The November 12, 2012 Wall Street Journal had a special report section titled, “Why Washington Has It Wrong.” The lead article, by Duke University professor Aaron Chatterji questioned whether small businesses, in general, are really job creators.
Some of the statistics in the article were:
- 75% of small-business owners aren’t looking to grow big.
- 8% ever reach 20 employees within 10 years.
- 6.3% of companies created all net new jobs (1994-2008).
- Every one of the job creating firms saw sales double over four years.
I’ve been saying for years that many owners are coasting. They may not have the skills to manage a larger company, like their current income or just don’t want to take any more risk, which they associate with growth.
Individual business buyers, on the other hand, have honed their management and leadership skills and are looking to scale the company they buy. And while it may sound good to say, “We’ve held down growth,” a buyer worries that the culture is such that the effort needed to grow won’t be well received by the employees and it will be a struggle to grow.
Advice to future sellers, get growing and prove it can be done.
“There are some things one can only achieve by a deliberate leap in the opposite direction.” Franz Kafka