Small Business Transition Blog
Becoming a Small Business Card-Counter
According to the most current U.S. Small Business Administration 23 million small businesses in America account for 54% of all U.S. sales. They provide 55% of all jobs and 66% of all net new jobs since the 1970s. The 600,000 plus franchised small businesses in the U.S. account for 40% of all retail sales and provide jobs for some 8 million people.
Moreover, the small business sector is growing rapidly. While corporate America has been "downsizing", the rate of small business "start-ups" has grown, and the rate for small business failures has declined. The number of small businesses in the United States has increased 49% since 1982. Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs. The growth of the internet, and the movement away from manufacturing to service-oriented business has significantly fueled this trend. With the advent of the personal computer and the exponential explosion of the internet, it is easier to start and run a small business operation from virtually any geographic location!
Now the bad news: in a 2014 study conducted by Small Business Development Center (SBDC), Bradley University it was reported that 50% of all small businesses fail within four years of their existence, and 71 % after 10 years of doing business.
As someone who runs a small business himself-as well as someone who has served as a consultant at a variety of Municipal, Federal, and Defense agencies, and additionally to some of the largest U.S. corporations for nearly two decades-I have come to one immutable conclusion: large business entities are no more efficient and effective than small businesses.
Large businesses are merely better funded and sometimes better managed, but often times not. Large businesses just have more resources and stronger brand recognition. They simply take longer to fail than their smaller cousins.
The SBDC findings support this intuitive conclusion; 46% of small business failures were attributed to Incompetence (Emotional Pricing, No knowledge of Pricing, Lack of planning, etc.); 39% of small business failures were attributed to Unbalanced or Lack of Managerial Experience.
Where once a business-both large and small-was protected by virtue of relative geographic isolation that provided a “captive” customer base that cushioned the impact of business incompetence and lack of managerial acumen, now there is-literally-nowhere to hide if you are serious about competing for market share. The advent of the internet has changed all of that.
We all buy from companies who can provide goods and services faster, better, or cheaper. And unless we have a strong personal relationship with the vendor, few of us would hesitate taking our business elsewhere if we believe they can do a better job, quicker, or for less money. All small business owners bet-against the odds-that they can survive long enough to “cash in”. And like the man at the Las Vegas blackjack table, most are wrong. For that matter, so are all large businesses; they just have the advantage of a larger stake.
The operative word here is, “odds”. The small player who knows-in effect-how to count cards can beat the house odds. It is not easy; it is not guaranteed, but it is possible.
It just depends on whether you want to take the time to make the effort, and whether you believe yourself to be someone to whom the laws of probability don’t apply.
© Mark Lefcowitz 2014 - 2017
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