Column illustrates impact of small businesses

January 24, 2013 at 11:20 am

The Coloradoan, a Fort Collins, CO news outlet, published a column by Gerard Nalexny, the CEO of a local bank, Verus Bank, on the importance of small businesses in communities. Although the column comes out of Colorado, the sentiments expressed can be shared across states. Nalezny clearly illustrates the difference between corporate CEOs and small business owners–  namely, that for small business owners and entrepreneurs, the success of their venture relies on their own blood, sweat, and tears. Small business owners invest their own personal wealth into their businesses– and often borrowed wealth from their family and friends. They work long and hard to make sure that they don’t fall into the 80 percent of businesses that fail in the first five years. As Nalezny puts it:

This is why successful entrepreneurs tend to “live” their business. Business owners typically work 24/7, and when they are not at work, they are thinking about the business. The business dominates family conversations and supersedes family events and vacations. Given most entrepreneurial ventures will make or break the family financially, it is not surprising that the needs of the business come first. Go into many of the successful businesses in our community, and often as not, you will see or work with the owner

CEOs of large corporations, on the other hand, are largely  buffered from this intense personal investment in the businesses that they manage. Yes, the stakes are high and they are accountable to their investors and shareholders. However, failure of the companies they are in charge of does not necessarily mean failure for these executives on a personal level. In recent years especially, we have heard of the generous severance packages and “golden parachutes” for outgoing CEOs. No such packages exist for small business owners.

This distinction between small businesses and corporate executives is important for two reasons. First, we continue to hear news about what small  businesses think about a range of issues, from taxes to regulation to consumer demand.  As we blogged about recently, claims about what small businesses want or need can be misleading if we don’t investigate which small businesses we’re talking about. The very small, often family-owned, businesses that are rooted in communities across the country have very different needs than big companies– they worry about consumer demand, they need a level playing field when it comes to regulations and taxes, and most importantly they need a strong and growing middle class. But too often, the real voice of small businesses is drowned out by others who tout their perspectives in the name of small businesses.

Second, lumping together corporate executives and small entrepreneurs diminishes the real and valuable impact that small businesses have on local economies. Small  businesses are the economic  backbone of communities across the country. They create jobs and employ workers, which helps to build wealth both for spending in the community and also for future saving. According to Shop Local Raleigh, for every $100 spent at a local business, $68 stays in the local economy, compared to just $43 if the money was spent at a chain store. In addition, both workers and business owners pay taxes, which increases local revenue for public services.

Nalezny does a great job at showing just how invested small business owners are in their ventures and, as a result, in the economic vitality of their communities. We do small business owners and entrepreneurs a disservice when we combine them with corporate executives. These are hard working, persistent, and passionate people who deserve recognition for their real impact on our economy.


Entry filed under: Economic Development, Economy, Small Business. Tags: , , , , .

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