Big Business Can't Swallow These Little Fish
The March 27, 2002 cover story in USA Today had the catchy title noted above. It was a well-researched piece about the ongoing dynamic in various industries between consolidation and remaining independent "mom-n-pop" operations. According to USA Today, sometime in 2000 [for the first time in history] more than half of all US workers were employed by big companies rather than small ones. But, the assumption that this trend means the death knell for small businesses is not entirely accurate.
According to analysis of government data by USA Today, approximately one third of the 290 industries reviewed have a preponderance of very small companies with less than 20 employees. The table below summarizes the least and most consolidated of the industries studied:
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Those businesses that were dominated by small mom and pop operations shared to following characteristics:
- They largely sell services, not things
- Many rely on consumer trust and proximity
- Overhead is low
In contrast, those industries dominated by big corporations generally required huge capital investments in machinery and other assets.
One of the more intriguing aspects of the article was the recent history of the funeral home business, as depicted on the quirky HBO series "Six Feet Under". Apparently this field was a hotbed of consolidation in the 1990s, including a Houston-based conglomerate called Consumer Services, Inc. CSI, like the other mega-players, aggressively purchased small facilities in geographic locations, cut costs by creating rotating staff to serve all the individual offices and by bulk purchasing caskets and supplies at a deep discount. But, they ran up too much debt load and their stock tanked. The biggest competitor to SCI declared bankruptcy and re-emerged as a much smaller operation.
Then entire article is posted online at www.usatoday.com/money/covers/2002-03-27-staying-independent.htm