Thursday, September 20, 2012

Large Corporations Buy the Best of Small Business: Not Quite Like Farm Teams in Sports

Successful professional sports teams often benefit from the development of players at amateur levels. Professional football players hone their skills in college and most everyone wins. College players often receive an education through scholarship and the college itself often benefits from the "gate" and media rights to the games. In some sports like baseball, professional teams have established "minor league affiliates" that continue to develop players who are not quite ready for "prime time."

Large corporation of most every type have their "minor leagues" as well in small business, but they don't have much skin in the game. Despite what is often presented in the media and political circles, small business isn't called small business for nothing. In good times, sources indicated that about 2/3rds of all business fail within 10 years. Entrepreneurs often use up their own capital in these exercises and despite the fact that employment gains may be present, employment loss is almost assured when working for a small business.

During our recent recession, small business failures rates are thought to have increased in some areas by 50%. Logic suggests that such failures may be about as under reported as unemployment statistics. People have a tendency to drop under the radar of unemployment statistics after they have searched for so long. Some small businesses may be kept alive under poor economic conditions for any number of reasons that have little to do with potential success.

The constant turn of small businesses is a boon for big businesses especially in technology. Large companies can make up for creative lapses that can drag down organic growth, by buying creative new products and services through acquisitions. Many large companies can invest much less in internal research and development processes because they sift through the work of hundreds or even thousands of small companies and purchase what they need. The failure rate of small business that develop new technologies is appalling, but the continued incubation of new products by small companies insures the success of large non-innovative companies who grow by acquisition. Big slow "Sumo-sized" businesses can grow today as long as they are able to buy the creativity of others and leverage their size to throw opponents off balance. One has to wonder, what would happen to employment figures if large companies were taxed on such poaching efforts so heavily that they were forced to develop their own products and services.

Copyright 2012 Sporting Chance Press.

Sporting Chance Press is the publisher of J.D. Thorne's The 10 Commandments of Baseball: An Affectionate Look at Joe McCarthy's Principles for Success in Baseball (and Life) and other fine sports books. The 10 Commandments of Baseball is a treasure of sports lessons for all ages. The 10 Commandments of Baseball is an enjoyable mix of professional baseball stories and the author's affectionate retelling of his own amateur baseball experiences. Whether male or female, young or old, the reader is pulled into great baseball moments that make the baseball commandments come to life with compassion and humor. The focal point of the book is the classic, but little-known, 10 Commandments of Baseball, the baseball principles created by Major League baseball's most successful manager, Joe McCarthy. To Order.

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