Why Do Many Small Businesses not Sell? Lea Bailes, an attorney and business owner, explored this question at his blog yesterday. The dynamics of being a small business are part of the problem. He writes:
“Because of the personal goodwill attributed to the owner of the business, many owner-operated small businesses are not marketable. Generally, the goodwill in a fence company is personal goodwill versus enterprise goodwill. As we looked previously at the factors that contribute to personal goodwill (relationships, skill, knowledge, and reputation), many small businesses have a strong presence of these factors.”
He notes that the small business owner likely has a personal relationship with suppliers and customers. He is the most skilled and knowledgeable employee. His reputation is what carries the business. But Lea writes:
“All of the above traits and skills of an owner are both well earned and admirable. Unfortunately, the very factors that helped the owner start and build a successful business end up being the exact factors that decrease the marketability and value of the business. Owners must take their business to a new and different level in order to solve the problem.”
What strikes me about this is how similar it is to the problems congregations face. When the size of a human enterprise expands, the nature of relationships and modes of action must change. While you may have a familial connection with fifty or sixty of your best friends, you can’t have it with five hundred of your “best friends.” Personal relationships and knowledge about all other members isn’t possible for any one person.
This also goes to one of the most persistent errors I see when people ponder economic issues. They reason from the circumstances of face-to-face communities to ethics for mass (or commercial) society. Face-to-face communities, like family, permit us to make judgments about need and justice based on our personal knowledge of others. But we can’t treat economic questions in commercial society as though we are talking about family writ large. Personal knowledge simply isn’t there.
Some sociological dynamics are unavoidable. Interestingly, this size dynamic is so readily overlooked as people contemplate human institutions.
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