Jerry Goldstein is the publisher/editor of IN BUSINESS, a magazine about small businesses (6 issues per year for $18 from Box 323, Emmaus, PA, 18049).
Robert: What are some of the surprises and common misunderstandings you have found about small businesses?
Jerry: One overriding point is the diversity of the businesses that are out there, of the kinds of people behind those businesses, and of their motivation. Most of the businesses we focus on are personally oriented, and each person does things that seem to make sense from their own perspective. People are constantly looking for new ideas, better ways to manage their business but in each case they have to interpret those approaches as they impact upon themselves. You can’t make strict rules and say this is how small businesses should be run.
The other intriguing point about the small business world is the cycles these businesses go through. They still continue to be a small business but there is a common pattern that goes from start-up through the survival stages to success, and approaches that could be right at one phase may not be right at another point in the cycle. You find the owner changing views as you move along. This adds a lot of complexity. You still want to maintain the principles but exercising those principles may lead to different decisions even if you are consistent with the principles.
Robert: So it’s not just diversity between business, it’s diversity in the process at the different stages. Could you describe just a little bit more what those stages are?
Jerry: The pre-start-up and start-up, in what we advocate, is generally as shoestring an operation as you can make it, where you try to make full use of whatever capital resources you have and not overextend those resources. Since it generally takes small businesses longer to get market penetration, it’s important to have strategies that let you sustain your business for at least three to five years. At this stage, if it’s a family business, it may be right for the wife or the husband to keep an outside job and not have to take as much income from the business for those early stages.
Later on, when you get past the start-up and into the growth and survival stage, then you’re more aggressive in reaching out in promotion and escalating the growth potential. You’re not forced to be so tentative with capital because generally you’re generating enough capital to finance the growth. One of the big realities in small businesses is just relating the business development to the capital available. Balance is really a key.
Robert: What do you see as the benefits of being in a small business?
Jerry: One main overriding theme is the unity between personal ethic, personal taste, and how you spend your time earning money. The best way to do this, for many people, is to really have control over that income producing activity. It’s not for everyone, but these days more people seem to feel that that’s how they want to live. Generally, it begins less with market research, outside market research of what the public wants, than it does with an internal analysis of what you want. A lot of people we are writing for don’t consider themselves businesspeople as a first priority or the first categorizing of themselves. The challenge is to see where what you want to do becomes a marketable commodity.
The SBA [Small Business Administration] used to always talk about failure statistics, but for the most part I feel that people who have a positive attitude about themselves and what they are doing haven’t failed simply because their business closed. It is no more a failure than if they worked for Sears for a couple of years or what have you.
Robert: Sounds like some of those "failure" statistics could be labeled as graduation statistics.
Jerry: This is a key attitude and that’s exactly right.
Robert: So far we’ve mostly been talking about the owner- manager. What about the employees within a small business. What’s the situation for them?
Jerry: One main benefit is the intimacy with what’s going on, the involvement in, very often, a wide spectrum of responsibility. They too have a sense of participation. There’s generally a far more informal atmosphere, a personal atmosphere. The negatives are that there can be a lack of benefits such as insurance coverage, vacation policies, etc. If the business is fairly static there can be a lack of growth opportunities within the business. If it’s a family business they may suffer as outsiders. Generally, I think one real plus is the broad training that enables people to get a whole lot of experience in a variety of areas. Normally within a larger corporation you are just slotted into one particular channel and you don’t have that diversity or even a sense of how everything fits together.
Robert: What about some of the special considerations that come in when the business is also the family.
Jerry: This is something we are particularly interested in since ours is a two generation family business that we started with our grown daughters. A real challenge is that the business be interesting to each family member. It won’t work if anyone was either forced into it or is there as a martyr. I think, generally, you do have to manage the business in such a way that it’s not a divisive force. In our experience, that comes if you have a pretty sound family relationship base. Then you can go into a business setting and the sound relationship overrides potential disagreements that are bound to come up in ways to develop a business. If a family has a series of problems about getting along its hard to imagine that the business would not exacerbate those problems.
Small business is not a panacea, and it is definitely not for everybody. It’s not really an escape. I think that someone who tends to be sour on their present job will often be sour in a business of their own. It’s a tricky quality there. The small businesses that we see are viewed by their participants as an opportunity to really do something that they like to do. They may bitch a bit but generally they are where they want to be.