Darwin and Small Business Survival

For those of us in businesses tied to natural resource sectors, one quickly gains an appreciation for the ups and downs of market cycles that drive investments and returns. Surviving as an independent or small business is tough in any sector, but particularly challenging when the ‘goal posts’ keep moving. In Canada, about 30% of small businesses fail in their first 5 years of operation (Key Small Business Statistics – January 2009, Industry Canada). The failure rate rockets to over 80% for those businesses posting less than $30,000 in sales per year (micro-enterprises and part-timers).

With survival elusive for so many start-ups, it emphasizes for me how small and micro-businesses in forestry, agriculture and other natural resource enterprises could benefit from the mentoring of other entrepreneurs that have weathered one, two, three or more market cycles. Unlike large corporations where CEOs regularly gain celebrity status, we don’t often acknowledge success or tap into the wealth of knowledge and experience in this entrepreneurial network.

Some may see this as a contradictory notion to my own consulting business where I focus on research and development support, and bringing new ideas to market and new production systems online. But quite the contrary, I have the utmost respect for individuals that have been educated at the ‘school of hard knocks’ and weathered many business and market cycles and still found ways to thrive. Talk is cheap, but these are people that walk the talk.

I also believe the whole process of small business survival is an extension of the social evolution of our species. At the risk of being lynched by a group of creationists or black flag anarchists, I freely admit to being firmly in the Darwinist camp. Survival of the fittest is what drives biological and social evolution. Unlike many on either side of the Darwin debate however, I’ve read (and on multiple occasions) The Origin of Species by Means of Natural Selection. And for those that have not taken the opportunity to do so, I think it is good point out that the source of contention for most anti-social Darwinists is one of the most misinterpreted – that everything can be rationalized from competition. Darwin put forward the hypothesis that the struggle for existence was the driving forces behind natural selection of the fittest. But he also clearly notes that he uses the term ‘struggle for existence’ in:

…a large and metaphorical sense, including dependence of one being on another…

In other words, survival can result from cut-throat competition, but also validly stems from co-operative and mutualistic processes. So too in business and other social arenas, your ‘survival’ may come from driving your competitors into the ground, but often success hinges on strategic co-operative investments, working in partnerships and joint ventures. Indeed the laws of the jungle are as much about facilitation as they are about competition.

And one should not conclude that there is only one strategy to follow to success. Many small businesses have succeeded by transitioning between different operating structures and working arrangements as needs dictate. Adaptation to the ever changing business climate is what matters most.

It is this Darwinist approach that logically leads me from seeing how difficult it is to survive a full business cycle to deeply respecting those that have made it through many of them, and wanting to learn from them.

So while we put forth private and public investments into new ideas and cheer loudly for start-ups and new entrepreneurs, it would be prudent to give more recognition to the survival of the fittest and devote resources to tap into that vast network of small- and micro-business experience.

And if you are starting a new business or venture, find a mentor and learn from their experience. A bi-weekly or monthly coffee or lunch meeting could be your most important step towards surviving and thriving.