Small business matters now more than ever

Each year, on the last Saturday in November after Thanksgiving, the US holds an event called Small Business Saturday. It is a shopping holiday, the only useful purpose of which is to highlight that small businesses are different. There is not really anything great about only buying from a small business when it offers large discounts.

Small businesses have always mattered. Big businesses are a comparatively recent phenomenon borne out of the industrial revolution. Collectively, small business is the largest employer group in Australia, and can quickly influence employment growth. Imagine what it would do to the unemployment rate if each small business hired one additional employee.

The principal reason why small business works is that every small business owner has “skin in the game” – every day of the week, every week of the year. Things that affect their business also affect their families. Overpaid CEOs and CFOs in large corporations can simply leave if things get too tough, but the small business owner is stuck. CEOs who do the wrong thing pay no penalty, but the business owner does (often for the rest of their lives).

The critical distinction between big business and small business is the micro versus macro approach. You see similar comparisons in microeconomics and macroeconomics.  Macroeconomics is a top-down approach; microeconomics is bottom-up. We can summarise this for business as follows:

  • Micro: Active, flexible, concrete, outcome focussed, personal responsibility.
  • Macro: Abstract, theoretical, big picture – no results, little personal responsibility.

Big business often uses complicated spreadsheet models to solve simple problems. Small business usually does not let problems get too big. Big business (and government) spends someone else’s money. Small business spends its own money.

In any economic downturn, being active, flexible and outcome focussed is what works. Dealing with reality, rather than a big-picture hope strategy, is required to survive. At the start of the COVID-19 pandemic, when there was a widespread perceived shortage of “essential” supplies, supermarket chains waited for head office to tell them what to do. But the small grocery stores had to be adaptable, nimble and customer focussed. The surprise for many consumers was that some of these small stores carried very high-quality items at affordable prices.

You can’t have innovation without profits, and business owners who allocate their own money to developing new products or supply chains invest in the future.

Pretend you live in a small town with small businesses (if you don’t already) and spend your money where the owners have “skin in the game”. You matter to them!

If you need guidance to become more active, flexible and outcome focussed, email me at

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