11.30.2010 0

The Misguided Economics of Small Business Saturday

By Adam Bitely –

On November 27th, 2010, American Express along with several non-profits, encouraged people to participate in a national Small Business Saturday, similar to shopping holidays like “Black Friday” and “Cyber Monday” where Americans would change their normal shopping patterns and intentionally devote their resources towards small businesses identified by American Express. While there is nothing wrong with shopping at a small business, to suggest that all Americans should on one day purchase items from a small business is absurd, to say the least.

Small businesses are the backbone of the economy. Most businesses in the U.S. are “small businesses.” But there is a terrible epidemic of misinformation being spread about what a “small business” actually is.

First, the notion of supporting small business just because they are “local” is absurd. Consider the following. One would assume that you would boycott McDonald’s on a “small business” day. However, a boycott of McDonald’s would in most cases result in a small business owner being penalized. Most McDonald’s locations are franchised, meaning they are owned and operated locally. It’s not a big “fat cat” businessman that you are boycotting, rather, it’s your neighbor.

You might be surprised to see just how many “big businesses” are actually locally owned and operated. Check out the International Franchising Association for a surprisingly large list of companies that would qualify as a “small business” in most cases.

Second, people shop at specific stores for various reasons. People should not be purchasing products from a company simply because of its size or where it is located. Rather, products should be purchased because both the consumer and the seller are benefited from the transaction. Keep in mind, the local non-chain grocery store doesn’t sell a wide array of different products that are not found at the bigger chain stores. They are selling products that people know and like such as Pepperidge Farm or Campbell’s. Further, the employees at both the chain and non-chain stores are all locals who live in the area. Wal-Mart is not importing their employees from other states or nations to staff their stores, they rely on local folks to work in much-valued jobs.

And third, this was a simple ploy from American Express to pressure businesses to accept their cards. American Express charges a higher rate for purchases processed on their cards, thus, many small businesses refuse to accept American Express purchases. But imagine a day when American Express customers go expressly to stores that American Express pushes their customers towards only to discover that their cards were no good. The small business would realize that they lost a considerable amount of business and thus, the result would be that they would be willing to now accept the purchases.

Too often I see poor logic employed to convince me to purchase local, small business items. But everywhere I turn, I cannot see how I’m not supporting local small businesses with my day to day purchases throughout my community. For quite a while now, I have been spotting the “Buy Local” bumper stickers on cars. But I have often noticed, like Jim Swift, that these stickers are on vehicles that are foreign and completely dismiss the entire notion that the sticker purports.

As the Small Business Saturday website that was launched by American Express reads, “Small Business Saturday recognizes the importance of small businesses to the overall economy and local communities. It’s a day to support the small, independently owned businesses we can’t live without.” They fail to recognize that all businesses support their local communities, regardless of their size. If they were not fulfilling a need in the community, they would have shut their doors and moved on finding another market for their goods.

There is absolutely nothing wrong with small businesses. But there is something wrong when one decides to dictate that there are only certain “local” businesses that deserve our business. I’m having a very tough time trying to think of a single business in my community that solely imports its workers from outside localities, only to send the money made off to foreign and distant lands.

Adam Bitely is the Editor-in-Chief of NetRightDaily.com.

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