bootstrapping | Kevin Koym

Recently there has been a bunch of press about the growing threat of recession coming to the US. Today’s front page article of the New York Times tells a story that all of us as entrepreneurs need to start preparing for called “As Lenders Tighten Flow of Credit, Growth at Risk“

From the article there are two important paragraphs to note:

Credit flowing to American companies is drying up at a pace not seen in decades, threatening the creation of jobs and the expansion of businesses, while intensifying worries that the economy may be headed for recession.

The article goes on to focus on small business, and how small business is getting hit the worst. So why is this important? Small business is where all of our growth and job creation is coming from. From the NY Times article:

In recent months, smaller companies have been adding jobs even as larger firms have been shedding workers, according to the ADP National Employment Report, which tracks changes at companies with payrolls overseen by ADP. From May to October, 276,000 of the 378,000 jobs added were at companies with fewer than 50 employees, the report found.

It is the entrepreneurs that are building startup and small businesses that are contributing to the greatest growth of the US economy. Programs that are being structured by the government should take this in account- and support small business- versus focusing on solutions for large, slow moving corporations that typically are the benefactors of the pork coming out of Washington DC.

So what can entrepreneurs do in lieu of dealing with a drying up of financial capital other than make sure that they voice their vote strongly in the coming election? Although I will go over this in a coming blog post and also in my forthcoming book, given today’s news, it is worth mentioning here sooner as well. Even though financial capital might not be as available, social capital can be utilized to continue to build businesses. Social capital, called “human capital” in Paul Hawkin’s book called Natural Capitalism can be a somewhat replacement in lieu of financial capital. Creating social capital is what we have been doing in Bootstrap Austin and other entrepreneurial social networks that I have been building. To get an idea of how this is happening… think back to times when farmers helped each other raise barns together… these farmers were creating social capital with each other (“I help you, you help me”). As many stories from my family members can attest, they had no access to financial capital… but they could help each other, and survive the worst of recessions. It appears that the US is entering into a time that once again that entrepreneurs building social capital together will be the way that we are going to be building our businesses, as financial capital runs and hides during the storm. Thanks goes to David Armistead for one of the conversations that helped me clarify some of the distinctions in this capital transformation.

Lest there be any question about the potential power of the Internet, the One Laptop Per Child Project , and the work that we are doing coordinating entrepreneurs through Enterprise Teaming, see this video. At 14 years old, Malawian inventor WIlliam Kamkwamba built an electrical generator out of some wood, plastic pipe, wire, and a bicycle. His family now has electricity, and William is in the process of taking this project forward.

Imagine what happens when ten million or more young, inspired entrepreneurs get access to basic knowledge that allows them to improve their worlds! KICK ASS!

Here is a link to a TED Talk about the One Laptop Per Child project. Interesting and inspirational as well. We live in interesting times.

Urgent focus: Small Business Growth and Tightened Credit

The Most Inspirational Video I have seen this month

Bootstrapping Your Startup

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