Comment by eigenrick | Hacker News Reader

Comment by eigenrick | Hacker News Reader

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> The fact of the matter is most small businesses are crap businesses.

> They also abuse their workers in ways big business can't get away with, both illegally and legally.

Really? You know this to be a fact?

It appears that the only thing you know about small business comes from what you read on /r/antiwork

The fact of the matter is that 47% of Americans are employed by small businesses. That percentage keeps dropping, not because the owners are assholes, but because mega corporations keep getting larger and more monopolistic.

Most small businesses run on razor thin margins because they don't have the economies of scale that the larger corps enjoy.

My friend owns a cidery. The cost of his raw materials (juice concentrate and sugar) have gone up over 300% in the last 18 months, thanks to supply chain issues and worker shortages due to Covid. The prices are due to get even worse this year.

His total burdened cost for a case of goods has gone up 170%. But he can't just mark his stuff up 170% now can he? He has to settle for a 10% bump in price and hope his distributors don't freak out.

BTW, he has 8 employees and pays health insurance. Afaik, he didn't suffer any employee churn during Covid, cause he's not an asshole.

In most sectors except for maybe fast food, small businesses have suffered not from employee churn, but from the Covid policies over the last two years combined with ridiculous price increases.

As someone who's worked between big corporations and family owned businesses, I'd say the family owned and small businesses are worse, especially in entry level jobs, than working for a big corporation. At least with a big corporation, they're more likely to leave your branch or location alone if you at least hit their targets for revenue. There's not much in the way of micro management in a job at the bottom rung with respect to big corporations whereas I've had 'the owners' of family owned businesses always pestering folks when most times they have no clue what they're doing, especially their kids who they think they can trust with running day-to-day operations.

You may or may not be right but I wouldn't want to live in a world where we did not have small business.

That combined with the fact that the reason they probably struggle so much to provide for their workers is because they are competing with global multi-nationals that can use tactics to eliminate them.

Funny enough, I'm in a position to be friends with many small business owners (I've done work for them over the years, and it has involved into friendships)

The folks that are successful don't look at pennies. They produce or sell their products for a healthy price and focus on delivering a quality experience. I went to dinner with the owner of a small business last week that just closed on 30mm in revenue across 15 employees. The company has a profit-sharing plan that pays most of the profit into a pension. It has been in business for well over 15 years. They aren't the cheapest, but they have excellent customer service, sell great products, and ship those products to you in the fastest way possible.

If, as a small business owner, and your primary concern is undercutting the other guy, you are going to go out of business. That has been the rule since capitalism was basically invented. Very few businesses can make their money by undercutting the other guy. Notice the most successful companies such as Starbucks and Apple, and even nonprofit companies such as the YMCA (in the US) don't focus on the bottom dollar. Instead, they focus on standing out.

Even if you look at bottom dollar chains like McDonalds, companies have tried to do it cheaper. Shoot, you can STILL do it cheaper. The reason they don't exist anymore is because, at the end of the day, McDonalds did a better job of providing food of consistent (shit, erm, sorry, not a McDonald's fan) quality, quickly, and at an affordable price.

Nailed it.

Not rocket science; focusing on delivering VALUE in exchange for the money you charge has always been the obvious, unsexy, boring, fundamental thing that makes any economy function.

So yeah, it's not surprising your friend has closed over 30mm. Especially if he's treating his employees well (which is what it sounds like, esp. wrt. pension). And there's unsexy rule number 2: you treat the people who do the hard work really well, you pay them well, and you hire accordingly because that translates into an intangible competitive advantage that doesn't lend itself well to quantifiable measurement, but something we all have a word for anyway: OPTIMISM!

It's no secret why these shit-for-pay businesses all over the country are having a hard time filling open hiring reqs; because the pay sucks! And that's usually a fair indicator of how your employer's going to treat you if you join them, too. If they're not willing to pay a reasonable living wage, you can be pretty sure they're also not going to bother making the working environment anything even marginally better than the law requires as an absolute minimum. And frankly that legal bar is far, far too low to begin with (and we're not even talking minimum wage here, just basic human decency is lacking most of the time).

So yeah, kudos to your buddy there. If small businesses want to compete with the big guys, this is how you do it. You don't undercut, you charge fair, you pay better, and you over-deliver.

It's called "hard work", and that's precisely why it's so damn rare.

We really need small businesses. I would hate to see them go extinct and only be left with a few mega corporations. It would be a shame to lose the local pizzeria serving up authentic, quality food and only be left with Little Caesar's and Domino's. They both have their place.

That sounds like a crappy business that can benefit from economies of scale.

Absolutely.

All he needs to do is dig up the 100 million dollars he has buried around his yard so that he can scale to the point that taking a 300% hit on materials doesn't affect him.

Or maybe he should spend some of his billions to buy up all of the apple orchards in the region so he can better control his supply chain (and, coincidentally, that of his competitors)

Scaling has its limits, unfortunately)

Yeah: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

The bottom 50% of the US has 2.6% of the wealth. The 50-90% bracket has 27.6%.

And thats how monolpolisation happens. Instead of 5 or 6 moderately successful cideries meeting different market needs, we have 1 or 2 who control the entire market.

You sure have a lot of details about your friend's business. Most friends might say, "hey my cost of goods went way up" or "almost doubled". Your friend is oddly specific. And he doesn't have "a bunch of workers" but exactly 8. You must be a very close friend!

It's almost as if they're friends who talk about things that happen in each others' lives!

Not on this planet. This sounds like how you talk to your accountant, not your friends. You don't burden your friends with details this specific.

My friend wants to own a brewery and was an accountant, my other friends are in finance, banking, etc. Last time we hung out we had fun going over the business plan of the brewery my friend was working for in detail down to costs. It was a fun chat. My other friend wants to start a honky tonk in his hometown, he's in construction but was also quite interested.

I don't remember all the details that's what paper is for, we got down to salary and % ownership stake while at a burger joint in rural Texas on our way to a lake.

I got to Texas 2 days early to hang out with my friend who I hadn't seen in a while. We went to 5 micro breweries in 5 meals so he could scout them out and get my feedback (just general dude) on the decor, food, beer selection, location. We talked about that interlaced with talk of families and friends.

I really don't think it's uncommon.

Lol, just what I said - accountants (plus bankers, finance guys etc). Discussing business plans, scouting locations, splitting ownership stakes... all the fun parts of starting a business. Not so cool: years later, getting deep in the weeds bitching about raw material cost increases down to the percentage point.

he was evaluating an existing business he was essentually running as the accountant to buy. 3 of the people at the table were me: software, a guy in construction, and a guy who installs gym floors and is a local politican.

but hey adjuat my narritive to fit your world view.

Typos == phone and lack of care

How did I adjust your narrative? You mentioned the bankers and finance guys, not me.

Again, plenty of people are interested and excited about starting a business. It's fun! I'm not surprised the construction guy and the politician are involved. But they aren't so interested years later when you're miserable and complaining about your cost increases and explaining it all down to the penny.

HN would be a better place without trolling like this.

I talk to random people about business details this specific. Different people interact in different ways.

Random people are not the same as your friends.

I could totally see a friend spending 5mn explaining that his cost has gone up 300% when venting while getting a drink together. I don't understand why you're finding this so unbelievable.

You talk to your friends about "total burdened costs"? Or something went up exactly 170%? Not "almost tripled"? Sure.

If you and your friend are both interested in how businesses work, you're definitely going to talk shop

Yes of course, in generalities. That's the whole point. Of course you talk to your friends. But you don't go over your income statement line by line with them.

Eight is not exactly a difficult number to count up to.

You get all employees in a room and count each one individually and you'll get there in under 5 seconds.

Well, maybe not you, but...

What business owner calls all employees into a room just to be counted? Is that how you utilize your employees' valuable time?

This has nothing to do with the cidery owner. Do you know the exact headcount of any of your friends' businesses?

You may very well know that your buddy has "about 10" employees or "half a dozen". But to the exact number? And how to explain knowing the exact percentages of cost increases? Can't exactly line them up to be counted like cattle, pardon me, your employees.

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