BIG BUSINESS IS MORE VULNERABLE WITHIN UNCERTAINTY & this provides an opportunity for small business

Big business has easy access “to the best consultants, experts and professionals in the market” for strategic advice. They seemingly have a perceptive advantage.

In an era of uncertainty and complexity; frequent change makes it difficult for big business to respond and keep up with dynamic markets. They start to become reactive and increasingly use their resources to “retain rather than grow”. The principal “deterrent to their change is   “self change” . The older the company and greater the number of managers; the greater the resistance and ability to respond to changing markets. While there are always exceptions; in context of numbers this is more the rule than the exception.

Big business can afford long gestations and losses. These in reality accommodate the trial and error they go through. Their ability to plan losses for extended periods to gain market share is a daunting strategy and justifiably why they are FEARED by SMALL BUSINESS.

BUT this approach was funded by the unique concept of Venture capital and “virtual valuation which creates wealth much before it is due”. This has not always worked and is cyclical. We have witnessed the dot.com era and then the financial services boom where huge incomes and turnovers were created by derivatives that are virtual products that do not really exist nor reflect accurate market demand. BUT every cycle brings back the respect for brick and mortar based “revenues that create a real bottom line, real jobs, based on real products”. These then become more important to financiers/shareholders beyond the BIG IDEA and BIG SIZE”.

The era of   “virtual valuation”   as the principal creator of wealth will decrease because its proponents are themselves either no longer there or fast fading. This “art” of creating value within a zapping presentation is now being understood for what it is. It is just an art and not a knowledge based skill.

However Venture Capital, Private equity and angel investors will always be there and provide the invaluable source of finance which motivates and creates the most valuable resource – the spirit of entrepreneurship. They should now be more willing to spread their risks and increase their support to small business in this era of uncertainty. So far in boom times very few venture funds have actually supported small business (relative to Indian norms).

We hope this will change!!