Like many, I was surprised this past week to learn of some of the recipients of PPP funds, many of them publicly traded companies. It seemed unfair and unjust, like big business taking from small business. Maybe they were. PPP’s presentation as a small business program highlights the risks of using a relative term like “small” for something so important. I am sure that the group of publicly traded companies that received PPP benefits consider themselves “small” compared to some other Goliath and were no less anxious and hurting than the general population. Pain is pain. It is usually a mistake to opine on others’ pain through your own lens. Truth is, we just don’t know all the circumstances of those companies and what was at risk.
Still, I found myself frustrated by the missed opportunity for thousands of small businesses. My ongoing beef is with the ridiculous definition of “small” used by the SBA and the US Chamber of Commerce: 500 employees or less. Keep in mind that 92% of businesses in America have annual revenues of $2 million or less and likely average 25 full-time employees or fewer. We know what end of that size continuum will fund the lobbying effort, and how it will shape the agenda. We know it because we just saw it. Something needs to change there. I thought Japan’s small business definition was much more sensible at less than 20 employees.
My mind raced all week about the relative term of “small” in business – what that really means. Even small businesses left empty-handed in PPP’s first round look like Goliaths compared to microbusinesses in third-world countries and some urban US areas. I decided that capitalism is kind of like the movie, Big, starring Tom Hanks. Most people love the idea of being “big” but forever in their hearts know that staying “small” is the best. Paradoxically, there are ways to stay small while getting big. I wish it were as easy as just saying “goodbye” to being big, as Tom Hanks’ character Josh did! So, let’s balance our thoughts with five reasons for getting big, and five ways to stay small while you are getting big.
Five Simple Reasons Why Businesses Strive to Get Bigger
Mass is vital for momentum. Increasing numbers of clients who love you means fewer for your competitors, and tremendous energy in the market. Momentum will be on your side.
If you are not growing, you are shrinking. Mr. Rogers figured out how to weigh exactly 143 pounds all the time, but for most people it is very hard to stay exactly the same, isn’t it? Most people I know tend to believe if you are not growing, the death spiral has begun. Sometimes the fear can be so great or the need so urgent that hyper-growth plans are spawned, which cause a whole other set of problems.
America loves big things. As a nation, we seem to value bigness over essential beauty in many ways, and there is a latent urge to be the biggest. The Empire State building gave way to the World Trade Center. The Washington Monument looked pretty tall until we carved Washington’s face into Mt Rushmore, a mile in the sky. And then there’s Amazon. Breathtaking, all of it. It means even more when it is your own creation.
The economics are compelling. Scale drives down costs, which increases profits. More buying power allows one to cut better deals and average costs are reduced by fixed costs being spread across more clients. Shareholders truly love this idea and its impact on company valuation.
Privileges. Beyond the buying power that bigness creates, it also produces clout, especially in the political arena. Lately, it has been refreshing to see billionaires use their clout in worldwide causes of hunger, healthcare, and education.
Five Ways to Stay Small While You Are Getting Big
Simple processes enhance momentum. Bureaucracy and confusion are business killers –friction in the system. Everything you do, both internally and externally, must be designed for the highest level of simplicity. When your business is growing rapidly, it is easy to get caught in the trap of placing band-aids on major process flaws, just to get through it. You are effectively writing an order for a huge consulting gig for someone. Be disciplined about keeping it simple every step of the way.
Employee empowerment. The “small” stereotype is agile and energetic. The laws of physics dictate that in order to maintain momentum, when mass doubles, energy must be squared. That means that every single employee in your company needs to care as much as you do and have the same sense of ownership. Trust them to do the right thing, clean up mistakes later. The energy difference in your company will be electrifying both inside and out.
Client Connection. The micro-economists lick their chops as scaling begins to happen, rallying for the lowest possible unit cost. Technology will play a role in any scaling effort, but you cannot become so enamored of technology that people are no longer in place to connect with clients. Connecting is a different thing than communicating. Many forms of communication can be automated, but the connection that people feel with small firms is a product of people being in places where clients need them the most. Have you ever had a human, interpersonal interaction with anyone at Facebook, Instagram, or Twitter? And, how did that feel?
Transparency. I am not talking about opening your books to the general public. When I do business with small businesses, I feel the presence of the owner in every interaction. Most often, I see the owner and interact with him or her during my client experience. As your business grows, it is impractical to think that clients will have an experience with you in every transaction, but they can still know who you are and how much you care. Too many options to list here.
Relativity in your communication plan. In most cases, you can always make a case that you are the “small guy”, battling behemoths, with a straight face – because everything is relative. You really ARE small compared to someone else. I know of one bank that by asset size is in the top 1% of all banks in the U.S., but still rails against “big and bureaucratic” competitors. Warning: I would not try this unless you had already been successful with the four items above because people know “small” when they experience it!
