I have a great empathy for small businesses and their importance to a community.
Research shows between 50 and 80 percent of new jobs come from small businesses. Most small business are locally owned. Most of the owners took a great risk starting a business.
If I had read the statistics on the chances of a small business making it after the first year, I may have never started one. In the book, E-Myth Revisited, the author Michael Gerber shared that 80 percent of startup companies will not survive one year.
But if a business makes it through that first year, they are in good shape, right? Wrong. Eighty percent of companies that make it one year will not make it five years. Another point the book makes is that most people who start a business do so because they are technically proficient in one area. Think about a baker opening a bakery, a chef opening a restaurant, etc.
But running a business requires more than just being an excellent in the area you are passionate about.
When you write that personal check, or sign that loan guarantee, or activate that lease to start a company, it’s a very nervous moment. I’ve been there. Leaving a job with an almost a guaranteed pay check and entering a situation where you don’t know if there will be dollars to cover expenses is difficult.
Every 90 days I meet with many small business owners in roundtables with the goal of finding out how we can help each other be successful. I have heard very often how a parent mortgaged their house to provide startup money, how the small business owner put all their assets (including house) to run the company. Stories are shared about an owner making payroll, but taking little or nothing to make sure his or her people get paid. There are all those long hours, too. It seems risky and difficult.
Here are some very common themes I find in these brave people who start businesses.
— Passion. These entrepreneurs are very passionate about what they do. They want to provide quality in product and service. As Jim Collins wrote in his book Good to Great, passion is the key ingredient in a successful leader. This passion helps the owner make it through the tough times.
— They want to control their own destiny. I find these owners have worked well for others, however they wanted to do it a bit differently on their own terms.
— They care about their community. They want to be a good employer and they want to give back to the community. If you look at Pensacola, a great majority of the large donations come from individuals versus companies. This is because we have very few large corporate headquarters in the area. The challenge at times is that these small business owners are often so busy making sure their company makes it, they don’t have the time they wish they did to volunteer. Also, they may not financially be at a point to donate dollars. Do not take that for a lack of desire.
— They have confidence in themselves. This does not mean they are cocky. You don’t start a business if you do not feel you have what it takes and can make it work.
— They feel a great responsibility to their employees. I believe most companies feel this way, however in a small business you know the employees. You know their families. The fact that people are counting on you to feed, shelter and clothe their family is never out of an owner’s mind.
So, this is the makeup of a small business owner. Why are these businesses vital to a community?
— They often fill a need in the community. Once they prove there is a customer base to make them successful, often the larger chains then move in.
— They are invested — big time — in the community. Their roots are in the community. So, when times get rough, they do all they can to stick it out. Larger organizations look at the numbers and in one decision can close hundreds of stores.
— The dollars they receive stay in the community and are reinvested. Perhaps the most important of all. If you pay a little more, know that those dollars stay here to support other businesses, other causes and charities and families living among you.
Let’s be clear: This is not to say large companies with corporate headquarters are not important. They are. We need to be grateful for them, especially if they have a local presence.
Each time you stay local — in whatever area you live — you are creating jobs and helping families have a better life. You are feeding a child, helping someone get an education, helping buy that home, rent that apartment, take that vacation.
These owners have taken a big chance. Please know your patronage makes a big difference.