Posted: July 30, 2010

It is difficult to overstate the importance of small business for a nation's economy. In the U.S., small businesses are credited for creating most of the nation's new jobs, employing about half of the nation's private-sector work force, and providing nearly half of the nation's nonfarm gross domestic product.

In 2008, after the onset of the "Great Recession," small businesses took an unfortunate brunt of the economic downturn by receiving little public subsidy and direct economic aid. Faced with frozen credit markets, rising health care costs and weak consumer confidence, small businesses patiently persisted through an uncertain economic climate. Yet for the long-term outlook, small firms continue to face challenges and costs connected to health insurance, attracting a quality work force, meeting global competition, as well as the familiar burdens of regulation, taxes and government procurement opportunities.

Despite the host of challenges facing small businesses, research shows it will be small businesses and entrepreneurs that will pave the way to the economy's eventual full recovery. The ability of small business to remain flexible, innovate and embrace new industries is essential for new job growth and capital investment. This adaptive quality of small business, furthermore, is precisely what makes them ideal models of strategic collaboration. In fact, many of the reasons that individuals seek the vocation of small business ownership - such as the desire to be creative and productive, the desire to engage or service a particular community and the desire to be free from regular authority - are features favorable to lasting community-based relationships. As small business owners are free to work where, when and with whom they want, they simultaneously increase opportunities for expansion, re-investment and innovation.

The pairing and collaboration of small businesses is certainly one important type of strategic alliance to emerge in the new economic paradigm. However, the precise sense of collaborative competition where the interests of stakeholders of the local economy are perhaps maximized, or most directly served, results from a model of collaborative completion where nonprofit organizations are teamed together with small-business owners.

The growth rate of the nonprofit sector, recognized for outpacing both the business and government sectors, is largely spawned by need-based community activities and ideologically led mission programs. Although representing only a small part of the U.S. economy, the type of organizations and expertise represented in the nonprofit sector represents extraordinary talent and specialized knowledge. As a result, as the sector grows in size and financial clout, both policymakers and the public have a vested interest in preserving the autonomy of nonprofits. Nonprofit leaders and nonprofit boards of directors similarly have a responsibility to understand their organizations' economic and service niches as they plan for the future. Coordinating the resources and assets of the community, therefore, is an opportune occasion for a collaborative partnership with small business.

Part of the reason why small businesses and small nonprofits are so suitable for collaborative partnerships is their commitment to a common group of local community stakeholders. As it turns out, many of the groups and individuals that are directly served by one enterprise/organization are also served by the other. In our local lives, it is often the case that the requirements for happy, fulfilling and meaningful interactions depend on a complex network of compassion and caring individuals. And while there is no reason why these networks of individuals remain off limits for larger firms and businesses, arguably local business communities offer a greater chance for both intimacy and regularity of interaction -two qualities that increase the likelihood of meaningful interaction. That is to say, because individuals in a given community are motivated to come together and respond to the needs and wants of others in their group, an opportunity is created for lasting partnerships and meaningful projects in the future. Ultimately, it is the strength of the relationships among the stakeholders of the business environment that provide the security and predictability necessary for a sustainable capitalistic exchange. The synergistic harmony between individuals committed to small business and small nonprofits, therefore, epitomize what is meant by "B-harmony."

"B-harmony" is a concept that embodies the way businesses and nonprofits can compete, both individually and collaboratively, while balancing various stakeholder interests. Leveraging intellectual capital can play a crucial role in the success of an organization. Part of this endeavor includes understanding knowledge management. Knowledge management is the process of gathering and transferring explicit information among the functional units of an organization's overall network. Within a business economy this includes marketing, production, planning, finance, management and deployment of digital communications including online social networks or OSNs. Within the larger more established firms, intellectual capital is often recognized as a valuable resource on par with material assets such as the land, buildings, employees and equipment. Managers of small businesses and small nonprofit organizations, therefore, would be remiss not to develop ways to enhance organizational competence and the development of intellectual capital in their organizations.

Local small businesses and nonprofit organizations are invited to witness B-harmony through a new series developed by Christopher Newport University's Small Business Institute. The event, "The CNU-SBI Workout: Is Your Business 'Fit'?" will take place from 8 a.m. to 5 p.m. Aug. 6 at the David Student Union at CNU.

The conference will give small businesses and nonprofits an opportunity to develop a self-assessment strategy that increases their effectiveness and efficiency throughout all phases of operation. This will be accomplished by identified topics of interest presented by business practitioners and academicians, which include accounting, business development, business compliance, finance, laws and regulations, marketing, management, online social media, website development and many more.

Patrick Douglas Walker JD, MBA is assistant professor of management and business law director of the Small Business Institute at Christopher Newport University. He can be reached by e-mailing patrick.walker@cnu.edu.