What we can learn from America’s most trusted institution: Small business
For those who need a break from thinking about banks
Small business is now the most trusted “institution” in America.
For years, Gallup has surveyed how much have confidence in various institutions—congress, the media, police, and banks among them. For years, confidence in institutions has been declining. In the latest survey, for example, confidence in the U.S. presidency and the U.S. Supreme Court fell 15% and 11% respectively; even as confidence in Congress rested at just 7% and television media at 11%.
The news for the private sector wasn’t much better. Banks and big tech had the confidence of only 27% and 26% of Americans respectively (one can’t imagine that’s climbed this week). And “Big Business,” those iconic companies that seem to define the American landscape, is only trusted by 14% of people.
But one surprising institution has risen to become the single most trusted in America: small business.
Since the days of Norman Rockwell, Americans have loved local business. Practically, small business in the U.S. still accounts for more than 46% of employed Americans and 99.9% of businesses in the country. Spiritually, small businesses represent core American ideals: localism, entrepreneurialism, resilience, and self-determination. But to see the gap in trust between big and small business also reminds us that small businesses operate in meaningfully different ways. And in a world in which more people are striking out on their own but sustaining those businesses is increasingly difficult, it’s worth asking what organizations of any size can learn from mall business.
First, they focus on service not scale. Many large corporations—particularly publicly traded ones—have an almost maniacal focus on growth. There are often benefits to this. Scale can lower cost. Large companies can aggregate exceptional expertise. And sometimes a big company is necessary to meet a big challenge—think of the world’s auto makers or energy companies. But often, that drive to grow leads to a deprioritization or depersonalization of the customer. Big companies automate customer service to save money and leave clients on hold for hours. They cut corners on quality to enhance margin. And they seek the new customer at the expense of the old. In addition, as they grow, the average person in the company has no contact with the customer and loses focus on the whole purpose their organization exists.
Small businesses, by contrast, dominantly survive against larger competitors by knowing and serving their customers better. When you call a small business you are more likely to get the owners cell phone than an automated line. You might be insignificant, as a customer, to a national chain—but you matter to your local landscaper or dentist. And this commitment to service shows in that 96% of consumers think small businesses are more attentive than their scaled counterparts. Some excellent large businesses have learned from this. Truett Cathy, founder of Chick-fil-A, once famously admonished his board saying, ““Gentlemen, I am sick and tired of hearing you talk about us getting bigger. What we need to be talking about is how to get better. If we get better, our customers will demand that we get bigger.” But keeping that focus as a business scale takes discipline.
Second, they thrive on ownership. 98% of businesses in America have fewer than 20 employees—and 8 out of 10 are sole proprietorships. By definition, the “employees” of small businesses feel more accountable to the success of that business and to serving its customers than an employee of a larger organization that feels less ownership. Sole proprietors, of course, will go out of their way to serve every client—their very lives depend on it. But even those who work with smaller businesses but are not technically “owners” are likely to feel more invested in the organizations success and connected to the mission of its founders. How often have you shopped at a giant retailer and felt the employees were checked out? How often have you had that experience at your local hardware store or coffee shop? Some businesses have famously avoided this by showing the owners are committed to an admirable mission (e.g., Movement), breaking up the big business into smaller chunks run by owners (e.g., franchises), or creating an ownership mindset (e.g., Whole Foods, Starbucks). But it’s harder as a company scales.
Third, small businesses build community. Sixty-eight percent of a small businesses dollars flow back into the community they serve. With respect to diversity, they are often more reflective of the make-ups of the communities they serve because they exist solely within that community. And anyone who’s been to a little league game or attended a local July 4th parade has seen a host of sponsor banners from the small businesses in their communities. Small businesses rarely make the error of talking down to their customers because they live amongst them. They rarely preach at customers but more often humbly reflect their values. While big businesses can seem distant and untrustworthy, small business owners and employees live among those they serve and feel a shared obligation to the success of their local neighborhoods, towns, and cities. Some big businesses get this and work hard to make a difference. When I was a kid in a small town in Georgia, for example, a big box retailer actually built the local little league complex and kept its team involved in the town. But it takes a focused initiative for larger businesses to maintain investment in each of the communities they serve.
Finally, the best small businesses love people. I spent most of my career in large businesses. There were amazing individuals in those businesses at all levels, people who cared for and valued others. But as organizations grow, the pull of bureaucracy is often towards process and away from personalization. They become professionally distant, not people centric. Small businesses more often avoid these traps. A local coffee shop will remember the names of customers and notice when they are not there. They’ll know when a customer’s spouse is sick and send flowers or a meal. And they will stay open later to help someone out. Small business owners often live closer to and are more in touch with the lives of employees, and have greater flexibility to understand their unique needs and goals unbound by the constraints of broader policies. And that personalization at all levels manifests as deeper, more positive and personal relationships—something akin to love. This is not always true. Some small business owners are abusive to employees. Some don’t care about their communities. And some bigger businesses definitely do, like Davis Smith at Cotopaxi. But the ability for people in a company to truly know and care for one another inexorably becomes harder with scale.
Does all this mean big businesses are bad? Absolutely not. Some are remarkable, even as some small businesses don’t serve either customers or employees well. But given that Americans are more than 50% more likely to have confidence in a small than large business; perhaps there are lessons we can learn from those community-based organizations that could make all American business better.
