Are You A Real Small Business?

Did you know that a cheese manufacturer with 1250 employees, and unlimited revenue is considered a small business by SBA? And so does a retail bakery with 500 employees, a brewery with 1250 employees, a shoe maker with 1000 employees and a gold miner with 1500 employees and a petroleum extraction company with 1250 employees! The list goes on and on. Don’t be surprised if you find a multi-billion dollar company with over 1000 employees in category of small businesses, because there are many.

Why does it matter? Let’s dig a little deeper.

A single mother selling pizza & cupcakes out of her food truck, making hardly $50K/yr ends up competing with big retail and commercial bakers with up to 500 employees, making millions, in the same category, called, small businesses. Both are typically subject to same class of business rules, tax rules, government programs & aids, contracts eligibility, and above all, market rules.

With huge marketing budgets, access to resources, access to facilities, skillset, sales & distribution channels, funding, the big guys (still playing in small business category) make business & life very difficult for the real small business owners. These big-small businesses are able to hire MBAs, accountants & consultants to find more and more opportunity, market share, newer business models, and not to mention loop holes.

Until recently, if you invested $1M in underdeveloped remote area in NY State, the state would forgive your state business income tax. It took them a while to realize that companies received benefits in 100s of millions in state-tax by pouring just $1M in a remote village. The program was well intended to promote business and employment in rural areas, but are real small businesses equipped to take advantage of such programs?

From social media marketing to procuring raw materials, the economies of scale benefit the big guys. The lead generation price-rate decreases sharply as you spend more and more on social media marketing, which makes the customer acquisition cost very high for really small marketing budgets of only $100s of dollars. Without saying, it sends the very small businesses into a downward starvation spiral.

A large majority of real small local businesses fail or just hang-in there by a thread, cash strapped, hardly making ends meet. Very rarely, some business gets lucky, shines and ends up being a story plot for a movie or TV show. But there are definitely not enough of these success stories out there. They are not just small businesses, they are small families, who fight an uphill battle in a field, which is definitely not level.

Is there a silver lining? Yes. Definitely Yes.

The answer is simple to explain, but hard to execute. Smart work first. Increase smartness of your business. Dig deep for data (market, customer, product, trends, policies, loop holes etc), find insights and turn them into plans & actions. How do I find time for all this? That’s where hard work comes in.

Good luck, real small businesses, I’m rooting for you.