the difficulties they face in developing those innovations are likely to continue.

Micro-Enterprise – The micro-enterprise movement continues to empower people with social and economic disadvantages. Government will soon have to deal more effectively with the largest of the micro-business movements–home-based  businesses.

Young Entrepreneurs – Increasing connectivity through the Internet, better marketing of government programs, lack of security in large firms, and new wealth in equity markets are encouraging more youth entrepreneurship.

It may be some time before we know the full scope of their impact, but these are the main issues, challenges, opportunities and trends that America’s entrepreneurs are and will be facing. It’s a challenging time to be an  entrepeneur, but an exciting one as well. No one can say for certain what the future holds for small business, but it is certain that America’s future depends on them.

If starting your own small business is your dream, there are a number of resources available to assist you, such as the U.S. Small Business Administration (SBA), the Small Business Development Centers (SBDCs) and the Service Corps of Retired Executives (SCORE). For more information about the SBA and any of its small business assistance programs, contact the Des Moines District Office at (515) 284-4422 or the Cedar Rapids District Office at (319) 362-6405.

Jim Thomson is Director of the SBA?s Cedar Rapids District Office. Cheryl Eftink is Director of the SBA’s Des Moines District Office.

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