Why we need small business – Part One

In a past life, I sold lumber. I worked for a great company. We had excellent people. Our company was locally owned, with three production facilities in neighboring states. We were innovative. We took very good care of our customers. We produced and distributed quality products. We were not the cheapest provider in most of the product categories we sold.

You might conclude (correctly) that it is difficult to differentiate one 2 x 4 from another. Yet our company did. We packaged in small bundles to allow our customers to maximize their product mix and inventory turns. We were obsessive about product appearance and labeling. We marketed the finished product; not sticks of lumber, but decks and outdoor structures.

We sold a package of value that our customers needed and appreciated. Our customers were, for the most part, independent lumber retailers. Small businesses themselves, they understood the value that we offered.

Then things changed. A decision was made that the focus of our business must be altered. The smaller companies who were such loyal customers didn’t provide enough volume. We had to sell to a new generation of retailers, big companies that sold big volumes.

The sale to the “big boxes” actually wasn’t nearly as difficult as you might expect. Our company had a great reputation. The buyers at the boxes had heard of us and wanted everything we offered, but with a catch. They didn’t want to pay for it. “No problem,” said the decision maker, “the added volume will carry us through.”

That’s when we lost our soul. The volume didn’t carry us through. We worked harder for less. And our good, loyal customers didn’t like us so much anymore. If the monster box across town had our products, how could they be different? And as our products and others migrated to the big retailers, some of the smaller ones went out of business. The good jobs they offered to long-term employees disappeared. The money they made was now exported out of town.

I left that company and started a little printshop. Burned out, I wanted to be as far from commodities and big retailers as I could get. One year later, our great little lumber company was sold to a monster wood products company. Three years later all of the plants were closed. Our great people lost their good jobs. All of the money that the company had generated went out of town.

What is the point? Small businesses are the backbone of every local economy and deserving of support. While the popular credo may be “think globally,” it is local business that allows those of us who do not want to live in the megalopolis to stay in our friendly towns and little cities. When we, as consumers, succumb to the low price temptation of the monster retailer, we export good jobs and money from our communities.

As a small businessperson, I don’t like the trends. Call me reactionary. I have little confidence that techology will save our small towns and cities. Telecommuting will not drive people to communities like Macon or Perry, GA, nor will it enable our working population to stay as the jobs disappear. Conversely, an innovative, thriving small business community is an engine for growth.

Think about it. The announcement of a new plant or industrial project makes the local Chamber of Commerce look great. But the impact of 500 small businesses, each of whom adds one job per year, is arguably much greater than that of a new plant or industry. Beyond the benefit of a broad, solid job base and the aggregate payroll is the multiplier effect of keeping purchases, payroll and profits in the community.

Time to get off the soapbox. Part Two coming soon . . .


2 Responses to Why we need small business – Part One

  1. […] February 23rd, 2007 · No Comments Why we need small business – Part One « Poor Richard’s Printshop […]

  2. […] Bang the drum . . . when will we learn to support local businesses? Small retailers, hardware stores, and even printshops comprise the backbone of a local economy, especially in smaller communities. Look around in your community. It’s the local businesses that are really engaged. They sponsor local charities, events and Little League teams, sometimes even when the owners don’t make much for themselves (See my previous diatribe Why We Need Small Business). […]

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