A collective sigh of relief quickly spread through key segments of the U.S. economy last week as news broke about QE-3 — the third round of quantitative easing announced by Federal Reserve Chairman Ben Bernanke.
The action included the Fed’s commitment to keep short-term interest rates near zero until 2015 and to buy $40 billion a month in mortgage-backed securities — two important steps that will reduce interest rates for home buyers and other borrowers. This confidence-building move is a reassuring sign to the financial markets as it signals to investors that U.S. monetary policy will serve as a stabilizing partner as our economy continues to improve.
While market confidence is an essential element in the decision making that takes place in the board rooms of multi-national corporations and other parts of our global economy, confidence teamed with creativity and the determination to move innovative products to market is the life blood of small business owners. It’s what wakes us up in the morning and it’s what inspires us to dream big.
There are two underreported market shifts that have taken place in the U.S. economy in the last few years that I think position innovative small business owners to reap unprecedented success now and into the future.
First, the proliferation of free distribution channels to promote and distribute products and services are a boon to small businesses. ‘Business 101’ is about the ability of entrepreneurs to get his or her product into the market place. Right now, anyone with Internet access can lay claim to their own YouTube channel, their own Pinterest page or any number of online social media platforms. These are invaluable channels that allow business innovators to access the global marketplace.
For instance, examples abound of rags to riches stories of authors who, initially, find supportive niche audiences online only to have their work picked up by leading distributors. For instance, “Fifty Shades of Grey,” with 30 million copies sold as an e-book, has had its film rights recently optioned by a division of Universal Studios.
A July report by the Association of American Publishers showed e-books’ net sales revenue more than doubled in 2011 vs. 2010. For the first time, e-book sales ranked number one for the year in net revenue among all individual print and electronic formats.
Second, the means to finance small businesses has radically changed and is continuing to evolve. While popular media loves to focus on the latest, new Silicon Valley start-up and the private interests who fund them, in the aftermath of the Wall Street crash of 2008, growing numbers of small business innovators are actively turning away from the large, money center banks and, instead, are finding start-up capital from a growing network of small, microlenders and private investor groups.
Organizations as diverse as Crowd Check, which pools investor resources to support small business innovators, or Biz2Credit, which teams technology innovation and market analysis represent the future of small business investment. In today’s technology-driven economy, great ideas and proven leaders have an eager audience of investors on the hunt for the next savvy entrepreneur.
There are no guarantees for any new business start-up. However, the rapid changes in our economy, teamed with a strong and growing class of innovators coupled with efforts to change federal and state policies to allow interstate access for online lending and investment makes this time in our nation’s history one of the most exciting since the dawn of the 20th century.
Last week’s action by the Fed was a welcome confidence builder for our economy, but it’s the combination of small business innovators and better means to access diverse consumer markets that will power economic growth well into the future.
Sharon Jenkins is principal and lead strategist at Alexandria-based My Brothers’ Business Enterprises, a multi-media content production company.