Typical Small-Business Ventures Part-1

For decades, small businesses have competed against some of the world’s largest organizations, as well as multitudes of other small companies. One of these fearless competitors is Dublin, California-based Sanrise Group, started by David Schneider to help businesses store the explosion of Internet data and solve today’s data-storage chaos. Imitating Dell’s original model of selling built-to order PCs directly to customers, Sanrise designs preconfigured data-storage equipment to match specific business customer needs and ships it worldwide within 30 days. Not only does the equipment match customers’ needs, but it also saves then 30 to 40 percentage in storage costs, while letting them avoid the months often involved between order and delivery and setup. To continue to serve its 600-plus customers and compete with larger, better financed rivals, Sanrise raised a whopping $115 million from several major outside investors. Revenues are soaring, too, and are expected to reach $100 million soon.

The past 15 years have seen a steady erosion of small businesses in many industries as larger firms have brought out small independent businesses and replaced them with larger operations. Drugstore retailers have been tremendously affected, as thousands of small neighborhood pharmacies have been replaced by retail giants like Walgreen’s, CVS, and Rite Aide. The number of independent pharmacies has plummeted 30 percent over the past 10 years. But as the below table reveals, the businesses least likely to be gobbled up and consolidated into larger firms are those that sell services, not things; rely on consumer trust and proximity; and keep their overhead costs low.

For centuries, most nonfarming small businesses have been concentrated in retailing and the service industries. As the below figure indicates, small businesses provide the majority of jobs in the construction, agriculture services, wholesale trade, services, and retail-trade industries. Small service businesses can be as high-touch as a country inn or hair stylist, or as high-tech as Sanrise Group.  

David vs. Goliath: Business Sectors Most Dominated and Least Dominated by Small Firms
Most Likely to Be a Small Firm	Fewer Than 20 Workers	Least Likely to Be a Small Firm	Fewer Than 20 Workers
Dentists	98%	Hospitals	4%
Home Builders	97%	Paper Mills	22%
Florists	97%	Nursing Homes	23%
Hair Salons	96%	Oil Pipelines	25%
Auto Repair	96%	Electric utilities	39%
Funeral homes	95%	Railroad Car Makers	44%
Source: USA Today analysis of U.S Small Business Administration data; reported by Jim Hopkins, “Big Business Can’t Swallow These Little Fish”