An article by the Canadian Press (reprinted in yesterday’s Globe and Mail) suggests that while small business activity is lagging the economy as a whole, that may change over the next 5 years – mainly due to the lack of sensitivity that small businesses have to currency fluctuations. The article references a recent report from CIBC World Markets, which you can find by clicking here.
While it is interesting to note that the Alberta and B.C. are seen as the most favourable provinces for small businesses, I think the Canadian Press has missed one of the key comments in the World Markets paper. On page 4, Benjamin Tal says this about why small businesses may be better able to compete in the Canadian economy in the future:
The theme here is that each participant provides a specific expertise as it relates to a specific project. This kind of cluster of competencies and strategic alliances will be temporary in nature and, at the end of a particular project, dissolve and may or may not cooperate again.
On one hand, Mr. Tal is not telling us anything new – people who start and run small businesses are often “freelancing” instead of relying on a steady stream of work from a single customer. On the other hand, the above quote comes out of a paragraph talking about technology and the ability to “start up” a business “in an afternoon with a computer and an internet connection.”
While I think that Mr. Tal is drastically underestimating the amount of time and effort it takes to start up a real business, the bigger point is this: the nature of project work is changing, and small businesses are well suited to advantage of the change. Instead of a freelancer being hired by a larger organization to cover one aspect of the project, what we are seeing these days is an entire project being completed by a group of freelancers who may not have worked together before, and who may not work together again afterwards. In a sense, technology has made it easier for the “construction project” model to be applied to other industries. For customers who have complex projects that don’t necessarily fit into the “one stop shopping” model, this change may well result in better results and better value – which is good for both the customer and the small business providing the service.