The Organizational Development Muse

Dr. Mark L. Vincent's Blog

A small rant in favor of small business

Posted by Mark L. Vincent on Mar 27, 2010 11:00:00 AM

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Several of my friends are deeply involved in micro-financing, giving low interest loans of less than $1000 to people in terribly impoverished areas, and experiencing 95% or higher payback rates. This stands in sharp contrast to our new too big to fail economy where small businesses and startups are experiencing the most hostile financing environment of my lifetime.

What our financial institutions are forgetting is that the local, privately owned business is among the safest of risks. Shared risk is what makes franchising and licensing work. Yes, it is a risk. Greed and fear and economic stupditity are problems in privately held firms just as they are in publicly held ones. But the scale is smaller. Further:

* The business owner is risking their own capital, not just the capital of someone else.
* The business owner is personally involved in absorbing any loss, something most CEO’s of publicly held institutions are not accountable and are usually unwilling to do.
* The business owner is more likely to defer their own compensation to meet financial obligations.
* The business owner is visible and involved in the day to day operations of their business, quite often ready to do whatever it takes to keep the enterprise going.

There is no best way to lead an organization or business. Some will become large and some remain small by necessity or preference. However, the model of a leader who knows the heartbeat of their business, who takes responsibility for what doesn’t work, and who is personally involved in the risk to bring something to the marketplace needs to be appreciated more deeply by our financial insitutions.

Here is another way to say it, the leadership model to admire at the moment is the Guatemalan woman who borrows enough money to purchase a tortilla-maker so that the money she earns guarantees her children will be able to read. It is simply more heroic than CEO’s begging for government bailouts or financial institutions who accept stimulus money and then keep it in order to get their books in better balance.

-mark l vincent

torched church, emell vee, whorled viewz

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Topics: franchising, leadership model, Mark L. Vincent, Design Group International, Whorled Viewz

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