Articles in Business Week frequently tout the substantial job creation and significance of small businesses, but a surprising article from fall 2011 did just the opposite.
Using empirical studies, the article showed small businesses create relatively few jobs; and the jobs that are created are comparatively lower-paying and offer fewer benefits than equivalent positions in large companies. Furthermore, these larger companies are actually more productive in terms of revenue and profit-per-employee than small companies.
Yikes! What happened to the talk about small businesses being faster, more flexible, more nimble, and more profitable than the behemoths?
Management, it seems, is the main reason small businesses don’t measure up; as they grow and begin to achieve some economies of scale, they’re often hampered by limited management expertise. Small business success, measured by organizational growth and the creation of long-term career jobs, isn’t achieved by increasing revenues or pinching pennies, but by building a well-trained management team.
Small business owners may quickly cry foul, saying they can’t afford expensive managers. A couple of factors exist behind this point of view:
- Limited vision. The owner may not be able to see much beyond the present size and reach of the company.
- Falling prey to the old business adage of knowing the cost of everything and the value of nothing. Sometimes a step back is required to take a look at the bigger picture of how one cost may increase revenue or reduce other costs.
Fortunately, many management skills can be purchased from professionals such as CPAs, lawyers, human resource consultants, and sales management trainers on an hourly or project basis. Professional hourly rates may make these services seem costly; but using an expert on an hourly basis is more economical than hiring full-time staff members of equal caliber. Moreover, what’s the cost of not growing?
The key, whether you use professional services or hire managerial staff, is assembling a team you trust to operate in your best interests…and then regularly evaluate the output yourself.
If you need an accounting team member you can trust, contact Patrick & Robinson CPAs for a no-obligation appointment to discuss your needs: Office@CPAsite.com or 904-396-5400.