Size certainly matters, and not always in a positive way.
-- Michael Powell, founder and owner, Powell's Books Inc., Portland, Oreg.
"We sell used books, which gives us a product breadth that Amazon doesn't have. You have to have a skill set for used books. Each book has to be selected on its merits and priced based on experience, and that takes a lot of training and a fairly large staff. So it's not easy to replicate, and it does give us a semiprotected niche.
"I enjoy the growth, as long as it's managed and sensible and under control, and I enjoy the neat things we can do with books. But I don't have a number in my head that's somehow a benchmark. I do want to grow, because I think we have to, but I don't feel that we need to grow at some exponential curve. All I see is that getting other people in trouble."
James W. Brock, 50
Professor of economics, Miami University, Oxford, Ohio
Coauthor, The Bigness Complex: Industry, Labor and Government in the American Economy
Status: Professor focusing on issues of corporate size and market and economic power (including mergers and acquisitions and antitrust) for two decades
"It's not like one size fits all. Running the local pizzeria is one thing. To assemble automobiles is obviously going to require considerable size. Some things do necessitate what we would think of as a large organization. But even in those fields, the size can be carried too far to where it becomes a dysfunctional thing. I think the perfect example of that is General Motors Corp. They are so huge that it seems very difficult for them to do anything. And so they spend all their time, it seems, coming up with new reorganizations of the organizational chart, of which one cynic said there are two kinds, ineffective and disastrous.
"The inequity of it is, giant organizations in my opinion are clumsy, inefficient, dysfunctional. But they can survive in part just by sheer inertia. On the other side, small businesses have an immense potential advantage. They know what they do without having a committee or a consultant write a mission statement. They've got their focus, their flexibility, their desire and drive."
Stanley Rhodes, 57
Consultant, Linden Travel Bureau Inc., New York City
Status: Independent contractor who works for an umbrella travel agency in an industry marked by both consolidation and Internet-based start-up activity
"To compete in the marketplace, we have to have the numbers and the dollar volume and the revenues to be important to our suppliers.
"Linden is probably one of the larger of the privately owned agencies in New York City. My four-person office is one of many, many independent contractors who work by commission under the umbrella of Linden. On my own, perhaps my volume might only be $3 million to $4 million a year, which is not small potatoes, but it really doesn't make me important to any particular airline. But as part of a company that does many millions of dollars of business, I benefit from it. And so there are many other little teams of twos and threes and fours that work here under Linden, not as salaried travel agents but as independent contractors. We can do the old-time-boutique luxury business, but we can stay alive by being part of a bigger team."
Thomas Lynch, 52
President: Lynch & Sons Funeral Directors, Milford, Mich.
Author, The Undertaking: Life Studies from the Dismal Trade and Bodies in Motion and at Rest: On Metaphor and Mortality
Revenues: Just under $1 million
Status: Independent funeral home in an industry that has undergone rapid consolidation in recent years but whose biggest players are now faltering
"What Service Corp. International (SCI) and the Loewen Group and Stewart Enterprises, who have rolled up hundreds of independent funeral homes, have proved is that they have the ability to acquire rooftops. What does not follow is the ability to operate them. All funerals are local, like politics. What was basically lost in their model of funerals is accountability. In our line of work, because you only die once, accountability is the single most important asset we can offer to the community. Bob Waltrip, CEO of SCI , can buy the name on the sign, but he can't buy trust.
"The mergers-and-acquisitions frenzy of the '80s and '90s did not take into account the fact that we are an unexpanding market. That this model has failed ought not to be a surprise, because Wall Street's great affection for the so-called death-care industry was based on demographics. 'Everyone's going to die!' Like that's news. What they failed to add was 'once.'
All funerals are local, like politics.
-- Thomas Lynch, president, Lynch & Sons Funeral Directors, Milford, Mich.
"Eighty-five percent of the market is in funeral homes like ours, doing 160 to 200 funerals a year, which rely on the townspeople calling. That size seems to work. The sign in front of the house says Lynch. If we're not doing our job properly, they can complain by name. That means I have a vested interest in doing the job properly. That's not because of good morals; that's good business. I rely on my customers' trust. If I'm part of McFuneral Inc., it's not the family across the table that I'm taking care of, it's the stockholders.
"Yes, we want our business to grow. I wouldn't mind acquiring other funeral homes. I have children who may go into funeral service. There are three Lynch & Sons in Oakland County. [The others are owned independently by Lynch's two brothers.] We won't acquire more funeral homes until we have family members who have something at stake by having their name on the sign.
"Size does matter, and it seems that you can get too big. I think that's what happened to Stewart Enterprises and the Loewen Group and SCI, but don't trust me. Look at the newspapers. Look at your portfolio."
Emily Barker is a senior staff writer at Inc.
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