Mitt Romney & Richard Branson on small businesses; Apple, Hershey's Wrigley's, Mattel were SMEs

Small is beautiful. — E. F. Schumacher

Champion small businesses! This was one empathic and exciting message of former Massachusetts Governor and businessman Mitt Romney, whom critics say won the recent first presidential debate versus US President Barack Obama. I hope our Philippine politicians — especially those senatorial bets and others running for our 2013 polls — listen to Romney’s empathic assertion that support for small businesses is key to national economic progress.

I agree with Romney that small businesses need lower tax rates and more encouragement, and that they create lots of jobs. When shall our government and legions of politicians earnestly champion the cause of small businesses? Small business owners do not make news headlines and cannot make huge election campaign contributions, but they need more government support.

To government leaders and politicos: Please cut the horrific bureaucratic red tape starting from the barangay level all the way to other government offices or agencies, lower the high rate of taxes and help ease other headaches for small businesses. Also, when will government financial institutions aid small businesses, instead of just so often quickly approving mega-loans for big-time business people or corporations or multinationals?

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One of the biggest challenges to small businesses is perennial lack of capital, or limited or difficult access to financing. Many small entrepreneurs have to resort to high-interest loans by private financiers or even so-called “loan sharks.” 

It is also a paradox of banking that, traditionally, bankers prefer to lend only to the rich and to those who do not need loans! A young entrepreneur e-mailed me a complaint about a top Makati-based bank whose officers had insolently rejected his loan application. His frustration came, not from the fact that the bankers had declined his loan application, but because the way they handled it wasn’t so pleasant.

Another businessman e-mailed me that he once encountered financial difficulties during the 1997 Asian financial crisis, but that didn’t give a major bank problems in foreclosing his mortgaged property; now that he has recovered financially and wants to buy another foreclosed property from this same bank, the officers of this bank said they have a policy against conducting business with people like him! 

When will banks — especially government financial institutions — grant more credit support to small businesses? The former Asiatrust Development Bank headed by talented banker Dionisio Ong used to specialize in supporting small businesses. I know this because I personally introduced him to a young couple with a small start-up enterprise that his bank efficiently helped and this business is now flourishing.

It is sad that Asiatrust Bank only this year ceased banking operations and sold the bulk of its assets to Asia United Bank. Which other banks will continue to support small businesses the way the former Asiatrust and Diony Ong used to do so well?

Planters Development Bank led by Ambassador Jesus Tambunting champions small businesses; what about other banks and institutions? Can the government and Bangko Sentral provide more incentives to banks that support small businesses?

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Apple, Hershey’s, Coffee bean. Ben & Jerry’s, Wrigley & Mattel were all SME’S

Barbie’s global company, Mattel, started out as a small- to medium-size enterprise in the garage of Ruth and Elliot Handler and Harold “Matt” Matson in 1945.

Do not belittle small and medium-scale enterprises (SMEs), their far-reaching impact on the economy of a nation and their potential for growth. Studies in the US show that over half of small businesses there were started in an owner’s home — similar to future corporate giants like Apple, Hershey’s, Mary Kay Cosmetics and many others.

Among the numerous corporate giants and legends that began as SMEs: Coffee Bean & Tea Leaf chain in the US and Southeast Asia started as a mom-and-pop coffeeshop opened by Herbert B. Hyman in 1963; Ben & Jerry’s quirky ice cream venture started as a small ice cream shop in a rundown gas station in Burlington, Vermont in 1978 and by the year 2000, global conglomerate Unilever bought out this business for $326 million; the world’s biggest gum and candies giant Wrigley’s started in 1891 when small baking powder trader William Wrigley, Jr. gave away free chewing gum to merchants for each can of baking powder they bought from him, and only two years later, he launched Wrigley’s now famous Juicy Fruit and Spearmint flavors; world’s largest toy business Mattel started in 1945 with Ruth and Elliot Handler and Harold “Matt” Matson in a garage workshop, and the firm went no to create the now world-famous Barbie Doll in 1959.  

Not only do many business giants originate from SMEs, it is also a global reality in many societies that SMEs comprise the dynamic catalysts of economic progress in terms of creating more new jobs, helping to realize economic democracy, and boosting the resiliency of national economies.

Richard Branson’s 6 tips on growing small businesses

On small businesses, America’s Entrepreneur magazine (which has a Philippine edition published monthly by Summit Media) had an article last Aug. 27 by British billionaire Richard Branson of the Virgin Group including his six tips for small businesses. Branson got his six tips from Richard Reed, founder of British smoothie and soft-drink maker Innocent. Reed was a speaker at a recent conference organized by Richard Branson for a number of the United Kingdom’s fastest-growing firms. 

Here are his six tips for growing small businesses:

1) Know your mission.

2) Make sure you get the basic structure right.

3) Get the right team at the top. (I agree with Branson and Reed on this point. Some small firms cannot grow really big because of inability to upgrade, retrain or even totally change officers at the top management.)

4) A strong purpose and a sense of ethics give the company a solid foundation.

5) No matter how big you are, details count. (I have heard countless fascinating anecdotes of successful self-made entrepreneurs who grew their enterprises to big businesses, but who still have a remarkable eye for details.)

6) Listen to your customers and act on what you hear. (This tip of Branson is so essential, and I am convinced that this advice is even easier to act on nowadays with the phenomenon of social media like Facebook and Twitter or even SMS texting as instant feedback mechanisms. Indeed, the customer is not only always right, he or she is king!)

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