Q & A: ‘Am I right in that SMEs are the major force in driving economic growth in hard times?’

I received an email question yesterday from Peter and it goes like this:

(…) ‘Am I right in that SMEs are the major force in driving economic growth in hard times? Was having a discussion over a beer with some friends who believe that it is big business that spends our way out of this. Whereas I feel that it is small compounded increases in the number of startups, etc. that causes this.’

This is a great question and my answer goes like this:

(…) ‘It is big businesses that got us into this mess, namely banks and insurance companies, to name but a few. Not to forget our government.

IMO, small business creates secure and more stable jobs if run properly. I believe that we are witnessing a shift from a big business capitalism to an entrepreneurial capitalism. It is going to be this type of small business that is going to get us out of this mess. The best thing anyone can do is to start a business, even if it only ‘on the side’, to supplement income. It is however important to bootstrap your business from day one and not get into debt.

We are looking at a long-term recession, we may (!) have seen the crash in the last few weeks, but the down turn is not over yet. The stock-markets will decline for a few more years slowly but constantly in my opinion.

I believe this ‘spend our way out of this’ policy is again a way to interfere in the markets. It is not only reckless, but it also will not work.

I believe running your own small business, not going for growth but stability, is the best way to weather this change and have the greatest control over your life.

But this is just my opinion, hope this helps a little.’ (…)

What do you think? Let Peter and me know.

Am I right? or Am I right? — ST.

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