(First published in the Business World)
At the SERDEF and UP ISSI, when we speak of the contributions of small enterprises, we tend to do so in terms of their potential, rather than their real, contributions and role.
The operative word is potential.
Indeed, small entrepreneurs are potentially able to contribute to nation-building and economic growth, but have not really done so to the full extent of their potentials.
There are many reasons for these, most of them inherent in smallness.
A foremost size-related problem is absence of assistant managers and other specialized and experienced staff who can help entrepreneurs manage their business. Many owner-managers serve as their own production manager, finance officer, marketing man and personnel administrator. Initially, when there is only one product to manufacture, few workers, and small community markets to serve, they do fine. That is, until the business grows, products diversify, employees multiply, and new markets are served.
An entrepreneur who tries to be all things to his business might find himself “seeing the trees for the forest.” This means that because he has only 24 hours a day to work, he will tend to concentrate on one or two aspects of the business, at the expense of others. Let’s say, he works hard on production – concentrating on producing better, cheaper, faster, better. Soon, he would tend to look only at production (the trees) and to think that production is the whole business (the forest). He forgets that the business is production, marketing, finance and people combined. Thus, as he continues to cast a myopic eye on production, to the neglect of say, marketing, the business might become saddled with a high inventory of products that the market no longer wants.
The small enterprise is also typically family-based. There is little difference between the business and the family. Personal and business problems are intertwined so that they are extremely difficult to identify, much less resolve. Family dynamics inevitably impact on the operation of the business. Some businesses, for example, are better off if some members of the family leave the family business and pursue other career opportunities. But who will tell them off?
There are other special problems that small entrepreneurs face mainly because they are, well, small. These include: capital shortage (because mainly financed from personal/family savings); inability to hire skilled manpower and good line management and specialized staff; failure to plan because of poorly-kept financial and production records; and poor bargaining power.
Many of these problems arise from the fact that small business owners are isolated – virtually alone in management and leadership tasks.
Wanted: Small business counselors
For these reasons, small enterprises need professionals who can help them identify their business strengths, diagnose their weak areas, formulate solutions and even help lay in place the improvements required. For family businesses, the consultant can be the objective, non-partisan authority who all family members – including the feuding ones — might listen to. Ironically, it is small entrepreneurs, more than big business managers, who are usually reluctant to receive outside assistance.
These are a proud and independent lot – the entrepreneurs. They can be very jealous or zealous of their independence. They put premium on being in control and calling the shots. They think that allowing an outside consultant into the business is giving up part of this independence and admitting that they are not in perfect control.
The outside consultant who will effectively help small business should therefore have special training and experience and familiarity with the small enterprise client.
(The SERDEF and its partner, the UP ISSI, can conduct training on small business counselling as well as field counselors on request.)