It seems cliche but small – even micro – businesses are the backbone of our [global] economy. In the United States, 91.5% of businesses have fewer than 5 employees. And according to the US Census Bureau, $837 billion in sales are generated by non-employer businesses (businesses of one) in 2009. That’s equal to about 70 Apples. That’s big business.
Small businesses employ more people and turn more dreams into reality.
Small is mighty.
No doubt your inbox, mailbox, Facebook stream, and main street are littered with “Shop local” and “Support small business” flyers this weekend. Between cash mobs, Small Business Saturday, just general Black Friday backlash, you are feeling the heat from small business owners and their friends this holiday season.
That’s not bad.
But it’s not good either.
See, we are hurtling towards a new age in commerce where businesses are no longer big or small.
All businesses have access to the most powerful tool of the day: the network. Some use it, some exploit it, some ignore it, some serve it… but all have access to it.
What made business BN (before-the-network) a boys’ club was that only certain boys had access to the most important tool of the day: money. Money meant machinery, human capital, real estate, technology, training, supplies. Controlling financial capital (or being able to turn other assets into financial capital) was the only way to enter the market and do business.
But with power concentrated among those with access to financial capital, things got real uneven, real fast. The more things got uneven, the more financial capitalists saw an opportunity to squeeze profit & productivity out of human capital, environmental capital, and organizational capital.
In other words, we got the shaft.
So we started to see big business – financial capitalists – as the enemy.
“Shop local!” “Support small business!” Cash mobs, the maker movement, food trucks, the modern farmer’s market movement–they all developed in response to a system that had enslaved us and our culture for so long. For many–though certainly not all, these developments were fueled by Us vs Them energy. Rage against the machine.
But we don’t live the in the industrial age anymore. We don’t even live in the information age anymore. We live in the connected age or, as Nilofer Merchant refers to it, the Social Era.
It’s not the steel-fisted financial capitalists that hold the power.
It’s each of us, network capitalists, that hold the power. It’s distributed influence and it’s based on your ability to cultivate connections between you and others around you.
The Us vs Them paradigm just isn’t accurate anymore. A microbusiness, with just 1 or 2 people, can produce a video that is seen by millions. They can grow a subscription base that makes newspaper corporations swoon. They can develop apps that sell for a billion dollars. Small is powerful.
Perhaps small is more powerful.
“In practical terms, here’s what all of this means: a person or team anywhere in the world can create scale without being big.”
— Nilofer Merchant, 11 Rules for Creating Value in the Social Era
(emphasis mine)
The problem is that the Us vs Them paradigm is what we’re accustomed to. It’s what we’ve always lived. So we tend to put people/business/regions/organizations in groups that need to square off.
The “versus” paradigm I see so often taking shape now is Unsustainable vs Thriving.
We’re cheering on those who have created businesses that don’t work, don’t create viable connections, and don’t grow. I’m all for cheering them on — but what are we doing to turn them into Thriving businesses?
Here’s an example: I shared a recent post on how “Facebook is not an advertising charity.” The article makes the case for how Facebook’s fairly new “sponsored stories” option is a triple win. It’s good for Users because they get to see better content, more often, from the people & pages they actually care about. It’s good for Facebook because, well, they make money and seeing how they’re a business, that’s important. It’s good for Page Owners (read: many small business owners) because it challenges them to create better content that will be shared well beyond the initial ad buy.
Every day it seems I see a small business owner bemoaning and condemning a change on Facebook. Generally, it’s not about privacy–it’s about cost. “Facebook is evil” was a comment that graced my screen a day or two ago.
Besides the fact that if you think it’s evil, you should probably not be using the platform, Facebook is a business. Their job is to make money (not unlike yours). To do that, they’ve built the most powerful social connection platform the world has ever seen. As far as I know, it’s the business with the biggest, broadest user base the world has ever known.
Facebook–like it or not–performs a huge service through it’s software. It will learn how to make money. It can (and probably will regardless) make money selling data. But it can also provide immense value to small business owners (that’s a helluva big market) by providing inexpensive, scalable, targeted advertising.
The problem is not that Facebook is evil. It’s that it’s successful (by many measures, if not financially yet).
Facebook, for it’s valuation and reach, it’s very small company with around 3500 employees.
Unfortunately, I see the “Support Small Business” movement as all too often trying to prop up dying business models. Mom & pop shops (virtual or analog) are often run in entirely unsustainable ways. They rarely translate sweat equity into financial equity. They often rely on cheap or free labor instead of trained employees.
I’m convinced that more-faster-cheaper big box stores won out in the Eighties and Nineties because the mom & pops more often than not failed to convince us that they had something better to offer.
I believe we’re not hardwired to prefer paying less, we’re hardwired to pay to get what we want.
Big box stores figured out how to present a package that appealed to us. Small business has the same burden.
When mom & pops provide a package that appeals to us more than the big guys, we pay more, shop shorter hours, and jump through more hoops. But so often, they do not.
Small business abdicated power to big business not so much because the big business muscled their way into the domain of small and more often because small business had failed to deliver a compelling reason for customers to jump through the hoops.
Maybe you’ve heard how a new Starbucks can actually increase business for popular independent coffee shops?
The Us vs Them paradigm we use to celebrate small business glorifies failing business models and practices. It glamorizes the refusal to evolve.
This isn’t Us vs Them anymore. It’s not Small vs Big anymore. It’s us and them. It’s small is big. Small is mighty. Small is powerful.
But not if being small means relying on the generosity of others to prop up what is broken.
So my question is, how do we encourage small business in an era when small is mighty?
How do we celebrate small business in a way that acknowledges its immense opportunity today?
Here are three of my ideas. I would love to hear your own in the comments.
Education is encouragement. Know a small business owner that doesn’t take credit cards? Introduce him to Square instead of cash mobbing him. Know a small business owner that is exploiting free labor? Let her know how much you value well-trained, engaged, attentive service.
Change public policy. Public policy in the United States was built for a different era of employment. With small businesses & freelancers, often unincorporated, becoming a larger & larger part of the workforce (estimates as high as 50%), we need regulations, policies, and laws that make the social safety net (including health insurance, worker’s compensation, unemployment, and bonus retirement savings) the norm for everyone.
Buy what you value. Don’t support a small business or friendly freelancer because they’re small. Support them because they create a quality product. Support them because they add value to your life through their work. Support them because they believe in the same things you do, whether they’re family, faith, the beauty of finely crafted single origin coffee, or the importance of a dozen different mac and cheese recipes.
So yes, shop local and shop small this holiday season. But don’t do it out of sympathy. Shop where your values and value-desired align. Shop where you can get exactly what you want, the way you want it.
Celebrate the opportunities that await small businesses today–not their shortcomings.
