Social Media - A (Small) Business Revolution

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How does the old saying go?

With every dark cloud comes a silver lining?

Well, in the case of small businesses getting off the ground…

It just may be true.

If you’re an entrepreneur or small business owner—or want to be…

You know that getting capital is a big deal.

You also know that getting funded from a “business” bank today…

Is about the same as buying a lottery ticket…

Yeah, it happens, people do get money…bt the odds just aren't very good.

But the silver lining in this era of tight credit, imploding banks, corrupt Wall Street firms, phony green businesses…

And an Administration who wouldn’t know an entrepreneur if it had lunch with one...(Steve Jobs)?

Is the social media revolution.

That’s right…

Facebook et al are re-defining the parameters of business and investors—and their access to one another.

Small Business Strategy & Risk

Small business owners and entrepreneurs are now using social media for a very strategic purpose…

Which is to raise capital for their business enterprises that would otherwise not be available.

People are “friending” on face book and leveraging many other sites to tell people whom they’ve never met about their business plans…

And potential investors are able to look into many opportunities that they would not ordinarily be able to…

And lo and behold…capital is being raised.

People are investing.

And why not?

Well, for one thing, isn’t it risky?

Compared to what, buying shares of Lehman Brothers?

Or Bear Stearns?

Or even GM?

No risk in those giants of American business, right?

What about buying real estate?

Please…do we need to go there?

The truth is, there is indeed risk…

But in today’s world…

Risk is everywhere...

And the truth is, it always has been.

But this is really true in today’s treacherous economic times…

Who has any confidence in the established ways of investing?

How many folks have seen their money evaporate in a mutual fund…

Invested in companies they had little or no knowledge of…

To say nothing of the fund’s management?

The answer, of course, is tens of millions, actually.

So, there are risks, yes, but there is also opportunity…

And why shouldn’t people be able to offer an opportunity to others…

And why shouldn’t people be able to decide if the opportunity is a good one…or not?

That’s the American way, isn’t it?

But, in this new way of entrepreneurship, there is something else happening, as well…

Which is also a welcome development.

It’s the sense of individuals taking back a little bit of control over their investments…

And over the funding of their businesses.

And that is a good thing overall.

Redefining the Investment Community

Clearly the impact of the social media revolution is undeniable…

It has redefined how we think about community...

And also expanded our sense and scope of community.

And in the context of business and investing…

Social media has returned power to the individual and those within any given community…

And loosened, just a bit, the grip of large banks in determining who gets funded…

And who does not.

Because truthfully, it is hard to get funded in the best of times…

But much more so today.

And, in the interest of full disclosure…

I understand this on a very personal level.

A few years back, after walking out of another disappointing movie with my wife…

I decided that I could write, direct, and produce a better film.

But raising the funds was nearly impossible…

So I funded it myself…

The movie got made…was popular and won some nice awards…and got distributed.

But I certainly wish I’d had known of the opportunity to raise money online.

Happily, today, that opportunity exists for all kinds of entrepreneurs…and is catching on.

In fact, even Congress is considering a bill in support of entrepreneurs raising funding online in exchange for equity positions for the investors.

What would this mean for entrepreneurs?

It would be a radical change in American business…

Business activity would likely explode.

Why?

Because it would get rid of the ban on “general solicitation” for equity securities that are not registered with the Securities and Exchange Commission, among other restrictions.

Will it happen?

Hard to say.

Aside from the resistance from traditional banks and other interests in the financial community…

There is also the area of consumer protection from deceptive practices…

And, granted, it’s a ripe market for fraud…

But again, what isn’t risky these days?

Can you even trust what a NYSE listed company’s balance sheet says?

Does any investor in any listed company really know where or how money is being spent?

For every Bernie Madoff, there’s a Jeffrey Skilling of Enron, a Dennis Kozlowski of Tyco, or even a Brian Harrison of Solyndra…

And at least this way, the smallest of the small business owner or entrepreneur gets a shot at funding…

The upshot of it all?

It needs to happen more.

So small businesses get a chance to develop…

And people get a chance to invest…

Perhaps the start-up grows…

And the investor makes money…

And the business hires people to work for it…

And unemployment drops.

Can you imagine that?

I can.

And those are…The Gorrie Details

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