Why Small Businesses Matter

When small business owners and small businesses aren’t around, they leave an awful hole, don’t they?

November 17, 2021

Politicians and newspaper editorial boards spend so much time claiming that small businesses are important that one wonders whether they remember why small businesses are important or rather are just repeating a familiar message.

The ones with a really good research team might point out that there are over thirty million small businesses in America, that they account for 99% of all U.S. businesses, or that they employ just over sixty million people.  (Media interns, see here.  You’re welcome.)  But these facts are all things that are true today and might not be true tomorrow.  And they really don’t get to the heart of the matter.

So let’s make it express, shall we?

Think back to everyone’s favorite Christmas movie, Frank Capra’s It’s a Wonderful Life.  (SPOILER ALERT!)  After an employee misplaces an $8000 cash deposit, Bailey Brothers Building & Loan Association president George Bailey, worried about scandal, bank runs, and prison, considers committing suicide by jumping into a freezing river.  And he might have done it, too, but for his guardian angel Clarence jumping in first so that George would save him.  After Clarence’s subsequent pep talk fails to convince George, George wishes that he’d never been born, and Clarence teaches him a lesson by granting his wish.

What follows is an eye-opening tour through the dystopian nightmare that George’s town, Bedford Falls, would have become without George Bailey and the Bailey Building & Loan.  Without George, George’s younger brother Harry died in childhood because George wasn’t there to save him from drowning, leading to the deaths of a whole transport of U.S. troops in World War II whom Harry wasn’t there to save later in his life, and George’s wife Mary ended up as a lonely spinster librarian.  Without George, the Bailey Building & Loan closed when George’s father Peter Bailey passed away.  Without the Bailey Building & Loan, slumlord Mr. Potter was able to keep most of the town living in his rented slums.  Bedford Falls itself has become Pottersville and descended into a morass of crime, sleaze, and immorality.  The social fabric of the town has frayed beyond measure.

As George contemplates the awful state of affairs, his guardian angel Clarence twists the knife, explaining, “Each man’s life touches so many other lives.  And when he isn’t around, he leaves an awful hole, doesn’t he?”

You can see where this is going.  Small business owners and their small businesses are the George Baileys and the Bailey Building & Loans of the real world.  They provide goods and services to their neighbors, provide a good income to members of their communities, give their owners an ownership interest in their communities, power the economic activity that underwrites strong families and vibrant social ties, and keep the social fabric from fraying.

It’s old Peter Bailey, just before he passes away, who explains to George that what he does in his “shabby little office” serves a much larger purpose than would be apparent from looking at just the nickels and dimes that he counts in the general ledger.

It’s when these small businesses go under that local economies contract, futures look bleak, and small towns start to look like Pottersville.  When these small business owners and small businesses aren’t around, they leave an awful hole, don’t they?

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