In 1997, when I attended my first Inc. 500 conference, in Philadelphia, an attendee complained to me about a reference in the magazine to "small-business owners." The Inc. 500 are not "small businesses," this founder pointed out, but rather adolescent large companies. To growth-hungry entrepreneurs such as himself, the term "small-business owner" was derogatory.
The guy had a point. The Inc. 500 (now the Inc. 5000) honors America's fastest-growing private companies, many of which go on to chalk up nine-figure revenues. Still, others never approach $10 million, widely considered the middle market's floor. In any case, his comments put me on notice. Over the past 20 years I have chosen my words carefully. I avoid the term "small business" when conducting interviews, except when speaking with proudly Main Street merchants.
Now I think both that entrepreneur and I were being oversensitive. National respect has been growing for small businesses--and not just for those that are small-on-the-way-to-becoming-huge. (Researcher David Birch dubbed such companies "gazelles" in a seminal article in 1979, the year Inc. was born.) Increasingly, the public has come to appreciate small companies for the contributions they make to the U.S. economy (more than half of sales and two-thirds of new jobs, according to the Small Business Administration) and to our way of life, particularly in cities where walkable downtowns are a major draw. Many entrepreneurs prefer to stay small so they can maintain control of their businesses or because technology gives them greater reach with fewer people. Where once "small" meant "modest," now it translates as "lean," "nimble," "innovative," "charming," or "trustworthy."
Meanwhile, politicians can't hope to win elections without paying homage to small companies' importance and touting policies that benefit them. Last year's presidential campaigns were no exception:
"You cannot ever start a small business under the tremendous regulatory burden that you have today in our country. We're going to end it." -Donald Trump
"When my dad ran his small printing business--he printed drapery fabrics in Chicago--it put food on the table; it gave us a good, solid, middle-class home and lifestyle. And I don't think it's old-fashioned to say that's what I want for every family that wants to work for that here in our country today." -Hillary Clinton
These are highly charged times, when government-proclaimed or -sanctioned celebrations such as Earth Day, Columbus Day, and Black History Month court controversy. Small Business Week, which began April 30 and runs through May 6, is one occasion behind which everyone can rally.
The changing face of small business.
President Kennedy introduced Small Business Week in 1963, not a banner period for this sector. Corporations were adding girth through M&A. Discount stores and fast-food joints challenged Main Street businesses. And manufacturing was migrating to cheaper climes, which back then meant the American South. Further insult and injury were on the way: malls, chain stores, big boxes, Asian outsourcing, consolidating supply chains, and global branding.
In spite of that upheaval, small businesses have persevered. And some have done surprisingly well. Artisanal manufacturers are benefiting from enthusiasm for sustainable goods and all things USA-made. Small traditional manufacturers are adjusting to exploit product and technology innovations. Growth in service companies, which (Uber notwithstanding) trend mostly small and local, has been accelerating since the 1960s. In 2016 the federal government exceeded its goal of awarding 23 percent of contracts to small businesses for the third year in a row. Remarkably, the number of independent booksellers has increased 27 percent since 2009, according to the American Booksellers Association.
Small businesses are also getting smaller. Companies with fewer than 10 employees are starting up faster than other small businesses, and the number of soloists has also surged. The SBA has ceilings (which vary by industry) above which companies are no longer considered small. It does not have floors below which companies are considered micro.
All of which suggests the prospects for, and even the definition of, small business remains volatile at a time when government at all levels tries to formulate policies that support it. In some cases, size isn't the critical issue. A border adjustment tax would help small manufacturers but hurt small retailers. Loose regulation of new technology helps startups but potentially hurts small, entrenched competitors who lack resources to play the new game.
To honor and explore the diversity of this demographic during Small Business Week, Inc. will post a series of articles that delve into the myriad faces of small business. Several of our reporters traveled for one day around a city or region, talking to company owners from a specific industry about their challenges and opportunities. Over the next few days you will read what they discovered:
Monday: In Baltimore, battered old-school manufacturers find new lifelines with small runs, niche products, cool technologies, and state and federal policies that, after years of frustration, are finally cutting their way.
Tuesday: In Lowell, Massachusetts, Main Street merchants walk the narrowest of tightropes: benefiting from the city's embrace of immigrants and investment in downtown development, but threatened by Washington policies and New England weather.
Wednesday: In Austin, high-tech startups grumble about the lack of Silicon Valley-scale investment but adapt by growing their less-sexy B-to-B companies with proven, sustainable business models.
Friday: In Northern Virginia, small federal contractors gird for growing demand while grappling with rigorous security requirements, a shrinking procurement force, protests from competitors, and the expectation that, in many cases, cheap matters more than good.
We hope you enjoy the articles and celebrate Small Business Week with a nice meal out. Independent restaurants, unfortunately, are losing the war to larger chains. So reserve accordingly.