Eve is here. This post by Richard Murphy makes an important point that is often overlooked: the roles played by small and large businesses are fundamentally different, and this influences policy. However, I do question the comments people make in passing about small businesses being founded because the founders wanted to make more money.
Even within my limited scope, mercenary motives were often not the driving force behind starting a new business. Many mid-level managers and professionals have had their employer bought out (soon or eventually driven off the turf; the target worker is thought to be no good), or their new boss has given them preferences such as: You will be placed in an unbearable position, such as being forced to make decisions. If the employee deems it to be misguided or unethical. or if you have to move to continue your job. Mid-level employees often have limited employment opportunities elsewhere in the industry (there aren’t as many comparable spots available, and even if the employee wants to make the jump, there may not be a spot available at an acceptable employer) ). So if you’re already aware of a need that’s not being adequately addressed in your industry, that could be the basis for starting a niche company (indeed, research on entrepreneurship suggests that this type of ventures are known to be more likely to succeed).
Written by Richard Murphy, Adjunct Professor of Accounting Practice, University of Sheffield Management School, Director of Corporate Accountability Network, Member of Finance for the Future LLP, Director of Tax Research LLP. It was first published in funding the future
It’s foolish to act as if there are few similarities between small and large businesses. Small businesses fail if they don’t serve us. Big companies try to get us into debt in order to keep growing bigger and bigger. We need to rethink how we think about the private sector and what parts of it we want to promote.
This is the audio version of this video.
And this is the transcription:
Large companies and small businesses are not similar at all. They may be similar to chalk and cheese because of their similarities. Most people don’t seem to understand that. In particular, most politicians don’t understand it, and neither do many journalists. However, it is very important to understand this distinction. Because as long as this confusion exists, which assumes that big companies are slightly larger small businesses, we’re going to be in serious trouble when it comes to economic policy.
Small businesses have very different characteristics than most large companies with recognizable brand names.
Small businesses do what helps to get started. We can survive because we provide products and services that people absolutely want to buy. And I would rather emphasize that point.
By and large, they do not generate a market for the product. Fill your needs instead. That’s why a huge number of small and medium-sized enterprises are involved in the service sector, doing what people really want. They are plumbers, builders, electricians, decorators, chiropractors to tutors, and all kinds of other people who provide personal services.
Those businesses are run by artisans, artisans, and experts in their fields who know how to deliver better than the expectations of those who purchase their services. It’s their raison d’etre, their raison d’être, their niche, and it offers them the opportunity to earn more than they could otherwise. This is why people take the risk of starting their own business in the first place. Don’t get me wrong, being self-employed is messy and more risky than employment.
So those businesses are really important.
Some of them even grow. They tend to gather others who want to work for them, but still do what someone else wants and they want without being made to feel the need to buy. We meet the same broad standards of actually delivering the service we know how to deliver.
The advertising these companies are doing shows that. They’re not saying, we’ve developed this new product, whether it’s the ultimate new dog whistle or whatever they’ve invented. No, what they’re doing is actually offering something that already exists in reality, and what they’re doing when promoting is whatever they specialize in. Just letting people know they can take it on.
Compare this to most large companies. Large businesses are completely different from small businesses. This is because, unlike small and medium-sized enterprises, which are basically bit players in the markets of which they are a constituent, large corporations seek to control, manipulate, and even manufacture their own markets. .
The ultimate example is Apple. From its inception, Apple sought to create a market for a type of PC that didn’t exist before, and then expanded to everything from iPods to iPhones to Apple Music that didn’t exist before. to put something on the market.
Previous generations had similar companies. Hoover was one example. The idea that a Hoover is something new and common is so common that everyone wants everyone to be able to identify what a Hoover is, even if it’s not what Hoover made. there was company.
And that’s what big companies do. It seeks to create niches that did not exist before by using intellectual property laws such as copyrights and patents to protect its activities. Create a niche for yourself in which you can achieve so-called paranormal phenomena. profit.
Supernormal profits refer to profit margins that far exceed those earned by ordinary companies that participate in markets rather than simply creating them.
Now, these big companies tend to make excessive profits because they can manipulate markets, create markets, and exploit markets. As a result, they do things very differently than small businesses. they grow very quickly.
Small businesses tend to hit a plateau and stop. There’s a good reason for that. Usually they only have a defined geographical area in which they can work. Or it may be run by one, two, or even three people. And they reach the limits of their management capacity and, as a result, do not want to expand. they are happy Small businesses will be satisfied.
Big companies are never satisfied. Big companies always want more. Most of the world’s problems are caused by large corporations demanding more.
The exploitation of the planet is largely driven by big corporations with just one goal.
Over time, exploitation of people also began to take place for exactly the same reasons. Big companies wanted more profits, and they did so by suppressing contract terms, wages, employment rights, vacation pay rights, pension rights, sick pay rights, and everything else they could.
And it continues to this day. You can still see it. Labor has proposed some new employment legislation, which I welcome. One of the few good things it does. And these employment laws are being challenged by large corporations as fundamental threats to their right to operate as they wish. In other words, their right is the right to maximize profits at the expense of the people they employ.
Now you can identify these companies. I’ve already mentioned one thing. But there are also super brands and sports brands.
For example, it used to be that everyone was in football leagues and they were equivalent. I’m old enough to remember when Ipswich Town won what is now the Premiership. It wasn’t called that at the time. But they weren’t just ordinary companies trying to take advantage of their situation to maximize profits. They were just a local club.
Now we have super brands. Chelsea, Manchester City, Manchester United, even if they were the worst on the field, Liverpool for example, and of course their counterparts in Europe and the rest of the world, have used their brands to do well through the sale of goods and merchandise. They are making extraordinary profits. Everything under the sun creates a market for things we didn’t know we needed. For example, a shirt with a number and name on the back. This is what big companies do. The cost to all of us was enormous.
Because let’s be clear about what big companies are doing. Small and medium-sized enterprises borrow from financial institutions. And frankly, most small business people hate bankers. I don’t want to exaggerate, but I’ve never met anyone who had a good relationship with their bank. They all tend to dislike them for service, cost, loan refusal, and everything else.
Instead, big business is colluding with finance to keep us in debt. Small businesses don’t do that. We usually don’t fund the business. But big companies do. The reason is that they offer us credit because they want us to come back for more, whether we can afford it or not. is. And the credit they provide means they’re working partnership Provide finance to keep us as debtors.
And as debtors, we benefit from this system. You can’t risk losing your job because you can’t pay what you owe. Therefore, you cannot argue with your employer. And we need to continue to maintain their systems. Their system apparently continues to grow exponentially as a result, even though they know the world cannot support that growth in the long term.
Big business and finance is a specialized subgroup of big business, which, as is well known from what happened during the recent cost of living crisis, has significantly increased the They intentionally try to exploit us. – These combined are completely different from small businesses, and it would be absurd to even say that they are all part of the same private sector economy lumped together.
The three components I have just identified, small business, large business, and finance, are completely different. But if you’re going to do that, group All together, it’s big business and finance.
They work to exploit, create new markets, and ultimately destroy the planet in the process. Small businesses are entrepreneurial, take risks, involve capital that can be lost, and meet needs.
One of those areas, and only one of them, is actually very useful to our society. Big companies don’t.
After all, most of the things that big companies can do, small businesses can do, and maybe even better. We really don’t need any more planet-destroying innovations.
We don’t need to borrow to the current level. For example, it could lower housing prices. A smaller car could get you from point A to point B just as well. Therefore, your car debt may be lower.
You can’t live a better life by consuming so much of the earth.
We can reduce our energy consumption, but that will offend the big companies in the corporate sector who want us to consume more, not less.
We were able to take a step towards change.
Small businesses are part of a sustainable future.
I seriously doubt that this is a large company. Because big companies don’t have our best interests at heart, small businesses generally do.
And by and large, small businesses can do most of the things that large companies do, just as well or better. Because small businesses actually tend to be much more innovative than large corporations. Because it threatens their market power, and that’s exactly why they buy so many smaller competitors just to kill their own products.
It is time for us to rethink what the private sector is. There is a private sector that we want and should preserve and foster. That is not what Keir Starmer is trying to encourage in the UK. This is not a City of London focused market. It’s something you’ll find on the high street or on your local industrial estate. That’s what he should encourage. And he hasn’t done that. And the resulting cost to all of us may be significant.
