Why small business needs big business
Bernie Sanders is right when he says that too many CEOs make too much money. Elizabeth Warren has a point when she says that the wealthiest need to pay more taxes. Many big corporations have a sad record of neglecting their employees, selling harmful products and – as the Guardian recently reported – really hurting the environment.
But small businesses, including mine, need big companies for our livelihoods.
That fact was validated by a recent American Express study. The study, which was based on the responses of more than 500 small and mid-sized companies with annual revenues between $250,000 and $1bn found that 81% of those participants planned an increase in their sales to big corporations (those with more than $1bn in revenues) over the next five years and also more than half of the respondents expected their income from those big customers to increase by more than 50% during that period.
As the study’s authors point out, many small companies get as much as 30-50% of their revenues from big customers every year and 40% of those have grown their businesses organically because of those corporate contracts. As a result of these relationships, a majority of the small businesses questioned have been able to hire more employees.
That’s certainly been the case for me. My small business takes in about 40% of our work from larger corporations. Sure, the bureaucracy, the politics and the slow decision making can oftentimes be a challenge. Yes, the risks of becoming too reliant on that one big customer are also greater. But the checks are bigger and the opportunities can be superior. I like my large corporate clients. Well, most of them, anyway.
Big companies also have other big impacts on small businesses even when they don’t have direct corporate contracts. That’s because of their employees. Those are the people that live near where they work. They’re buying pizzas, visiting merchants and going out to dinner. They’re having their lawns mowed, their kitchens redone and their cars repaired. They’re giving to charities, taking Uber rides and getting their hair styled. They’re seeking financial advice and having their tax returns prepared. They’re looking to small businesses to do all of this and none of this would be happening without those big companies employing them.
Of course, big companies need to be kept in check. The people running them have an obligation to their shareholders to grow and sometimes they make bad decisions in order to meet that obligation. Many of their CEOs do earn too much money. Most should probably be paying more taxes. They all have a responsibility for the environment and to their communities.
But let’s hope whoever leads this country after next year’s elections can find some way to address these issues without causing undue economic harm to the very companies that so many small businesses rely on.