Right now, we’re seeing an incredible leap in the number of entrepreneurs and small businesses all over the world. The internet makes it possible for a knitter in Estonia to sell her wares through Etsy, a web developer in India to sell his services though Elance and a board game designer in the U.S. to fund a print run through Kickstarter.
It’s an amazing trend to watch, but if you dig a little deeper, you start realizing that entrepreneurship is cyclical — that we’ve seen these booms before — and that the cycles are getting shorter.
The History of Owning Your Own Business
I’m about to compact thousands of years of Western history into some very broad generalizations in order to fit everything into a relatively short article. There are nuances and context that there just isn’t room to get into here, so please bear with me.
Go back aways in history to the time of feudalism: only a handful of people really owned anything. Most people were peasants, working on some lord’s land and passing the benefits up the food chain. A number of factors ended the age of feudalism, opening up opportunities for a large percentage of the population to own their own farms, effectively making them small business owners. The Renaissance and the Age of Enlightenment each brought new opportunities for entrepreneurs.
The Industrial Revolution offered another cycle: there were opportunities for almost anyone to work their way up and build a fortune with a new manufacturing process or by building enough mills. The last century was another downward swing of the pendulum: a lot of people wound up working for the man, either in offices or in manufacturing industries. But the internet started the cycle all over again.
Even within these bigger cycles, there are smaller ones. The internet has provided us with examples: the dot-com bubble offered incredible opportunities for any entrepreneur with a little technical know-how, a brief opportunity for growth and then a dramatic bust when huge numbers of dot-com businesses disappeared overnight.
When It’s a Great Time to Be an Entrepreneur
What this all means for entrepreneurs is that there are a lot of opportunities on the table right now. There are always ways for someone who is smart and determined to start their own business, but during the upswings of these cycles, it’s a lot easier. It’s impossible to say just when the next phase of the cycle will hit, but it will likely look like a time when the new businesses launching now can grow and consolidate. More people will be hired by those companies as they grow (though with each leap of technology, it takes fewer people to operate a given venture). There will be fewer easy opportunities to launch something with potential, though.
Not to be some sort of fortuneteller promising doom, but there will eventually be a bust that will winnow out a lot of the new businesses launching now. It’s an economic fact: if there’s a cycle, it has to include a way to clear the field for the next turn of the wheel.
In a way, though, that offers even more opportunities for entrepreneurs. If you have a sense of what’s coming, you’ve got the opportunity to build something that can withstand those tough times. That’s actually what really did in many of the dot-com companies. They were so used to having easy access to venture capital to cover any lean times that they didn’t know how to cope when that money went away. If you’re starting a business now, you know you have a window to get it up and operating, to grow and then to reinforce everything so that you can withstand the bust portion of the entrepreneurship cycle.
The Cycle’s Evolution
The entrepreneurship cycle isn’t exactly the same as it was a few hundred years ago. It’s never been so cheap to start a business today. If you’re just selling your services, you can be in business for the cost of a domain name, if that, and still reach clients all over the world. Crafters can set up online stores for free, only needing to cover the cost of materials until they make a sale. The barriers to entry are nothing, especially when you consider that even during the days when the U.S. government was giving away land for free to homesteaders, getting a farm was an expensive proposition. Not only did you have to pay hive travel costs to get to the places those farms were, but you had to buy equipment and seed months before you could ever hope to see some income.
The cycles I’m describing have become shorter and the cost of becoming an entrepreneur have dropped. It’s not yet clear what that may mean for people starting new businesses in the future, but it’s fair to expect that entrepreneurship will remain cyclical in nature. Business owners will still need to guard against busts, at the very least. But a certain amount of continuing evolution is on its way.
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