When you look at a big city skyline or take a trip down the information superhighway, you might think that big businesses like Amazon, Walmart, and McDonald's are the main drivers of our economy. What you might not realize is that, small businesses account for approximately 52% of all U.S. workers are employed by a company with 500 employees or less. Why support small business?
I'll give you several good reasons why small business is more important than you realize.
Power Corrupts…Even In Big Business
I'll be honest, it's hard not to like the convenience and prices of big retailers like Amazon and Walmart. They have the capital to invest in logistics networks and big data technology to deliver goods and services at an extremely low price.
Like anything in life, can you have too much of a good thing? We often say that “political power corrupts” but what about business power? Companies like Amazon, Walmart, Netflix, and Facebook became huge because they did a better job at serving a need than the current competition. The only problem is that we're now in business cycle where it seems like one or two large companies dominate an entire sector and the smaller competitors either go out of business or get acquired.
When all the competition has been eliminated, consumers lose a valuable benefit…price competition. When there's a monopoly in any industry, the company can charge more because they know consumers don't have another, cheaper alternative. Take cable tv companies for example, before you could start streaming tv over the internet.
While I'm not going to say Jeff Bezos is a retail oligarch, I think the growing dependency on mega-cap corporations is a long-term negative trend. From a consumer perspective, a lack of small businesses discourages innovation and price competition.
Small Businesses Offer Personalized Service
One benefit of visiting a chain store, restaurant, or hotel is that you're going to get the same experience each time. Theoretically, a Big Mac will taste and look the same whether you buy one in Wyoming or New York City. The Holiday Inn Express in Washington State will have the same bedsheets and morning breakfast as the property in Washington, D.C.
If you like uniformity, then go with big chains. But, if you want more personalized service, support small business instead.
The successful small business today specialize in goods and services that big box retailers and companies don't offer.
If you don't think there's a demand for innovative small businesses and entrepreneurs, check out these resources:
- The Mastermind Within (Erik runs his own business and hosts other successful entrepreneurs on his podcast)
- Azure Standard (We buy organic food at a discount and support a family-led business that doesn't believe in debt)
- Airbnb (So the founders are millionaires, but you can stay properties owned by real people, not agencies with steep fees)
- Local hardware store (Our Lowe's workers mean well, but most don't have home improvement or construction experience)
- Giving Assistant (30ish people help you get cashback on every online purchase)
- Our favorite ice cream shop (Hands down better than Baskin-Robbins, DQ, or anything in the grocery aisle!)
Take a drive down your local main street and compare the number of chains to local businesses. How many local businesses do you visit?
Small Businesses Offer Flexible Employment
From an employment perspective, a lack of small business means big employers can reduce their pay and benefits. It also means they can require employees to work longer hours. Ask any seasoned corporate employee how their quality of life has been in the past decade and they will most likely say their working conditions are worse now than they were pre-Great Recession.
While companies have cut payrolls and required current employees to work longer hours to reduce expenses, other industries require their workers to wear diapers to meet production quotas. In foreign countries, “sweat factories” are commonplace.
My last job didn't have extreme work conditions, but I knew I didn't want to be a pawn in Big Corporate's chess game.
Pawns are always the first casualty in a Chess game, and I want to be the king.
That's why my wife and I pursued self-employment, just like many others do each year. Sure, we miss out on several insurance and retirement benefits, but we have more flexibility in our schedule.
The Internet has been a huge boon to help people work from home. So you might dropship products sold on large marketplaces like Amazon, eBay, and Walmart, but you can also connect with other self-employed entrepreneurs. As you might guess, I have a love-hate relationship with big businesses. I do everything possible to help small businesses because I'm self-employed myself, but it's virtually impossible to completely avoid big business because they have their tentacles in every niche.
Small Business Saturday isn't the only day you should shop local. Small businesses are open the other 364 days a year too. Many of us went in business because we know we offer an experience you can't get at a chain. Plus, small businesses hold big business' feet to the fire.
Do you support small business? If so, how?
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.