Growth of private companies
The growth of privately held companies is upon us. 93%-95% of all companies in the U.S. are privately held. That’s a huge percentage. And it’s been that way for most of our country’s history. Why is it that now is the time for an explosion of growth, profit, and stability for privately held, entrepreneurial businesses?
The United States enjoys a rich history and culture of entrepreneurship. While many of the first settlers arrived here compliments of large, public trading companies (Dutch East India, Hudson Bay), many of the settlers quickly established themselves as shopkeepers, farmers, fishermen, merchants, and anything else that would provide independence and opportunity. Private companies invest in growth.
Fast forward to the last third of the 20th Century. The advent of microcomputing led to another revolution. The Industrial Age was coming to an end, and the Information Age was dawning, as computers were about to become the great leveler for small business competition.
Microsoft’s BASIC program, cheap Read-only and Random Access Memory, and inexpensive circuitry which enabled keyboards and other tools, were a few of the world-changing innovations. The computer could finally be operated by everyday people, without computer programming staff to handle input and output. The size was reduced from room to desktops.
Monitor the health of the business
The culture of entrepreneurship joined forces with automation tools. Small businesses could finally access, assemble, analyze, and distribute massive amounts of information with limited human capital. From 1980 – to 2010, the proliferation of computer-based tools, targeted at the needs of small business owners, was astounding. Today, the pace of innovation and offerings continues to multiply geometrically.
In the 1990’s finance and accounting tools came down in price from 100’s thousands to 10’s of thousands, to a few hundred dollars. Between 2000-2010, marketing programs that rely on 5, 6, and 7 figure advertising budgets were replaced by individuals learning to use available free and nearly-free internet tools. As the owner of a privately held company, it can feel like a never-ending.
Communication with the world now happens in seconds, on a computer that costs a few hundred dollars. The door blew open for entrepreneurs to build sophisticated, profit-making businesses. They go head to head with their large sister companies, the major corporations of the Industrial Age. The race is on, to see who can build what fastest, who can provide the best innovations, and who can best meet marketplace needs in the most innovative and customer-oriented ways.
The grand experiment has only just begun. In the mid-1970s and early 1980s, the Information Age was just getting off the ground. Analysis shows that the most profitable and successful privately held companies are those that have been around for at least 20 years. And many companies fall by the wayside as the leaders emerge – as only 1 business out of 4 makes it through each 10-year cycle.
Privately held companies matter
The first generation of computer-enabled businesses started around 1980. The early adopters, companies that grew because of technology starting in the 1980s and 1990s – are now only 20 – 30 years old. This is the point at which they show real traction, stability, and profit. Even established industries enter the information age. Construction and related trades, manufacturing, medicine, and financial services. They have only had the benefit of 1.5 cycles of 20-year development with computer-enabling tools.
Tools that enable computers (start dates or dates when the products took off in parens), such as GoToMeeting (2004 – 2009), Linked-in (2002), FaceBook (2004), Constant Contact (1995). None of them have been around 20 years. Wait until their leverage kicks in. The companies, they enable have also been around for 20 years.
For the first time, we are seeing small, privately held companies, fully enabled with the tools they need. Now they can get up and running with those tools for 20+ years. Many examples of companies thriving, despite the economy, are here in our own backyard. And this is the tip of the iceberg.
Sure, large corporations will snap up some of those companies. And under 10 years the majority will be gone. Out of ideas, mismanaged, or just plain out of luck as a result of business conditions. But if ever the time was right to change it, it is now. Seek to become a strong and fierce competitor. Carve out a profitable niche. Fuel an ever-expanding portfolio of products and services.
