Small Business Everyday

Is Small Business Saturday bogus?

Don’t get me wrong. I’m glad that small retailers were able to generate at least a glimmer of excitement with the Small Business Saturday event.  clothingcarnivalPresident Obama goes shopping at a bookstore, throwing out an obligatory morsel of goodwill towards courageous small business owners and thanking them via Twitter for “all they do for their communities.”  I did my bit, too, heading south to Exit 122 and the Clothing Carnival in lovely Unadilla, GA.  An odd anomaly of a store, garishly branded with a circus theme,  the Carnival has thrived from billboard advertising on I-75. I like to shop there and appreciate their selection of pants for “inseam-challenged” men like me.

All of that said, I find it more than a little ironic that the whole Small Business Saturday idea was generated by American Express, a multinational conglomerate that is decidedly “unsmall.” Certainly, the SMB segment must represent a measurable portion of their revenue, and their efforts on behalf of small business do reek of goodwill, but the skeptic in me says that there’s another motive at work. At the end of the 2012 event, small business owner Gene Marks penned a semi-snarky commentary for the Huffington Post, postulating that Amex’s motivations were not entirely charitable. In the process, he makes one excellent point:

But Small Business Saturday is a success… for American Express. And good for them. They successfully promoted their brand to small businesses, and the community of bloggers and experts and media around them. They got more consumers to use their cards. They’ve created an annual event with their company’s name all over it. But that doesn’t mean that a small business can’t benefit from Small Business Saturday. All you need to do is focus on the marketing. And learn from the masters at AMEX.

What do the numbers say?

According to SBA data, small businesses are doing ok, but probably not a lot better.   Unsurprisingly, there’s not a lot of data after 2010, but the SBA figures show that during the first years of the recession net closures among small businesses were around 300,000 (less than 5%).  Revenue data is kept by the U.S. Census, and there’s nothing past 2008 to indicate whether small businesses gained or lost market share to larger ones.  The census data does contain payroll indicators that give some indication of the relative size of business categories, though. In terms of both payroll employees and size, the patterns of small businesses reflected those of much larger businesses (see the graph below).
 

Payroll Graph by company size

Source: U.S. Census Bureau

From the SBA’s perspective, a small business is a company with less than 500 employees.  In 2010, there were almost exactly 5,717,302 firms that fell into this category.  They employed 54,996,680 human beings with a payroll of roughly $2.1 trillion. Impressive, huh?

The numbers are significant, but not quite so astounding when one considers that 17,236 firms with over 500 employees employed almost exactly 58,973,413 human beings that same year with a total payroll of roughly $2.8 trillion. There’s a question of scale, and large businesses obviously carry more economic clout. The numbers explain why most of the economic relief measures employed by the federal government after the recession were focused on large businesses – they were an easier target to hit, so small companies got short shrift.

Shouldn’t Every Day be Small Business Day?

My question is this: Isn’t the message of the small business shopping event worth repeating every day? I’m in agreement with Gene Marks.  Small businesses should take a lesson from Amex and focus on the marketing.  They at least need to tell the story. There’s so much to say, beginning with the fact that most small, local businesses really care about their communities.  They hire people, sponsor Little League teams, support local causes, and provide life and energy to small towns that receive little or no attention from large corporations.  As a rule, small companies are investors in the local economy – profits stay in town.  Large businesses withdraw.  While the payroll figures of corporate America are attractive to economic development types, lots of small businesses provide their employees with high quality of life and good working environments that frequently include benefits, even health care.

Small businesses, especially those with 20 or fewer employees, certainly lack the economic impact of the major corporations who were recipients of government largesse. None of them could be pronounced “too big to fail.” They also lack the marketing dollars, but they more than earn the purchases of their customers through careful selection of products and high levels of customer service.  How do I know this? Easy. An intensive customer focus is required of any small business that wants to continue in operation.  Customers just won’t put up with WalMart service at their local hardware store or boutique.

It’s a simple message: support small businesses every day. We should keep Small Business Saturday and even thank American Express for the idea. It makes great marketing sense.  But let’s declare the rest of the year Small Business Everyday and spend more of our money with our neighbors and friends who strive every day to earn our business and to make our communities great places to live and work.



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