In the survival of the fittest, will small be the new big?

Will the next few years belong to the micro-size businesses?

A few months back, we said here that today belongs to the big companies. The reasons were obvious under an inflationary environment: geographic advantage; bigger cash pipeline; buyer bargaining advantage; product diversity; greater rational to seek government help.

Now that the environment is one of recession and deceleration, this means bad tidings for companies with large overhead.

We already see a lot of large companies starting to fail in banking, financial services, and automobile industries, perhaps soon, in the retail and in the tech industries. General Motors may soon file for bankruptcy. Dell and Apple are starting to lose traction. Of course, everybody knows all the names that have gone under in the financial industry, Lehman, AIG, Bear Stearns, and many others worldwide. More may soon follow. Government appetite for bailout is rightly waning as business after business seeks for protection from the inevitable.

Being big is no protection when no product is rolling out the door. In this kind of environment, small and informal may be more appropriate. Large and extensive only translates into heavy and expensive.

If the global recession proves to be deep and long, how many more large businesses will we see fail? I also have to re-think the usefulness of consolidation among financial institutions from here on...