Stacked Odds? Surely Not!
by Stephen Underhill

It's hard to disagree with Thomas J. Watson, Jnr. (Former IBM CEO), "Business is the greatest game in the world if you know how to play it". But what makes the game so great? And why are so many players interested in participating? Why the intrigue?

Aren't business owners out there to make money? Why else go through all that pain? The lucky few reap the rewards, but for the remaining survivors it's often just a means, simple employment. ... There's got to be something about the 'game'.

Imagine a board game featuring Monopoly's wealth emphasis, the smoke and mirror diagrams of Pictionary, strategic Chess, and the ups and downs of Snakes & Ladders? Add some Jigsaw Puzzle confusion, a stumping Cryptic Crossword, and Murder Mystery stealth, and you would have a No. 1 seller. It's lucky the games designers of the world haven't managed to achieve this yet; otherwise we'd find ourselves with five-year-old business experts!

Statistically, and I presume the figures are similar in most countries; well over half of all small businesses fail within the first three years. Are we mad? It appears that starting a small business may just be a foolish gamble that a huge number of punters are prepared to take. It also happens to be the biggest gamble many of us will ever make and often involves our homes, cars and personal assets. I can see a new business opportunity looming ... sanity check-ups at the local psychiatrist ... for those planning to venture into small business. GP's can branch out into a new specialised field.

Coping with the hurdles facing SME's in a micro sense is commendable. Predominantly, they are manageable and controllable with the appropriate tools and the right attitude. However the game is far larger than that. At the macro level, one must question whether some covert plot might exist to ensure that most SME's struggle? No, it's not a conspiracy theory, rather an acknowledgement of the number of rules, rule makers, adherence policing authorities and overall governance. Most SME's strive to work within the boundaries, but how do they learn to play the game? What are the rules? And when will they change next? Yes, the odds are well stacked against the 'Small Business'.

Supposedly the 'system' is a reliable constant. Why then do many large organisations pay hardly any tax? That's the Pictionary smoke and mirrors syndrome, and large organisations pay experts very high salary packages to create thick smoke and defective mirrors. The authorities don't appear clever enough to detect the scams and even at bankruptcy hearings often fail to uncover the truth.

The ripple effect of a bankrupt large organisation is huge. Take into account the staff and their families, creditors' businesses, staff and their families, and other stakeholders, and soon thousands of people are affected. Considering this, why are SME's disproportionately targeted? Why is it that the governing bodies don't proactively thoroughly investigate large organisations until after their collapse? Maybe it's too difficult for the business police, and they don't want to face the likely ensuing legal battle.

Surely, auditing bodies must know that these organisations hire the cream of the crop, experts in hiding negative information from prying eyes. That's the big-boys game ... a clever version of the children's game 'Hide & Seek'. Why do governments appear to support this farcical process? We'd like to romantically think it's because of the high taxes paid by these companies (I wonder) and the possible effect on the unemployment rate should the company fail.

Although doubtful, maybe the people (electoral constituents) involved are important? On the other hand, it's not the voters, but their votes that are vital to a politicians' career. Or perhaps the political donations (more tax deductions) play a part, especially in industries where licencing requirements exist? Ask yourself, when was last small business bailed out by a government grant at the point of collapse? Many large organisations receive assistance.

Business governing bodies need to justify their existence. Answer ... pick on the little guys, the backbone of many countries. Generally, there's less smoke to see through and small organisations are less likely to launch drawn-out legal battles. They often can't afford it. Statistically they can then claim 'X' tax investigations and 'Y' audits, resulting in 'Z' prosecutions. The public need to see performance statistics, forget the details; it's a good political story!

SME's are the business-world's easy pickings and they are disproportionately targeted when the ripple effect is taken into account. They don't possess the cloak-and-dagger skills of many larger organisations and often accidentally expose themselves to the authorities through naive mistakes. The policing authorities don't need much of an invite, and remember public opinion ... those statistics are important!

Purchasing power is a fact of business life. High product turnover establishes a certain hold over suppliers. Big companies demand (negotiate) a far better buy-price than the corner shop and simply compete with price as the primary focus. Perhaps 'micro-globalisation' is a good term for this process.

The small business has no choice but to compete in a market place that has been, and continues to be educated in and dominated by price competition. Customers welcome any added value offered, the problem is they want it all for nothing. Suppliers and consumers alike, we are all guilty of aiding this education process.

A choice small businesses do have however is in the area of after sales support. If inadequately funded, thanks to the big-business squeeze on margins, how can it occur without the sale being unprofitable? The simple answer is it can't, and often the required support is almost non-existent. This severely damages the overall reputation of small-business industry, customers flock to the mega-stores, and the demise of the weak SME's begins. Until the mega-store lets them down, they are not likely to return.

Supported by the non-performance of the 'corner store', the big-business marketing machine then hammers in a few more nails. They promote an organisational image of purchase security, company stability, ethicality, unending support and total customer focus. Consumers are suckers for large-company promotional marketing hype; they rarely consider the possibility of poor performance. TV advertising then gives that additional touch of supposed class, a statement of wealth, and a picture of integrity. Why would any customer return to the corner store? These days, convenience versus price, price wins. Customers travel extensively and waste time just to get the best price. Does time now have no value in today's society?

Small business can defend themselves , albeit a David & Goliath situation. Internal and external environment awareness, strategic business management and marketing skills, the ability to create, add and sell value, and a never-give-up attitude will help. There are no guarantees of success, but are you prepared to calmly throw away the business you have built up, possibly over many years, for the simple reason of not seeing the issues and facing the problems head-on when they occurred? I suspect not. Source the information you need, source the tools required, and man the trenches.

If you are fortunate, or strategically organised and knowledgeable enough to survive the onslaught, you ought to be congratulated. You are no doubt now quite a thorn in the side of big business, openly competing with them without bowing to their pressure. The easiest solution for them now is to buy your company, and the bargaining chips are on your side. Remember, every business is for sale at the right price.

As children, it wasn't winning or losing that mattered, it was how we played the game. As a business owner, the innocence has faded and winning is paramount. Too often, how the game is played is almost totally ignored, hardly surprising considering the moving goalposts and ever changing rules. To their credit, SME's battle on regardlessly. Their spirit in the face of adversity, with the odds stacked heavily against them is admirable. There must be something in this 'game' we play.

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About the Author

Steve Underhill (MD - Business Rationale) is a business consultant dedicated to helping SME's (Small-Medium Business Enterprises) understand more about business techniques. Download his E-Book 1000+ Free Business Tips & Ideas and also take a look at the many Other Products that are available from Business Rationale.

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