Wall St needs another animal statue
Friday, 11 July 2008
By Colin Benjamin
Investors and speculators are finally accepting that the large cap stocks are not going to make them rich in the short run and believe Lord Keynes’s proposition that in the long run we are all dead.
There are early signs of a shift from playing the long/short game in the commodities market to a search for the companies that are going to deliver for superannuation and pension funds in the longer term.
The critical issue now is to remember that every day both a pride of lions and a herd of gazelles are competing for survival out on the plains. It will be the fastest and strongest of the two that will survive and the slower that will become a victim of the brute reality of market pressures. Forget the rollercoaster ride with bears in one cart and bulls in another, and focus on becoming a gazelle.
Go to the report released at the International Council for Small Business 2008 World Conference by Zoltan Acs, William Parsons and Spencer Tracy entitled High-Impact Firms: Gazelles Revisited.
The study re-examines the findings of small business researcher David Birch about fast-growing firms, or “gazelles.” Acs and his team examined “high-impact firms”, defined as those whose sales have at least doubled over a four-year period and which have significant employment growth.
The study notes that high-impact firms are found across all industries and in all geographic regions. It ranks regions, states, metropolitan statistical areas, and countries by their share of high-impact firms.
Acs et al also find that high-impact firms are not startups but are on average around 25 years old, and that they come in all size classes. The report also documents that over the periods studied, nearly all job losses came from large low-impact firms.
Given the available data, the authors were not able to determine what factors drove firms to become high-impact or how to identify the firms in advance.
“High-impact” were shown to be firms that created America’s new jobs and growth, according to a study released by the Small Business Administration Office of Advocacy. These firms are distributed across all industries, and they account for almost all employment and revenue growth in the economy.
As the US economy slowly responds to the heart-starters offered by the Fed after two and a half million home foreclosures and promises to put hundreds of small banks into triage, maybe its time for the good doctor (Dr Craig Emerson) to commission some research to find out how to create more gazelles and leave the bulls and the bears of the world behind.
It is small and medium business entrepreneurs that are going to be essential after the commodity boom starts to recede. We need an “office of small business advocacy” along the line of the US model.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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