4 myths about small-business America
There’s a lot of misinformation floating around about mom-and- pop stores these days. The devastating effects of the recession on the U.S. small-business sector were well documented, but as the recovery has progressed, its impact on mom-and- pop stores has been discussed less.
In fact, myths about life as a small-business owner threaten to overwhelm reality. The myths can convince entrepreneurs to pass on opportunities that could be profitable or, conversely, seduce them into chasing opportunities that don’t actually exist. Here are four of the most common mom-and- pop shop myths, along with a healthy dose of small-business reality.
Myth # 1: Mom-and- pop shops are dying
Truth: Small-business confidence isn’t at an all-time high, but recent surveys of small-business owners suggest the situation is far from dire.
Recent Wells Fargo/Gallup Small Business Index and National Federation of Independent Business Small Business Optimism Index can be summed up as a “mixed bag” for the small-business sector. By Wells Fargo’s latest measure (released in August), small-business optimism has increased six of the last seven quarters and is at its highest point in more than six years.
That’s a finding also reflected in the National Federation of Independent Business (NFIB) numbers: It showed a decline in small-business confidence in September, and it now stands at a reading five points below the prerecession level. However, the same survey found that more business owners believe it is a good time to expand their firms and expect better conditions in the next six months.
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Myth # 2: Wal-Mart is the big bad wolf
Truth: It’s actually more likely to be Amazon these days.
Smaller retailers have always been at something of a competitive disadvantage versus big box stores, due to inventory space. Because they have less square footage to store unsold merchandise, smaller stores are unable to order in the bulk quantities (and, in turn, receive the bulk discounts) of bigger stores. The smaller footprint of the store works against them again in real estate costs, since they often are forced to pay more per square foot for their locations.
But increasingly it’s not the Wal-Marts or Targets that mom and pops fear, but online retail companies including Amazon. In a survey of more than 2,600 small businesses by the Institute for Local Self-Reliance earlier this year, 49 percent of the owners said competition from large Internet companies was challenging or very challenging. That number jumped to 69 percent among retailers.
This shouldn’t be confused with the idea that small-business owners aren’t using technology to gain an edge. Just as service can be a key differentiator in stores, mom and pops tend to carry that over to their online presence. Small retailers have increasingly used social media to build a community among customers.
“Small businesses are better able to keep in touch with what customers have bought in the past, and let them know when they’ve gotten in a new line of things they might be interested in,” Vitner said.
Action Item: Start selling online, taking orders, providing delivery.... get your website ecommerce ready, and compete with Amazon... why not?
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