Listening to the political pundits, you might think that big business is the instrument of evil, responsible for all society’s ills. If we could only regulate, tax, and generally punish big business for the
harm it has inflicted on everyone, all would be well. Those same feelings aren’t transferred to small businesses. No, small businesses, bless their little hearts, are virtuous, positive reflections of American ingenuity and hard work, and they create all the jobs worth counting. If only it were that simple.
In February 2010, the Harris Poll did its annual survey on how confident the American people are in the leaders of major institutions. Supporting the pundits, the poll found that only 15% of respondents had confidence in big business, but a whopping 50% had confidence in small business, just 9 points behind the number one institution inspiring confidence: the military. As an aside, Congress was at the bottom of the confidence list. When people are asked “who will lead us to a better future?” Zogby International found that small business and entrepreneurs led with 63% while big business was left in the wake with only 21%. And these results are consistent across many polls. It's clear that the general perception is that big business is bad for everyone.
But wait a minute. Didn’t those big businesses like Google and Amazon begin as very small businesses? How did they start so positively and then at some point suddenly turn evil? The
Small Business Administration defines a small business as having fewer than 500 employees. I don’t know how you feel about it, but 450 employees seems like a pretty big business to me. In fact, the SBA reports that the U.S. has just under 5,000 small businesses that employee 400-499 people. Do you experience the same warm and fuzzy feelings about a 400-person business as you might about a 5-person business? When that 450-person small business grows and now has 510 people, does it suddenly turn bad and join its evil big brothers? Is the company no longer a valued part of the community but rather a predatory giant?
The fact is those cute little businesses we all love employ less than 21 percent of the total workforce while their much larger counterparts (businesses with more than 1,000 employees) employ 44 percent of all workers. A small business can double its workforce—go from 10 to 20 employees, creating 10 new jobs and it still won’t match a business with 1,000 employees that only needs to increase its workforce by 5% to create 50 new jobs. So is our cherished view of small business and what it contributes to the economy misguided? Absolutely not! Why? Because a lot of those small businesses grow up to be big businesses that take their entrepreneurial spirit with them. And it’s during that rapid growth that a lot of jobs are created. We all benefit from the fact that Google, Facebook, Microsoft,
Intuitive Surgical, and Starbucks grew up, providing along the way plenty of interesting new jobs and products and services that only a larger company with more resources can offer.
So the next time you hear the media and the political types bashing big business, remember that all those businesses started with an entrepreneur who had a grand idea to change the world. That entrepreneur’s success resulted in a big business!
It's more like small business turning into corrupted big businesses. Lobbyists, anyone?