An Economy of "Human Need"…….And Why It’s Forever Changing Today’s Entrepreneurs
Talk to a dozen economists about the state of the U.S. economy and you might get 12 different reasons why each think—following the 2008 financial crisis—the overall macro-economy has been forever vastly altered. Talk to a dozen entrepreneurs about the state of the economy and you should get 12 same reasons why each think—following the 2008 financial crisis—the overall macro-economy has been, again, forever vastly altered. Moreover, is there any real discernible difference between what an economist and an entrepreneur does? Maybe—but not probably! Other than the fact that an entrepreneur—driven by his/her own perverse desire to seek business profits—works to improve the overall macro-economy, they both appear to be in the business of forecasting.
Forecasting—you might ask? Forecasting is the process of making predictions about events whose actual outcomes haven’t yet occurred. The concept of business forecasting goes as far back as to the very first entrepreneurs who decided they could target a “given demand.” Unfortunately for more contemporary entrepreneurs, what they’re finding out is that it may not be such a good idea to target a “given demand” as much as it is to target a given “human need.” What worked yesterday doesn’t necessarily works today—this dictum especially holds true in today’s sluggish economy. An economy that has seen: 1) Long term unemployment at an historic high 2) A savings rate at its lowest level in recent decades; and more importantly 3) Consumer credit a virtual standstill.
What this all translate to—in relative terms—is an economy of penny-pinching consumers with very careful spending habits. In essence, if they don’t “need it” they’re not “buying it.” Thus, entrepreneurs in search of their “almighty profits” are now force into studying, analyzing and extrapolating macroeconomic trends more than ever: kind of like morphed offshoots of today’s macroeconomists (aka “econtrepreneurs.”) Much to the detriment of past entrepreneur’s mistakes, prior to kicking off their small business enterprises, today’s entrepreneurs are quickly learning—in a kind of “econtrepreneurial way”—that it really pays to know the laws of supply and demand.
For what it’s worth all you “would be” entrepreneurs out there—interested in creating “the next big thing”—the prevailing mantra of if you build it, they will come, might come off as a bit passé. Instead the mantra of, the need for “human need” is slowly taking the economic/entrepreneurial world by storm. When Plato said, "Necessity is the mother of all invention," I guess he meant it for today’s entrepreneurs struggling with today’s sluggish economic times.
At its very bare minimum level, an entrepreneur’s product/ service has to go above and beyond the law of demand; which, of course, innately, goes back to human “wants and needs.” Today’s econtrepreneur’s job, not only, entails recognizing both emerging and latent demand but also includes keeping a keen eye on embryonic macroeconomic trends: we’re talking about demand so early that people don’t even know they need it yet—now that’s early demand (better known as human need.) Macroeconomic trends? Consider, for example, the 34 percent obesity rate in this country; the 36 percent of homeowners wanting to downsize to smaller homes (homes of less than 2000 square feet); better perhaps, the 71 million Americans approaching their golden years. Profiled below, indeed, are three companies that did take into consideration these embryonic macroeconomics trends and, indeed, should reap the economic benefits from them.
The Macroeconomic Dilemma: First Lady Michelle Obama probably said it best when she said: “Obesity could now be an even greater threat to America's health than smoking, and if the nation stays on its current path, nearly 50 percent of all Americans will be obese in 10 years - not just overweight, but obese." Simply put, when it comes to a person’s health, he/she is going to “need” to do something about it. Suffice to say this alarming macroeconomic trend could, truly, have “macro-monetary value” to the right entrepreneur(s) who’s able to provide the right product/service in response to this enormous demand. What’s the market economic response to a frightening health statistic like this one: it may be simply one of catering to those particular diners “in need”—i.e., the millions of Americans diners, that doesn’t only “want” something tasty and quick but “need” something tasty and healthy.
The Econtrepreneur’s Solution: An econtrepreneur(s) armed with the right information—thinking of opening up a fast-food franchise—may want to think twice and maybe hop aboard the fast moving quick casual dining train. Panera Bread is a bakery chain of quickcasual restaurants in the United States and Canada that not only sells breads but also offers sandwiches, soups, salads, and many other healthy bakery items. “Our bakery-cafes are principally located in suburban, strip mall, and regional mall locations,” said the company’s spokesperson. “We feature high quality, reasonably priced food in a warm, inviting, and comfortable environment. Nearly all of our bakery-cafes have a menu highlighted by antibiotic-free chicken, whole grain bread and select organic and all-natural ingredients, with zero grams of artificial trans fat per serving, which provide flavorful, wholesome offerings.” Quite a contrast to the millions of fast food restaurants that most health pundits, now feel, could be the main culprit to this country’s health issues. I guess when you put it in those terms, quick casual dining could, very well, be an econtrepreneur’s dream come true—that is, of course, if he/she’s able to target the right kind of “human need.”
The Macroeconomic Dilemma: Coming off one of the worst real estate housing debacles in the history of our great capitalistic contemporary society, the American housing market has been inundated with “upside down mortgaged 2500-5000sq.ft. homes.” With the MTV Cribs decade (2000-2010) finally over with, the second decade in this new millennium could, indeed, usher in a real estate renaissance like none before: it appears that today’s homeowners are downgrading from those mega-structures of yesterday and settling into smaller homes with more modest building standards. To the surprise of many, Americans are now demanding much smaller sized homes: hit with a zest of humility by this very same crisis, Americans appear now more willing to do things from a smaller point of reference. Whoever said “bigger was better” obviously wasn’t living in today’s time—as more and more Americans are expecting to downsize into environmentally sustainable homes. The U.S. green building market is expecting to expand from $71.1 billion to well over $175 billion within five years—according to many trade publications.
The Econtrepreneur’s Solution: Blue Homes, based in Massachusetts, structurally manufactures and builds eco-friendly modular homes. These aesthetically pleasing homes are built with this generation’s “smaller is better” view in mind—to be precise, starting at 750sq.ft. Blue Homes, which employs about 50 people, have already sold eight homes and estimates to sell about 20 this year. “Blu Homes simplifies the home building process for our clients by utilizing our proprietary 3-D design and visualization technology, cutting-edge building science and our precision-building process,” says the company spokesperson. “This means you can build your new home easier, faster and at a fixed price.”
The Macroeconomic Dilemma: Unbeknownst to many, there’s an increasing “aging boom” in this country. Even more startling, the aging U.S. population that isn’t situated in assisted living facilities lives by themselves. A survey conducted by the AARP states that, "90 percent want to live out their golden years in their own homes." How can this be made possible? Don’t worry “grand-ma and grand-pa,” the free market enterprise system may have a solution!
The Econtrepreneur’s Solution: Ever heard of a company called GrandCare Systems? Based in West Bend, Wisconsin, this small company makes technology that helps seniors live independently. This is accomplished by sensors that are installed around the home: “The GrandCare System is connected to any dedicated Internet Connection and communicates with ‘wireless’ sensors throughout the residence,” according to their website. These same sensors tracks the movement of the residents, check room temperatures—thus allowing remote reporting of blood pressure, pulse, weight, and other health indicators.
In order for a small business owner to stay competitive, they may have to look above and beyond the economic dogmas of “supply and demand.” Coming off our nation post war's worst financial crisis since the Great Depression, today's budding entrepreneurs are quickly learning that it pays to understand a little about how the overall macro-economy works—that is, of course, if they want to turn a profit. Under normal economic environments, an entrepreneur should base his/her entire existence in the marketplace around the law of demand—which states that, ceteris paribus, as prices goes down, the quantity demand should rise. But what entrepreneurs are now finding out in a “human need based economy” is that this paradigm may not hold true. Surprisingly enough, if entrepreneurs are able to economically calibrate for these aberrant economic times, they may—in the process—be able to win new markets, new fans, new praise and most importantly new profits.