Small business has always been big,
just not especially visible.
Soon it will be.
Nearly all of what happens in business is too small and ordinary for Wall Street to care much about. Same goes for business reporters. Even economists don’t pay much attention. What they see are the waves and weather on the surface of the world’s economic ocean, when what matters most happens in the mass of water below.
My friend, Patrick
Last week my friend Patrick, the contractor who built our house, helped me haul home a new 55″ Samsung TV from Costco. The TV was too big for my car, but it fit in Pat’s truck, and he was already heading over to that part of town. On the way back we stopped at a hardware store so Pat could pick something up. There we ran into several other guys who had worked with Pat over the years: a roofer, a mason, a landscaper. Then we stopped at one of Pat’s job sites, a home owned by the dad of Julie, my dentist. After dropping off the TV in our garage, next to the boxes of Samsung surround-sound speakers I got earlier at Best Buy, I drove to an appointment with Bob, my ophthalmologist, while my wife worked with Rebecca, the accountant for our business. Later, while my wife went out to an appointment with Fay, her hairdresser, I began setting up the TV and speaker system in our living room.
The biggest issue in setting up our new TV is getting the old one off the wall, and the new one put up. So I started with the two brands in a position to help: Costco and Best Buy. Costco said the fee for putting up the new TV was $200. Best Buy’s Geek Squad told me their fee was $99 to show up and evaluate the situation, then a labor charge above that. So I called Pat again. He said he’d be glad to do it. He’s out of town right now but will come with a couple of guys and do it next week at a time that works for both of us. We didn’t talk price, because we’ll probably all do it together, and he’ll take care of a couple of other things that need doing around the house while he’s here. That’s how he’s getting my business, and the two brands aren’t.
There are also a lot more Pats than there are of Costcos and Best Buys.
I’m telling you this not to brief you on minor details in our ordinary lives, but to draw a distinction between two kinds of characters in stories about business.
The Characters in stories about business
One kind of character is “brands” | In this case, brands like Costco, Best Buy, and Samsung. The fact that we know them is what makes them brands. Their names have been burned into our brains, much as rancher’s symbols of ownership are burned into the hides of cattle. In fact “product branding” is an idea borrowed from the cattle industry in the 1930s, when broadcasting took off as a mass medium. It also turned into a huge marketing obsession when the internet became a thing. You can see both happening in the graph below of the appearance of the phrases “product branding” and “cattle branding” in books that are in the database of Google Books.
The other kind of character is a person you don’t know | Pat, Fay, Julie, Rebecca, the mason, roofer, and landscaper. All those are people with small businesses. None of them want to grow their businesses any larger than they need to be. None thought about an exit when they started up. None call themselves “entrepreneurs,” or go to expensive conferences. Instead, they socialize at bars, clubs, gyms, restaurants, churches, city parks, beaches, ball games and on the street. They tend to have roles rather than jobs. When you need one, you look for a mechanic, a painter, a lawyer or a driver.
who help each other out, side by side,
face to face, in the physical world.
Small is the new big
The vast majority of businesses are small (less than 100 employees)
99% | Percentage of businesses in the EU that are small businesses (Eurostat)
97% | Percentage of businesses in Australia that are small businesses (Xero)
99.7% | Percentage of businesses in the U.S. that are small businesses (SBA)
In the developing world (World Bank)
80% | Formal jobs in emerging markets that are at small businesses
45% | Percentage of total employment in emerging markets that are at small businesses
33% | Percentage of GDP in emerging economies that is created by “formal” small businesses
365-445 million | Small businesses in developing nations
600 million | Jobs needed in the next 15 years to absorb the growing global workforce (primarily in Asia and Sub-Saharan Africa
But stats are boring. That’s why it’s so easy to look at business through the prism of what the big brands are doing. The media that covers business finds no shortage of great stories about big brands, especially when you can cover fights between giants using sports metaphors. Here’s one example: Google Home vs. Amazon Echo — a Face-Off of Smart Speakers, in The New York Times. Having a talking cylinder in your house has its charms. So does living as vassals to corporate lords (which we do with our Apple or Google/Android phones). But most of what we need is simply practical, especially when it involves our business dealings.
The digital dashboard that a small business own needs
As a small business owner, here are the operational tools I need as part of my digital dashboard.
1 | To-do list
One that is flexible, works on mobile, desktop, or laptop, and is tied in with the next two items.
2 | Calendar
One that, like the to-do list, knows something about what needs to be done, and what’s been done already, going back as far as I want. I also want one that ties in well with the many other people and companies I deal with.
3 | Contacts
One that knows about the prior two, and notes when and how I’ve kept up with them, and is easy to correct — or have others correct. Here I include password managers and everything else that helps me keep track of who I know, who I deal with, and how. If I have a relationship with a supplier or a client, I want to be able to connect with them easily and in ways that work the same across all of them. I also want a way to remember what agreements I’ve made, and with whom.
4 | Communications
I want one way to manage all the various ways I communicate with other people: email, texting (SMS), other chat systems (Apple’s App Store, last I looked, listed 170 of them), multiple audio and video conferencing systems, tie-ins between all of these with all the functions listed in 1-3 above, including records of who I’ve talked with, how, and when, and the ability to locate any files that may have accumulated in the process.
5 | Records
Inventory doesn’t cover it, though that has to be in there. I’m talking about records of everything I own, I sell, have sold already, I rent or have rented for myself or to others–you name it. As more smart stuff comes into my life and onto my shelves, I also need to keep track of it.
6 | Accounting
I want a dashboard that’s the center instrument panel in my business cockpit, whether that cockpit is on my desk, my lap or in my hand. Here the usual — payroll, inventory, payments, invoicing, expenses, quotes, shipments, purchase orders, credit data, currency tax stuff and so on — stays up to date with all the other stuff above, is easy to search, yields sense-making reports and the rest of it.
With the exception of #6, most of the rest are partial solutions from large and usual suspects. Which are problems begging for solutions, no?
To see what one investor thinks, check out Return to the Edge and the End of Cloud Computing, a presentation by @Peter_Levine of the venture capital firm, Andreessen Horowitz. It’s a good way to invest 25 minutes because it helps your mind board history’s pendulum for a ride from today’s centralized technologies and assumptions back to the edge, also known as the small. Here’s the most relevant slide from his talk:
The edge intelligence that matters most is yours and mine. Not the central kind that already has the networked world divided into feudal fiefdoms that don’t get along. Yes, we do need clouds to do the big things centralized services do best — perhaps more than ever. But we need them to work for us as individual clients and customers. And we need tools of our own as well since we’re the ones doing the actual work.
There will also be plenty of that to do, no matter how many robots take over jobs in big business. Houses still need to be built. Plumbing still needs to be fixed. Hair still needs to be cut.
The status of the small business digital toolset
As I noted, when we look down the list of those six needs above, the only one that’s already ahead of the game is accounting software. To-do lists, calendars, and contacts are all trapped inside the castle walls of Apple, Google, and Microsoft. Email is universal and portable (you can move yours from Apple to Google to your own server if you like), but messaging systems are fractured into hundreds of mostly incompatible competitors. Same goes for video and audio conferencing systems. And nobody is doing what I want for records under item #5.
Why digital accounting tools are so far ahead of the other tools
All but accounting is based on the personal interpretations or metaphors of their creators. They are creations of the digital era. On the other hand, accounting software is based on the double-entry bookkeeping method formalized by Fra Luca Pacioli 543 years ago, in 1474.
In Pacioli’s Summa de Arithmetica, Geometria, Proportioni et Propotionalita (Summary of arithmetic, geometry, proportions and proportionality), he wrote:
“The bookkeeper will put everything in order before he transcribes a transaction in the journal. In this way, when the owner comes back he will see all the transactions, and he may put them in a better order if he thinks necessary. Therefore, this book is very necessary to those who have a big business.
“After you have proceeded this way through all the accounts of the Ledger and Journal and found that the two books correspond in debit and credit. It will mean that all the accounts are correct and the entries entered correctly.
“After you have finished checking off the Journal, if you find in the Ledger some account or entry which has not been checked off In debit or credit, this would indicate that there has been some mistake in the Ledger… and you shall correct this error.”
So embedded and permanent are these principles of the double entry system, they have not changed in 543 years.
What does this have to do with the future of the small business dashboard?
What Pacioli was seeking in Summa is what we need to take full control of our lives and businesses in the connected world: a way to keep track of what our business does, starting with money and other assets. That is why I see accounting software as the star around which the other five things listed above will orbit like planets, and start to work with each other far better than they do now.
“When we put the user at the center,
and make them the point of integration,
the entire system becomes simpler,
more robust, more scalable, and more useful.”
That user can be the person or the business. What matters is control. Agency. The ability to get stuff done.
All the data about our lives and our businesses needs to be under our control, even if it lives in clouds somewhere. Realizing this will help us locate resources where they do the most good, and integrate them in ways that work for each of us, and therefore for everybody else.
You’ll read little if any about this in the business press. But you just read about it here. And you’ll be reading a lot more like the pendulum swings toward the edge where you live. Because putting the individual and the small business at the center is what will give all of us an edge.
Doc Searls is the author of The Intention Economy, co-author of The Cluetrain Manifesto, Fellow of the Center for Information Technology and Society at University of California Santa Barbara and, alumnus Fellow of the Berkman Center at Harvard. | @dsearls