Is there a lesson for radio?

Recently I read a post in BusinessWeek about the phenomenon of more businesses being started during a downturn. Some suggest that it’s easier to start companies during downturns because everything a business needs in order be created is cheaper; rent, labor and just about everything else. Everywhere there are stories and articles written about how out-of-work professionals are starting their own companies.

An interesting point was raised that I hadn’t thought of –is it easier to start a successful company during a downturn? This question is a bit trickier in that it may be easier to start a company now, but harder to start a successful one.
Gary Beach, publisher emeritus of CIO magazine put together the table below. The table, based on the Fortune 500, shows what percentages of top companies were incorporated during a recession.

Based on Fortune 500 percentage that were incorporated into business
during a recession year
Top 10 companies 70%
Top 25 companies 64%
Top 50 companes 52%
Top 100 companies 43%
Top 500 companies 36%

percentage of years that the U.S. has been in recession 39%

Based on the information presented here we can draw several conclusions. If we look at all of the Fortune 500 as a whole, we see that only 36 per of them were incorporated during a recession—so so. What is dramatic is the percentage of companies within the top 25 and particularly the top 10 that were formed during a recession.
So what if anything does this mean to the radio industry.

Let’s muse here a bit. First, with more businesses being formed now, radio can look to these small and medium size companies as potential advertisers. As the economy continues to recover, and I believe it is—companies at different stages of their business life-cycle will begin to advertise more. The fight for renewed consumer spending will be great and radio will be poised to get its fair share. To get its share, and then some, the industry will have to move toward merging its core competencies closely with those that are inherent with the internet and particularly local search. We’ll speak more about this in next week’s issue.