October 30, 2014

3 Deadly Threats Against Small Businesses Today

Don't Tread on MeDespite the economy apparently growing for government and corporations, most small business owners I work with are increasingly terrorized by the unholy alliance of big business  and government.  Across political parties, this alliance is creating an increasingly toxic environment for small business success.

Here is my view of the 3 threats to small businesses — and what should be done about them.

Threat 1: Slow Payment – While large corporations and banks have been fortified with ample low-cost cash to buy small businesses’ products and services, they continue to pay slowly, bargain harder and demand more concessions from powerless small businesses who are selling their souls “where the money is.”

  • Remedy 1: Require all corporations and governments with revenues/receipts over $100 Million to pay all their vendors under $100 Million within 30 days.  This would fortify small businesses’ balance sheets just as TARP funds and bailouts did and continue to do for the goliaths.

Threat 2:  New costs, taxes and compliance — As social causes like sustainability, diversity, healthcare and fair taxation are being legislated by governments and lobbied into favorable terms for corporations, small business is getting choked. Small business used to lament about paperwork. Now, the new costs, taxes and compliance rules are sapping the will of owners to believe that they should risk, invest and remain confident in their businesses. A comedian recently reacted to the Times Square hot dog vendor discovering the incompetent Time Square bomber’s smoking  SUV, that not only must small business save the economy, but now must save the country from terrorism!

How much can we continue to heap on the backs of small businesses?

  • Remedy 2: If large corporations and government are serious about respecting small business as the best vehicle to empower minorities, women and the handicapped to join and increase the middle class, both of these goliaths must be held as accountable for the impact of their actions on small business as they are on the environment, minorities, women and the handicapped!

Threat 3: “Approved” vendor programs force buying solely on price — To shift responsibility and outsource their liability, corporations and governments are hiring third party sourcing companies whose objective is to reduce small business vendor power and commoditize their products and services. And the more owners have to comply with RFP’s and join “approved vendor programs”, the less they can add value through their creativity. Years ago I wrote a piece called ISO 9002 or I So Stupid.   Since then, ISO 9002 and recently, its environmental twin, ISO 14000, along with countless “vendor aggregators” are allowing purchasing agents to buy solely on price and penalizing small businesses who invest in innovation and branding to differentiate their offers and earn increased gross margins.

  • Remedy 3: Recently a European friend of mine commented how the American flag and imagery of small business is featured in so many commercials. Whenever any organization invokes small business “values” or the American flag in their advertising they should have to prove their “commitment” and pay a “royalty” to small business by buying from or investing in small businesses just as consumer marketers must comply when they advertise “Locally Farmed”, “Fat-Free” or “Native-American” on their  labels.

I am so tired of witnessing small business owners endure so many hardships caused by the frivolous and cavalier behavior of the bullies they now face in trying to survive. The more we are impacted by the above threats, the more business owners are distracted from taking risks and confidently investing in profitable growth. Enough is enough!

And for those who only blame Obama, Congress or Wall Street, please don’t stop there! What’s the difference between government, large corporations, donkeys or elephants when it comes to their disrespect for small business owners?   I am still waiting to see if my small business owner’s prayer to Obama will be answered.

To paraphrase the popular country song, “Save a Horse (Ride a Cowboy)” by Big & Rich … save a small business, ride your corporation or government into respecting small business!

14 Comments ▼

Andy Birol


Andy Birol Andy Birol is the author of "The Five Catalysts of Seven Figure Growth." He is also a noted small business coach, consultant and speaker who has been interviewed on CNN, Wall Street Journal, The New York Times, Entrepreneur, and Fortune Small Business. His blog is Profitable Growth.

14 Reactions

  1. Andy, do I detect disgust with everybody, in this post? :)

    – Anita

  2. Disgust is an emotional reaction. I am more numb at this point. What did small business ever do to deserve what it’s getting these days?

  3. I agree that small business is getting a bad rap, but it seems like the implementation of the remedies would involve governmental intervention (which is exceedingly unlikely to happen since big corporations have considerable sway with politicians and their reelection funds). Is there a way to get these remedies in place through other means?

  4. Robert Brady, great point: asking government to help fix government won’t work. The answer is simple (but not easy). Just like politics, all biz is local. I have been part of Chambers of Commerce movements to promote “buy local” and then hear the chamber failed to participate at levels that their members considered appropriate.

    “Buy local” has to become become the status quo first, when ever possible (and you would be surprised how often that is possible). Then, as the commercial said, tell two friends.

  5. I am not a fan of government intervention, at all, but government intervenes all the time regardless of party, level, or issue. So why shouldn’t small business get some legislative help and ROI in return for the massive taxes they pay?

    Chambers are not great at telling their members who to buy from so I go back to suggesting that small business is as endangered as the snail darter, free checked suitcase or New Orleans coastline, all who are getting lots of government attention!

  6. Andy: Time for a new tea party? ;) As an experienced purchaser, I agree with your point “Threat 3″. The ISO system could easily end up in a paper product framed and attached on the wall. The ISO 14000 is totally off the chart according to my view. You should implement TQM into the process, with or without an ISO certificate.

    As a side note, a purchaser should value quality, price and delivery (lead) time as total package.

  7. You bring up some important issues, but more “requirements” and laws aren’t going to help. They will probably be counter productive, and would never be passed anyway. We small business owners need to quit complaining and asking for more government help, and take responsiblity for ourselves. The governments at all levels would do us a great favor by getting out of our way.

  8. Great post. Glad to see it getting circulated.
    Thought this link might help your readers too:

    http://www.freebookkeepingprogram.com/

  9. Good article. Reality is hard to swallow at times. We have seen many of our clients struggle over the last 18 months. Some down 20%, some completely driven out of business. The hardest thing to, do but the most necessary, during these times is to stay focused on generating some form of growth and minimize the other distractions inside your business.

  10. WELL SAID! Wonderfully written article and great ‘remedies’! This is why politics is, for the most part, a giant show/lie. It’s not really about left v. right, or Dems v. Reps, or Private v. Public, nor Government v. Business. The TRUE conflict, the TRUE opposing forces here are Big Government/Big Business V. Small Business/average citizen. Liberals and Conservatives and Private and Public workers are, for the most part, on the same “team”- we just don’t realize it with all the divisive rhetoric. Instead of realizing what we agree on, finding a solution to this diminishing middle class and number of small business and employees, we’re kept clawing at each others’ throats so that we may not find a solution- or the ‘remedies’ this article mentions.

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