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Monday, February 21, 2011

A NOTE FROM THE FOUNDER: The War on Small Business and What One Company is Doing About It

The War on Small Business and What One Company is Doing About It

by Adam J. Kovitz

I was catching up on The Colbert Report this weekend when I saw host, Steven Colbert interview Jeffrey Leonard of The Washington Monthly about his recent Memo to Obama: Do small business a favor, in which he researched a recent trend in big business policy that is adding another nail in the coffin of small business and entrepreneurship. The practice of corporate accounts payable is changing from the traditional Net 30 to Net 60 and, in some cases, as much as Net 120 is the newest "bite-the-hand-that-feeds-you" antic that gives big business extra cash-on-hand in the form of interest-free loans at the expense of their small business suppliers.

NovaCare Rehabilitation, Marathon Oil, Kraft Foods and Unilever Global Infrastructure OrganizationNovaCare Rehabilitation, Marathon Oil, Kraft Foods and Unilever Global Infrastructure Organization
According to Leonard, the cause of this trend amongst corporations is "benchmarking" against current industry standards, which is a fancy way of saying, "we've paid some large consulting company a lot of money and they suggested we implement this new policy because that's what they're doing everywhere else." Leonard cites companies like Cisco Systems and AB InBev (who own Anheuser-Busch) in his own research of high-profile companies engaging in extended payment practices. Adding insult to entrepreneurial injury, Leonard goes on to say:
"What is interesting about this phenomenon is that America’s large corporations don’t generally need this money—statistics show that they are sitting on nearly $2 trillion of idle capital on their balance sheets."
So while Fortune 500 companies are mostly enjoying record high-profits and increased business expansion, it is being done at the expense of their smaller counterparts. Here's what really gets people like me incensed:
  • Small businesses have contributed to over 60% of job creation over the last decade, and
  • Small businesses have provided over half of all private-sector jobs.
What's more is that banks, due to various reasons and despite the recent Small Business Jobs Act are still unable to give small business the kind of loans to alleviate current cash-flow crises.

But as Mr. Leonard suggests that perhaps the SBA do some additional studies, I suggest something radically different - entrepreneurs and small business owners can't wait for the government to save us or for big business to have a breakthrough in consciousness.

So what else can be done?

Small businesses and entrepreneurs can stop being divided and conquered and stand together united and coordinated. is a lot of work. means radical shifts in thinking. may mean that we have to sacrifice our work-life balances, but jeez...look at the alternative.

In our own enterprise, we have implemented the following strategies to grow our organization, stay relevant, preserve the spirit of entrepreneurship and fight the war for small business:
1.) Give more opportunities for ownership - our belief is that the more people who own a piece of our organization, the better. We have modeled our company after an ESOP - employee stock option plan, in which we give out MIPOs - member interest purchase options.
2.) If you can't beat 'em, join 'em - we don't look to bury competition, we look for ways to play nicely in the same "sandbox". In fact, if we see a small business offering a service that we feel is good for our membership, we look to joint venture with them and offer their services under our roof. They provide the expertise and the fulfillment, we provide the technical, marketing and sales support.
3.) Offer something for free - from day 1, The National Networker Weekly Newsletter has been free. We didn't stop there, though. We've added additional publications and informational products (like The BLUE TUESDAY Report) as well as our MINI-MEDIA BUZZ BLITZ - a free social media marketing campaign for all new TNNWC members showing off our BUZZWORKS service. Finally, membership in TNNWC is still free and will remain so. This allows everyone to be part of our community and to support our cause to keep small business and entrepreneurship as a viable business model in the 21st century.

Like it or not, as a small to mid-size business owner, you're in a war against big business - they're out to get you. Why? Because they can.

Stupid? Indeed. Self-destructive? Yes.

Nonetheless, it's happening and we must stand together if we wish to avoid becoming mindless automatons or living lives of quiet desperation as a number in a large megalithic corporation.

That is...if we can get a job to begin with. Good luck with that.

I choose boot-strapping, innovation, creative solutions, collaboration and innovation.

What do you choose?

All my best,


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The Emergence of The Relationship Economy

The Emergence of The Relationship Economy
The Emergence of the Relationship Economy features TNNWC Founder, Adam J. Kovitz as a contributing author and contains some of his early work on The Laws of Relationship Capital. The book is available in hardcopy and e-book formats. With a forward written by Doc Searls (of Cluetrain Manifesto fame), it is considered a "must read" for anyone responsible for the strategic direction of their business. If you would like to purchase your own copy, please click the image above.


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