The State Of

4 REVIEW [FALL 11]

BY  ERIC  KRELL

Rolling  with  the  Punches  and  Upping  the  Ante    

Innovative  entrepreneurs     grasp  the  true  meaning  of  

“RISK.”
Causes  for  Pessimism   and  Optimism
The volatile nature of small business management is evident in the jagged trend line of the Index of Small Business Optimism the National Federation of Independent Business (NFIB)publishes each month. Although the index, which is based on 10 indicators, is above its 2009 historic low, it has declined for five straight months (as of July 2011). Weak sales are the top cause of declining optimism, according to the NFIB, followed by concerns about rising inflation. “While I am an optimist by nature, like most entrepreneurs, there is a general uneasiness among small business ownersabout opportunities in the near future,” notes Steven Bradley, assistant professor of Management and Entrepreneurship. “In growing economies, small businesses often find new niches in markets, and those niches are hard to find right now.” The 2008-2009 global economic crisis continues to disrupt businesses. “Small companies were hit hard during the recession and are still being negatively affected,perhaps even more so than larger companies, by the lingering impacts of the recession,” explains Kevin Castello, director of the Baylor Angel Network. “Companies with less than $10 million in annual revenue are really struggling to find the capital and access to credit that they need.”

Successful  small  business  leaders  tend  to  treat  risk  as  a  two-sided  coin:  they  identify  and  mitigate  threats  on  one  side  while  seizing  and  exploiting  opportunities  on  the  other  side.   Thanks to the rough wake of the global economic crisis, recent technological breakthroughs, better short-term access to specialized skills and intensifying global competition for skilled talent over the long term, there have never been more threats or opportunities confronting U.S.  small businesses.  
Take it from Pangea Bottles founder Kevin Henry (MBA ‘10), who is definitely a glass-is-half-full kind of guy when it comes to risk. “While a global recession does have an impact on any business, I believe that the recession has led to more small businesses and startups driving innovation by necessity,” notes Henry, who earned his BBA from Baylor University in 2008. “Many largeorganizations have trouble in bad economic times causing them to cut back on certain aspects of their business, while startups have the ability to react more quickly and use the talent more efficiently to create innovative products.” Henry’s optimism is contagious—for every Pangea bottle purchased, the company provides a person in need in countries such as Haiti and Guatemala with clean water for fouryears—and impressive given that the recession and other drivers of change pose new and sizeable threats to small businesses. For this reason, Henry would represent a prototypical “product” of the Hankamer School of Business’ longstanding emphasis on grooming future leaders of startup, small and family-owned businesses. “Hankamer has focused on creating courses and programs for future leaders of startupcompanies, privately held and family businesses since the late 1970s,” says Hankamer School of Business dean Terry Maness, who credits his predecessor, Dr. Richard Scott, who more recently served as Baylor University’s vice president for development until his retirement in 2006, with launching these efforts. This emphasis is particularly important right now, given the number and magnitude of risksconfronting even the most optimistic of small business leaders.

6 REVIEW [FALL 11]

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“It’s no surprise that “improving   access  to  capital” represents the first, and most frequently mentioned, strategic objective identified in the U.S. Small Business Administration’s strategic plan for fiscal years 2011 through 2016.”
Other uncertainties, including the nerve-wracking debt-ceiling...