5 Trends Why SME’s will Continue to Grow.

In the wake of massive lay-offs in the manufacturing sector, downsizing across all industries and renewed vows to create sustainability, SME’s are a powerful way to counter large Corporations and create REAL, SUSTAINABLE, solutions. Here are 5 Trends why we think  SME’s will grow in the future…..

1. Generation Y– brought up to value their own individuality, their talents and skills, as this generation matures research has shown that they are more entrepreneurial than those before them They value the flexibility of entrepreneurship and bring passion and savvy tech skills that allow them to work anywhere at anytime.  In addition, this generation has lived at home longer, and has been less likely to purchase major assets (from cars to homes) permitting them to bootstrap and live on less income than generations before. In pure numbers,  they represent a major “wave” of demographics, and the impact of their generation is just beginning to be felt.

2. 3-D Printing and Changing Nature of Manufacturing

The changes quietly started over 50 years ago with the advent of the CNC machine, and within a decade you may have one of these little machines in your home.  Imagine printing up toys that your children have designed, a new component for a broken piece of equipment or a piece of art for your home. The possibilities are endless. Greater still, is the impact that this will bring to the nature of manufacturing. No longer will massive warehouses dot the landscape, but a manufacturing facility could sit on 2500 square feet or less, producing made to order components, warehousing only enough to fill a small truck. These shops will not employ thousands or even hundreds, but scores.  This will change the nature of our suburbs and create opportunities for new buildings, space sharing and collaboration.

3. Increased Environmentalism & Sustainability Awareness

Environmentalism over the last hundred years has come and gone. However, over the last two decades, the awareness and trend towards  “green” has not diminished, but increased in importance. Corporations are adopting “sustainability” as a way of life, incorporating these concepts into their Strategy Maps and Balanced Score cards. Consumers are demanding that the companies they do business with be environmentally aware and sustainable.  It is far easier to develop a sustainable operation as a small entrepreneur and to maintain a low carbon footprint.  Many small businesses start off as home based businesses, and these offer shorter commutes, lower electricity consumption from smaller machines and growth in  internet communications technology (email and social media) that permit SME’s to connect to the world from a smartphone.

Beyond this, there is growing dissatisfaction with the income that CEO’s earn. The erosion of our middle class, has created calls for for egalitarian pay distribution which recognizes the value that all bring to our workplaces and society. Generally speaking, most founders are not making millions, but earn incomes far more modest than the CEO of Goldman Sachs or Citibank.

4. Increased Social Responsibility

SME’s are connected to their local communities. Many times entrepreneurs are involved community leaders and advocates, volunteers for local charities and non-profits and catalysts for local change. SME’s are tied to their local communities because these communities support them and are where they work and live.  Large corporations try hard to stay connected to the public-via technology such as Twitter and Facebook, they interact with their customers. However, the public demands more. They want to know who is behind the nameless corporations and want to ” know” those they are doing business with.

Add to this, the enormous growth in social entrepreneurship over the last decade and the awareness that you can do good, while earning a living.  Very few large social enterprises exist. This domain is nearly all dominated by SME’s and micro-enterprises.  This continued demand for Corporate Social responsibility (CSR) will continue to drive the growth of SME’s.

5. Worsening Financial State of Western Governments

Everywhere we look, from the USA and Canada to Europe, governments are increasingly facing fiscal pressures and inabilities to manage their own budgets. In Canada, government funding for social programs and welfare are decreasing. Cuts further erode the quality of life of individuals caught in cycles of poverty. Social justice advocates will always secure some funding for those most in need, but many will fall between the cracks. Consider the role of microenterprise and SME’s can play in alleviating poverty.

Studies show that median household income of self-employed microenterprisers increases 78% in two years, and 91% over five years. In another guided program (Welfare to Work) participants’ business assets and their net worth grew by nearly 250% during a two year period, and home ownership increased from 14% to 22%. Finally, in Washington State a study by the Center for Economic Opportunity showed that over 50% of microenterprises moved toward self-sufficiency by completely reducing all forms of public assistance over 3 years. This reduced reliance on government programs has a significant impact on the burden the state carries to support low-income families. In this study participant  unemployment decreased by 24% in the first year. Strong local economies can be created by fostering microenterprise in low income communities and encouraging the break from the cycle of poverty.  Given that governments have less and less money to give, the growth of microenterprise and SME’s is predicted to grow at increasing rates in the coming years.