Friday, October 14, 2011

I’m a Small Businessman --- No You’re NOT.

… after I pay my 500 employees, I’ve only got $400,000 left over to feed my family.  (Self-described “small businessman”).

By what definition does this guy think he’s a small businessman?  Is a family owned company that employs 10,000 workers a small business?  Is an incorporated law firm with five employees a big business just because it has “corporation” after its name?

We don’t really seem to have a definition of a small business and anyone who wants to exploit the term just calls himself a small businessman.

So, here’s a definition.  A small business is a business where

 the owner knows every employee by name

The real difference between small and large business is number crunching:  How does a business deal with an employee who has some special need?

The 500 person “small business” most likely has an accountant and a human resources department.  Since the owner doesn’t know his employees personally, he has to rely on his number crunchers who, due to the lack of personal relationship with each employee, have created a rule which must be followed.

The small incorporated law firm’s owner knows everyone by name.  He can sit down with the employee with the special need and work something out.  And, if the employee is sufficiently valuable, he will bend over backward to meet his needs.

So, incorporation doesn’t make a business “big.”  Neither does family or personal ownership make a business “small.”

A small business is a business where the owner knows every employee by name.

Let’s get some rationality into the discussion by spreading this definition …

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