1. WORKING IN THE SMALL BUSINESS SECTOR X420 Discussion Session #82
THE WORLD OF
SMALL BUSINESS.
IS IT
RIGHT FOR YOU?
Good evening
I'm Bob Goldstein, and this is my _____ year as a Career Counselor for the X420 course. I suggested speaking on the subject of the small business world because I spent most of my active working life in a variety of small and medium sized businesses in the Indianapolis area, where I lived with my family (wife and four kids) for 40 years before migrating to Bloomington.
Although I am an IU graduate from the Business School, I certainly don't consider myself to be an academic scholar, but I hope my life business experiences have some value and that you leave this session with a little more than you came in with, even if it's only a good nap.   )
It has been said that with age comes wisdom. That being true, I should be loaded with wisdom. But regrettably, I really don't think so. What living for many years does, however, is to expose you to multiple experiences---- some good, some lousy, some wonderful, some terrible and maybe after getting beat over the head a number of times, a wee bit of wisdom does emerge.
I've added a few PowerPoint messages not directly related to the subject matter------but with some pertinence. .
Please don't hesitate to ask questions if you want to. And if you ask me a question and respond by saying, “Now that’s a very good question.” I probably don’t know the answer.

2. THINK SMALL The importance of…….. BG-B
BG-B
Definition of a Small Business
Before I tell you what I think defines a small business, I'd like to give you a chance to tell us what you believe is a proper definition of a "small business".
SMALL

3. What’s your definition
of a
small business?
There are many definitions of what is called, “A Small Business”.
Let’s go around the room and get some answers as to how you would define a small business.
(USE CHALK BOARD)

4. There are many definitions based upon different criteria
There are many definitions based upon different criteria. Here are just a few:
Type of Ownership
Size of the Capital Investment
Sales and/or Service Volume
Number of Employees
Number of Locations

5. So when did this “Small” business become a “Big” business?
1.Joe and his wife buy a “Subway franchise and open their first store. They beg, borrow (but don’t steal) enough to open---including credit card debt. No bank will touch them. They incorporate as a Sub S corporation.
2. Business is good. They decide to open a second store. Joe has installed a very good accounting system and they have good internal controls. They go to a bank for a loan, which is approved subject to Joe and his wife signing “joint and several” personal loan guarantees.

6. 5 years later…..
3. Bob and family have expanded to 10 locations in several cities. Business is great and they have a chance to buy a company that operates 50 stores in another state. Up to this time they have established bank credit lines---but the banks always require personal guarantees on all loans. So they decide to go public.

7. The next year……
4. The company has a successful public offering. The company is no longer a Sub-S, has over 1,000 outside shareholders, a Board of Directors that includes non-employees and non-family members.
5. Banks now deal directly with the company, and personal guarantees for lines of credit are no longer required.

8. SO…………
When did
This
“Small Business”
Become a
“Big Business?”

9. My Preferred Definition:
"A small business is a business which is independently owned and operated, with close control over operations and decisions held by the owners. Business equity is not publicly traded and business financing is personally guaranteed by the owners. (The business will have less than twenty employees).”
---Professors Scott Holmes and Brian Gibson of
The University of Newcastle, Australia
BG-C My comments about definition
I like this definition except for the last sentence about limiting the definition to businesses with less than 20 employees, as I personally don't think that the number of employees is a proper criteria.
For example, let's take a local restaurant, like Nick's. I am quite sure that Nick's has more than 20 employees----so would Nick's be considered a "big business" because it has more than 20 employees? I don't think so.
Nick's is still family owned and operated, and I would assume that major decisions about the restaurant come from the ownership family. And as successful as Nick's appears to be, I'll bet that if ownership went to a bank to borrow a large sum of money, personal guarantees would be required.
I don't think you can divide the business world into small and large. I think it would be more correct to define the size of businesses the way they size sweaters:
Small
Medium
Large
Extra-Large
But to define each size category is beyond the scope of this lecture, and I intend to stay within the scope of the definition I have accepted.
There is much flexibility within the definition. So long as a business is family run, the ownership is not publicly held and borrowing still requires personal exposure, I consider it to be a small business.
Now if you disagree, that's o.k. with me. But I'm the guy up here presenting this lecture--so you'll just have to go along with me at least for now.

10. TO REVIEW: Management and ownership are rarely separate.
Control over business operations and decisions reside with one or two persons, who are usually family members.
The equity in the business is not publicly traded.
The level and number of formal contractual relations are kept at a minimum level.
Personal objectives of owners will guide and directly influence business decisions.
The personal guarantees and signatures of the owners are required to secure business debt, and limited liability is rarely if ever present.

13. What does it take to work for a small business?
Probably the very same qualities it
takes to work for a big business---
but more so.
Good Communication Skills---both
Written and Verbal
Reliability and Responsibility
Creativity
Organization
BG-D
Bob G--notes for "What does it take to work for a small business?"
It's not rocket science, and most small businesses are not looking for M.I.T. grads with PHD's in molecular astrophysics. The majority of all jobs in this country do not require specific skills that couldn't be learned on the job. One of the real goals of a university education is to give you better learning skills. Of course, if you are hired, for example, to take over the accounting and financial responsibilities you have to have the necessary education to do the job; and this could be true for other specialties that do require academic study and training. But beyond that, there are a list of qualities that just about every small business employer is looking for in its employees:
(Your first job will be to sweep out the store-----A young man hired by a super market reported for his first day of work. The manager greeted him with a warm handshake and a smile, gave him a broom and said, "Your first job will be to sweep out the store." "But I'm a college graduate", the young man replied rather indignantly. "Oh, I'm sorry, I didn't know that" said the manager. "Here, give me the broom and I'll show you how."-----it's called learning on the job)
Communication----If you can't communicate with fellow employees, customers and vendors, you are really in big trouble. You will find that in the small business world, much of the communication is face to face and not by . Communication is important in all facets of the business, from being able to understand customers' concerns to giving and taking instructions.
Reliability and Responsibility----With fewer employees, small businesses are much more dependent on employees who perform the day to day critical functions----and this means that employees must be very dependable and reliable.
 Creativity----Small businesses are very good environments for creating and developing entrepreneurial instincts, and you will find that most owners are very appreciative of receiving ideas and suggestions that can make the business more profitable. This takes creativity. This takes placing yourself in the owner's shoes and help to ensure success. I can assure you that if you can show the owner how to increase profit margins you are making lots of points for yourself.
Organization----In many smaller businesses you will usually not find detailed printed organization charts; and oftentimes employees are expected to be able to handle multiple tasks. The owner must have confidence the employees will be able to take care of multiple tasks efficiently and effectively without a lot of direction and monitoring. So to do more than one thing at once, you must have or develop strong personal organizational skills, by prioritizing, scheduling and monitoring so that nothing falls through the cracks. (Story about my boss who gave me 4 tasks and when I asked him which did he want done first, he said "all of them"---that's the last time I asked him).
Management----Have you ever heard the saying :"lead, follow, or get out of the way"? Every small business needs leaders who can see that the work gets done, and the more that the owner can depend upon you the more valuable you become.
The great thing about working for a small business is that you have more opportunity to make the kind of contributions to the business that can have a significant impact.

14. IN SHORT---THINK SMALL
The Question:
IS IT
RIGHT
FOR YOU?
The Answer:
YOU’VE GOT
TO FIGURE
THAT OUT FOR
YOURSELF.
BG-E Is it Right For You?
The world of small business is a very large world. Small firms are big employers. Every year many large companies in the fields of accounting, finance, manufacturing, computer technology and miscellaneous services come to the Kelley School of Business as well as to other campuses and interview hundreds of students. They ultimately hire a very small percentage of those interviewed.
So what happens to the 95% who are not hired?
Obviously they've got to look elsewhere and the "elsewhere" is the very large number of smaller sized companies.
It means there is a greater chance of finding work among the large number of small companies than from the smaller number of large companies.
IN SHORT---THINK SMALL
There was a time not too long ago when the large companies were considered the ultimate in job security. Just keep your desk and nose clean, stay out of trouble and there would be that golden 401k waiting for you at the end of the rainbow. Not true today--most of the massive downsizing and lay-offs have come from the big companies. Smaller companies are no panacea either--but the economists tell us that most have done better than the large ones these last three years.
In the 2003 winter newsletter of the Midwest Association of Colleges and Employers, appeared the following: "Small companies (particularly those with fewer than 1,600 employees) are begging for employees; however, they don't tend to recruit on campuses or contact career centers very often.
Students need to look for jobs very differently than in the past."   
There are hundreds of companies registered with the Kelley School of Business Placement Office, and many do not conduct interviews on campus---but are in the job market. This imposes upon job seekers a whole different approach.
But as to whether or not the world of small business is right for---before exploring that interesting subject, let's look at what I call the "GOOD NEWS" and "BAD NEWS" of working for companies that fall within my definition.
(Know Thyself)

15. THINK
SMALL

16. THE BAD NEWS: Nepotism The owner retires and sells
The financial risk factor
The demands of work
You are VERY VISIBLE
In your face communications
Multi-tasking

17. Your first job will be to sweep out the store A young man hired by a supermarket reported for his first day of work. The manager greeted him with a warm handshake and a smile, gave him a broom and said, "Your first job will be to sweep out the store." "But I'm a college graduate, and I just graduated from the Kelley School of Business at Indiana University, one of the top ten in the country" the young man replied rather indignantly. "Oh, I'm sorry. I didn't know that," said the manager. "Here, give me the broom - I'll show you how."

18. THE GOOD NEWS: Small firms are big employers
Decision-making and areas of responsibility are usually shared more freely than in larger organizations
Less people carry a broader range of responsibilities
In a small organization you are in the best position to take advantage of any new jobs that are being created
Constant challenge of MULTI-TASKING
You are VERY VISIBILE
DUE DILIGENCE
In the current labor market, I know that some of you will accept a job offer simply because it's a job and you need to bring home a paycheck.
Others will be and accept a job offer from a company they really wanted to join.
In either circumstance, there is still some personal obligation on your part to exercise some "due diligence".
What does "due diligence" mean? (Ask audience)
In short, it means---"Check Them Out"
To activate Due Diligence on a company is just a high-class way of saying that you ought to "check them out."
So let's look at some of the areas you should look into--(To the Slide)

19. DUE DILIGENCE: How long in business? Who owns it?
If the business is family owned, are there relatives actively involved and employed in the business?
Will the leadership go to younger, and possibly incompetent, members of the family?
How far can I go with the company if I am not a member of the ownership family?
What kind of reputation does the business have in the local community?

20. DUE DILIGENCE:
Does it have non-family employees who have been with the company extended periods of time and have achieved high levels of responsibility and income?
Check with the Better Business Bureau if the community has one.
You can check with other members of the community, such as; Businessmen, Lawyers, Accountants, Bankers.
Also, don’t forget that customers are an excellent source of information too.
BG-G
As we are nearing the end of this lecture, I thought I would add a few snippets of advice, some of which may not be taught in prestigious Business Schools…For example, "The Laws of Work" (go to slide)

21. Rules of Work not Taught in The Kelley School of Business
You can go anywhere you want if you look serious and carry a clipboard.
Important letters that contain no errors will usually develop errors in the mail.
If it weren't for the last minute, nothing would get done.
The last person that quit or was fired will be held responsible for everything that goes wrong.

22. Rules of Work not Taught in The Kelley School of Business
When you don't know what to do, walk fast and look worried.
Don't be irreplaceable; if you can't be replaced, you can't be promoted.
Eat one live toad the first thing in the morning and nothing worse will happen to you the rest of the day.
When all else fails, go to lunch.

23. A helpful hint for you accounting majors.

24. The Four Questions What are the seven things I absolutely love to do?
What are the seven things I am good at, have a talent for, or other people tell me I'm good at?
What is absolutely essential for me to do in life?
What do I feel I ought to do or would like to be doing?
Robert Allen, a writer and teacher wrote these words of wisdom.

25. Two After Thoughts "I am a great believer in luck,
and I find the harder I work
the more I have of it."
---Thomas Jefferson
___________________________________________________________
"If you think
education is expensive,
try ignorance."
----Derek Bok

26. “The Art of Living”
A wise person once said, “The art of living is to make use of what you’ve got and use it to the fullest. Most people do not know what they are living for. But once you have found out, you have the jewel of life.”
I'd like to end by telling you a story. Some say it’s a story that in some ways contravenes everything we try to teach you here--- but I don’t think so. Decide for yourself.

27. “I HAVE ENOUGH FISH TO FEED MY FAMILY”
 Once upon a time…….
An investment banker was on the pier of a small coastal village when a small boat with just one fisherman docked. His boat was full of beautiful yellow tuna. The banker complimented the fisherman on his catch, asking how long it took to catch. The fisherman replied "only a short time." The banker asked why not stay out and catch more. The fisherman replied, "I've enough fish to feed my family." The banker then asked what did the fisherman do with the rest of his time, he replied, " Well, I will sleep late, fish a little, play with my children, take a siesta with my wife, stroll into the village each evening, sip wine with my friends, play my guitar. I have a full and busy life.“
The banker was not impressed. "I have a MBA from the Indiana University Kelley School of Business, one of the top twenty in the country, and I can help you. You should spend more time fishing and with the proceeds buy a bigger boat and from those increased proceeds you could buy several boats and soon have a fleet. Instead of selling your fish to a middleman, you could control production, processing and distribution by building your own cannery. You could leave this small coastal village and move to the city and then to New York where you could run your expanding enterprise." The fisherman listened patiently and then asked, "Sir How long will this take?" The banker said, "Ten to 20 years." And the fisherman asked, "But what then?" "Next you would announce an IPO and sell your stock to the public, making millions and millions.
“Then you could retire to a small coastal village where you could sleep late, fish a little, play with your kids, take a siesta with your wife, stroll to the village in the evenings, sip wine and play your guitar with your friends," said the banker smiling. Submitted by José Mário da Silva Oliveira Martins

28. Evaluation Questions Use Strongly Agree---Agree—Disagree---Strongly Disagree---Don’t Know
I found the presentation of material easy to
understand.
This session increased my knowledge on the
subject presented.
I will be able to use some of the information from this session in the future.
The presenter was well prepared.
This presentation should be repeated in the future.