Bob Russell mugshotBy Bob Russell

Guest Contributor

BOONE COUNTY – Small Business Saturday is a shopping holiday held on the Saturday after Thanksgiving during one of the busiest shopping periods of the year. It was introduced and promoted by American Express Company and was first observed on Nov. 27, 2010. Small Business Saturday encourages holiday shoppers to patronize small and local brick and mortar businesses.

What is a small business? The U. S. Small Business Administration (SBA) classifies businesses according to sales or number of employees. In nonmanufacturing industries, the measure of relative size is by dollar sales volume while in a manufacturing enterprise it’s measured by the number of employees.

Generally the SBA classifies a manufacturing concern as small if it has fewer than 500 employees and a nonmanufacturing concern as small if it has annual sales of $7 million or less. According to the SBA, there are 28 million small businesses which account for over 99 percent of all businesses and for 49 percent of all private sector employment.

When national retailers move into a community they often drive local merchants out of business, because of pricing advantages. The large concerns buy their merchandise in much larger quantities which enables them to buy at better prices. This allows them to sell for less.

This competition forces the local merchants to operate at lower profit margins and often they become unprofitable and are forced out of business.

When employees lose their jobs, it has a domino effect throughout the community. That is, when one store closes, people lose their jobs; other businesses lose business from the failed business and so on.

These national chains generally do not support the local community in the same way that local merchants do. Local stores often buy merchandise locally and may hire other local merchants and firms such as accountants, lawyers, insurance agents, architects, contractors, etc.

In the banking industry, where I spent my entire career, we have had many mergers and acquSmall business saturdayisitions by national banks.

However, I’ve never seen a merger or acquisition by these national banks which have resulted in better service or lower prices to the customers. In fact, the opposite is true. Instead, they often suck up the deposits of the rural communities and take them back to large cities where loans are more profitable.

Often we find that these national concerns do not understand the needs of the local communities and many times they don’t care. We have seen national banks go into rural communities with little interest in providing agricultural loans in part because they didn’t have expertise in agricultural lending.

This has resulted in many farmers losing their financing and sometimes being forced out of business. Farmers and other rural customers have found the locally owned banks to be more reliable because the local banks and customers are really dependent on each other.

Small businesses provide the majority of new ideas and inventions. They often serve as the proving ground for new ideas and products. Many of these products never achieve public acceptance, but they must be given a trial before it is possible to know their future.

Large businesses typically wait until public acceptance is assured until they introduce new ideas and products. Thus, some of our most cherished products of today might still be just a dream if not for the daring efforts of small businessmen.

Innovation is easier in small businesses where employees usually work in close proximity to consumers and learn firsthand about their needs.

Also, these small businesses typically have fewer managers separating line workers from the business owner. Employees can help their organizations grow by sharing ideas that will benefit consumers.

In turn, business owners must go through less bureaucracy to put employees’ new ideas into action. This is why some innovative workers prefer to work in smaller businesses.

These local merchants generally provide greater and more personalized service in order to survive. The money we spend with local merchants stays in our communities to make all our lives better. We should support our local merchants, because they support us.

We should support our local merchants every day, but especially on Small Business Saturday.

Bob Russell grew up in Capron and spent his entire career in banking in Rockford. He recently wrote a book entitled “The American Dream” which tells the inspiring life stories of 17 friends who achieved success by owning a small business.

The book is available for purchase at and at book stores everywhere. He now resides in Fort Myers, Fla.

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