Two articles I read this morning join together nicely to provide a good picture of small business - success, contribution, challenges, and demise.

The first is from MSNBC, 100 sizzling small companies to watch. It's an article about the agility and competitiveness of top small companies. What caught my eye is the following on the level of contribution small companies make to our economy:

Small businesses produce 14 times as many patents per employee as large companies do, and they are twice as likely to turn those inventions into successes...They account for half of the private gross domestic product, create more than 60% of net new jobs each year, and pay 44.3% of the private payroll.

That's a staggering contribution.

Small business has an advantage in being able to move quickly. Small companies are most often started by people leading with a vision of achieving something in particular, chasing a dream. Enthusiasm is high and creativity is at a maximum level. Fast, agile, too dumb to know better, too young to care.

For many, if not most, success is the first step to failure. That's where the second article comes in, an article from bizjournals titled Why small businesses lose their velocity advantage.

Here is an overview of the deterioration process: Sales growth requires hiring significant numbers of additional staff. This leads to additional layers of management. Soon there are Leads reporting to Supervisors reporting to Managers reporting to Directors reporting to Vice Presidents reporting to the Chief Executive.

As small companies grow, they too often loose their agility. Policies, procedures, and fiefdoms choke the life out of once nimble organizations. As you grow and add more people, it becomes necessary to formalize, you have to. Departments grow, conflict increases, the vision is challenged...all natural occurrences. And you see it all the time, I've lived it twice.

There's no lesson here, just a tale of success, challenges, opportunity, and the consequences you need to be prepared for. Read both the articles, they combine to give you a good perspective of the business life-cycle.