Advertisement

Carroll Business Path: Don't apply macro data to micro situations

Beware broad statements. For example: "The economy is soft." That's about as broad a statement as you can get. In fact, it's so broad that it means virtually nothing in an entrepreneurial context.

In a macroeconomic sense, it's true that our economy is soft. Over the last several quarters we've bounced around between 0.1 and 2.8 percent growth in our national Real Gross Domestic Product. Those are not percentages that indicate a robust recovery. However, it's an error of logic to apply macro data to micro situations. Given that, what does a soft RGDP mean in an entrepreneurial context?

Advertisement

Probably not much. An entrepreneur should be more concerned with his or her own geographic market and industry. Real Gross Domestic Product is an average. It's an average composed of an extraordinarily large set of data points. There is no expectation that the market growth rate of yacht sales in Florida, the market growth rate of 3-D printers in Maryland and the market growth rate of home improvements in Nevada would be similar, let alone consistent with Real Gross Domestic Product averages.

In fact, 2011 data from the U.S. Department of Commerce, Bureau of Economic Analysis, provides growth figures that vary from a positive 22.7 percent in mining services to a negative 4.6 percent in construction. Furthermore, within that negative 4.6 percent you'll find divergent negatives and positives among the sub-disciplines that make up the overall negative construction industry average for that year.

The robotics industry? It's expected to increase by 15 to 24 percent per year for the next decade. Data storage and processing? It's forecast to grow at an annual rate above 8 percent for the next 10 years.

For entrepreneurs eying the international market, global RGDP is just as wildly variable. While the U.S. is expected to continue recovering very slowly over the next couple of years at a forecast rate of 2.7 percent annually, Brazil's growth is forecast at 5.1 percent, Indonesia's at 6.6 percent, and India's at 7.5 percent over the same period.

My point is that opportunity does exist. It exists right now. This is not a bad time to start a business. It's a very good time, if you start the right kind of business.

Opportunities for small business are microeconomic by their very nature. Macroeconomic averages are not controlling. Entrepreneurs find microeconomic opportunities and exploit them. Should you care that the market for legal services is down 3.2 percent if you're starting a bed and breakfast in a market for accommodations that's up 5.7 percent? Probably not, as long as your intended clientele isn't out-of-work lawyers. Should you let a soft economy discourage you from pursuing your idea for an improved scanner for 3-D printers? Of course not.

If you know macro from micro and how to recognize an opportunity when you see one, you're on the right path.

Advertisement
Advertisement