I enjoy reading Matt Yglesias’s blog on Slate, and it was exciting to see that he had a recent piece on small business. In it, he relates the process he went through to get an entrepreneurial endeavor of his own started. It was quite a hassle.
Unfortunately, Matt’s experience is not uncommon. In talking with small business people all over the U.S., we heard many stories about red tape and regulation and taxes and other issues that add frustration to the challenges of building and operating a successful company. In one form or another, navigating through these challenges – along with figuring out budgeting and lining up financing – is something all small businesses have to do.
There are plenty of resources available for small businesses that need help in these areas. Books with titles like Small Business for Dummies or The Small Business Bible cover such issues in depth. Though universal, these cover questions that are operational in nature and for which there is little ambiguity about the answers. Should a small business owner prepare a budget and track expenses against it? The answer is certainly yes. The mechanics are important, but the questions themselves are not that difficult.
Instead, we are interested in questions that are equally important but more difficult – ones whose answers are typically, “it depends.” For example, many small businesses that we met with were proud that they offered a very “high quality” product or service. However, it is not always the case that high quality translates into a successful business. It depends on customers – how much do they care about high quality in this category and how much are they willing to pay for it? It depends on technology – how costly is it to produce a higher quality product or service.? It depends on competition – is there another (perhaps bigger) company that already has a high quality offering? Depending on the answers to these questions, the small business may be more successful by focusing on value for consumers and lower price rather than higher quality.
Our book will tell the “it depends and here’s how to think through what it depends on” story using examples from small businesses we’ve visited on the road. That is not to say that we don’t sympathize – we’ve started a “business” ourselves in “The Roadside MBA.” And I have the junkmail to prove it.