Categories: Business

Small Businesses: Doing The Business Or Just A Lifestyle Support System?

Small businesses are supposed to be our salvation. The Small/Medium Enterprise (SME) of today will become the major corporation of tomorrow, but how true is that anymore? Most small businesses run up against a natural barrier to growth and expansion, not due to an inability to obtain adequate financing or recruit suitably skilled workers, but rather to the lack of ambition in the founding directors or an ethos that mitigates against expansion.

There’s nothing intrinsically wrong with a small business remaining a relatively small operation, but many small businesses in the SEO and internet marketing world, or the service sector especially, remain small because their management wants them to. Small family run businesses may present a public face committed to growth and expansion, but an alarmingly high number exist purely as a “lifestyle support system” for the founding directors. Those that do go for some growth often do so in order to be a more attractive “personal retirement plan” by selling on, again for the immediate founding family members.

What does that matter if they do indeed grow and provide employment? In the overall scheme of things, perhaps not much, but investment decisions in such companies tend to be lengthy processes, often dictated by whim and a tendency towards minimising risk rather than seizing opportunity. No decision can be made that could jeopardise the generous lifestyle the company supports – at least for the founding family owners. Considered and careful investment decisions are of course no bad thing in the current economic environment, but frequently that reluctance to ‘spend recklessly’ extends to employee wages and benefits too.

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A company’s only real assets, it is said, are the people who work for it. That’s especially true in any service or skill dominated sector. Equally true is the fact that many owner/founder operated concerns rely on the fact that there is a conveyor belt of bright, cheap, young things out there (given the glut of graduates and the dearth of jobs available for them) keen to get a toehold in the job market for next to nothing (or in some cases nothing at all – aka internships). Exploitation would be too harsh a term, but if your entire business ethos is simply to support a pretty decent lifestyle, why pay more than you need to for the “help” in order to achieve that, even if that results in high staff turnover levels?

No one would deny that those who took the initial risk in setting the firm up deserve a greater share of the rewards that flow from its success, but equally the better small business owners recognise the need to hire “better” people. They also reward the contribution the “minions” make in supporting their present and future business plans, whatever they may be. Small businesses can make a difference and can help to generate growth in the larger economy, but only those companies run by owners or founders that are in business for the long term and have ambitions beyond merely funding a pretty good personal lifestyle may be capable of doing so.

This guest is from WorkBooks.com. Workbooks provide customer relationship management guest posts, video resources and others to help small businesses.

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