Mark Latham doesn’t get it: size doesn’t matter to small business owners

Mark Latham loves to goad people into debate. This is what Fairfax pays him for from his op-ed pieces in the Australian Financial Review.

Latham was wrong in his column on the weekend when he wrote:

Self-evidently, if small businesses were any good they would’t be small. They would be big monstrous things with massive levels of profit, employment and economic grunt.

A good business owner, large or small, spreads risk. The best way to do this is across many revenue points (customers or products). Businesses relying on one big revenue generator carry a huge risk as do economies – look at the doom and gloom forecasts for Australia flowing from the mining downturn.

Our economy will be stronger from 10,000 small businesses with combined revenue equal to one large national business.

While I am no economist, I suspect and economy will benefit more from many small businesses than one big business generating the same revenue. Here’s why:

1. Small businesses have been essential to cost-effectively delivering the newspaper in which Latham writes since it was first published.
2. Small businesses are less likely to shift revenue off shore.
3. Small businesses are more likely to pay their full tax obligation. No double Irish with a Dutch sandwich here.
4. Small businesses have fewer tax concessions.
5. Small businesses are safer economically in that one can collapse and the community is okay. A big business in town collapsing can cause real hardship.
6. Small business owners are less greedy than large business CEOs and senior management.
7. Small businesses boost personal and economic optimism.
8. Small business start ups are vital for economic activity.
9. Small businesses employ fewer lobbyists and therefore get less time with politicians.
10. Small businesses more actively support local communities as they are local.
11. Small businesses are more likely to source products locally.
12. Small businesses do more to spread local narratives.

Latham goads further with:

Small businesses, in effect, are the garden gnomes of the modern economy – purely ornamental and totally dispensable.

I don’t think Mark Latham actually believes this. If he does he is an ignorant small business bigot, he ought to work in some small businesses and see the world from here. He should see first hand local community engagement that is unique to small business. he ought to spend time in the office and see first-hand the economic value from wages paid, suppliers paid, rent paid, profits made. Sure, most small businesses make only slim profits – but does that matter? I know many small business owners who are not in business to get financially rich – their businesses make them personally rich.

I’ve owned my software company for 34 years and my retail newsagency business for 19 years. Both businesses have been and continue to be considerably more than ornamental for me, all who have worked in them and all who have done business with them.

The best business success in large and small businesses is that which comes from many small steps as it is this success which will be more sustainable. The same is true for an economy. Australia will benefit from more small businesses not fewer. They do not need massive handouts, only the occasional reaffirming encouragement like the instant asset write off in the latest federal budget.

While I appreciate Fairfax runs Latham’s pieces to encourage debate, in this piece on small business he offended a business community that is vital to Australia.