[Editorial Note: A number of businesswomen came together to put these thoughts on paper. Not every thought applies as equally to some businesses as others. However, in aggregate, it paints an accurate picture of small business ownership. – Lucie of Locally Laid Egg Company]
This past February, one of us watched, dispirited, as four different women small business entrepreneurs she had met (in real life and on the internet), who she had learned from and cheered for, each announced that they were stepping away from leading their businesses. The four businesses were very different sizes, in different places across the country, and the women came from different backgrounds. But they had all worked passionately over the past decade to build successful businesses known both for their products and for being compassionate and thoughtful places to work.
And they all simply couldn’t do it anymore. They were running on fumes. We would be lying if we said we didn’t identify with them. As small business owners, we want to enter the chat with some of our own: Real Talk on Small Business.
TLDR: It’s worse than you think it is. Making it look good is a prereq for real success, but the truth is, we’re not rich, we’re subject to the same or worse laws than giant businesses with legal teams, we don’t have a way out, and for those of us who are women the expectations/responsibilities/balances are especially impossible. Yet, what makes us different than large companies is kind of exactly what our society needs.
Why bring up this conversation now? First, we’ve noticed that more and more people have opinions about how they would run a business. But, rarely is this opinion built on complete information.
Second, we are having conversations amongst ourselves. We’re walking around feeling like failures because the truth is when you’re doing a million things every day, you’re bound to do several of them wrong every day. But, discovering that others are having the same feeling made us feel less alone, and we want that for other small business owners too.
SOME REAL TALK
First, let’s start with how the public sees a small business –– vibrant, fun, full of vitality from passionate creators with unlimited optimism. And, honestly, we small business owners have a hand in curating this view. We wrap our socials in the bright imagery of us crafting the products we care so much about. We make everything shine. We have to. Whether conscious or not, all people are attracted to shiny things because we all want to shine. As a business, the moment we stop projecting this success is the moment people start to “tut tut,” assume we are a lost cause, and jump ship. Anything other than radiating success can jeopardize sales, loan and investment opportunities, and more.
Everything we put out there is absolutely the truth. There is passion and beauty and authenticity in what we make and sell. You literally cannot build something as outrageously difficult as a small business without superhuman quantities of enthusiasm. But, no matter what, it’s more complicated and frankly, it’s unsustainable.
We enter business wide-eyed, caring so much about what we make and the community we make it in and for. We’re trying so hard for high integrity in so many arenas – procuring well-sourced, ethical ingredients, creating a beautiful, safe, nurturing workspace for our employees, and showing everyone on the internet how fantastic it is, so they’ll continue purchasing our products.
But passion isn’t profit. Exposure isn’t profit. Ubiquity isn’t profit. It’s fair to say we are all ever desperate for support.
ENTREPRENEUR LIFE REVEALED
The public perception is that people are enthusiastically consuming our goods and handing us cash to add to our Scrooge McDuck piles of money. They don’t see that the vast majority of our income flies right back out of our till.
Where does it go? A lot of places. A big one is that we all need to invest in the items required to make the stuff. A steel tank costs $9,000. A website design costs $35,000. An order of packaging can be $100,000. And that’s just the beginning.
Government compliance dictates a whole other set of costs. Have you ever had to spend the time and money to go through the process to get the permit that says you don’t need a permit to let your water go down the drain? We have. Or had a regulator change their mind after 7 years and tell you that you can no longer call your product what you have called it for those 7 years, leading to months of expensive legal back and forth? We have. On top of that, there’s payroll taxes and incur eye-popping tax liabilities. Most businesses also take on significant debt that requires the payment of interest. (That’s paying investors, multiple banks, funding sources…)
The topic of employee compensation is a whole other stressor. The $25 an-hour wage needed to live comfortably these days cannot be the crushing responsibility of small businesses alone. It must be shouldered by society. Health care is too expensive in our country. Housing prices are untenable. But unfortunately, turning to small business entrepreneurs to subsidize it all cannot work and is burying us.
We should look to the government for more systemic changes so that people can live comfortably on a wage that small businesses can actually pay. If a small business is successful, we may have 7 or 8 figures on our revenue line, maybe 4 figures in our profit line, and then pay 45% of that in taxes and the rest in loan repayments or investment into our businesses. Meanwhile, larger corporations operating in the US can easily have 11-12 figures on their revenue line, 8 or 9 figures on their profit line, and pay none of it in taxes. The stock market basically dictates that corporations focus on maintaining endless short-term profits instead of investing in the employees or society. And to the extent any of us in the world have investments and retirement plans, we are all complicit.
The stress is real and significant. That’s why putting entrepreneurship on a pedestal is dangerous. Being your own boss is often portrayed as fun, creative, freeing, and, while not exactly easy, certainly not as difficult as it really is. And that’s dangerous.
Behind the cool entrepreneur façade, you’ll find exhausted-to-the-bone, occasionally zombie-like, small business owners buckling under the weight of their worlds. It’s an environment filled with endless decisions plus all the things and people they are trying to care for. A full 75% of businesses fail in their first 2-5 years of operations. The overall small business success rate is only 20%. These numbers are so staggeringly bad none of us can quite wrap our brains around them. Meanwhile, the stories that get told over and over are the successes. Even the stories of our trials get told with a smile because the only way to keep going is to reframe our pain as learning and keep swimming.
Ironically, many local entrepreneurs (at least here in Duluth, MN) enter business during some of the busiest times in their adult lives. For those of us writing this essay, we are in between small children and aging parents. We strive to be good partners, adult children, and loving, available moms. Many business owners also contribute to their community by being on non-profit boards and donating to many fundraisers. And this does not even touch on the “being a woman” of it all with its high beauty, fitness, and style standards on public display — and open to general commentary. As a society, we unconsciously give women only two choices, stay out of the spotlight or be perfect. You can guess how well that goes.
In whispered conversations with fellow business owners, most report taking home less income than if they’d had a “regular” job working a “mere” 40 hours and with astronomically less stress. Meanwhile, as owners, we live the unrelenting burden of our business and its exhausting learning curve. Because not only do you need to learn how to run and scale your product or service, there are the ins and outs of everything from payroll, to accounting, legal compliance, manufacturing operations, inventory and supply chain management, sales work, video editing for social, the list goes on. And ironically, when we are successful, we generally work ourselves out of doing the thing that we set out to do and initially loved. We instead find ourselves the beekeeper tending the bees. A genuine, very challenging, very important job, but so different from making honey, and with so much getting stung. With every new level comes new devils. There is no plateau, no moment when you’ve solved the problems. The best you can do is get better problems. The business owners we know live in a state of clinging to the end of their rapidly fraying ropes.
You might ask why we don’t just quit our business and get a job. Frankly, most of us are in too much debt. Plus, what even is the end to a business that won’t draw ire and judgment? The only common options are to sell your business – “sell out!” – or close it down – “So sad that they are closing after all these years. They must not have been able to adjust to the times.” – or hand it down to a family member – “Nepo baby!” Which would you choose? With no answer, we put one foot in front of the other. We’re often too busy to look past the next hour let alone the next day or a 5- or 10-year plan.
A PLACE FOR SMALL BUSINESS
Now, we know it may not seem like it, but this is not intended to be a complaint, and we’re not asking for pity. We recognize that we have a lot of privilege. And no one knows better than small business owners that we always must take responsibility for our own circumstances. The intent here is to give some behind-the-scenes perspective into a world that very few people know.
And after showing you the dark corners, we think small business, really, is part of the solution.
We’re real people who know and work with our employees as real people, not solely numbers to manage. We also see our customers as real people, not just market trends to capitalize on. We build connections, weave society into fabric, and support community. We are the creative, artistic, path-breaking innovators from whom better ideas will come. Who know that getting things done means you’re going to do your best, screw up, course correct, do your best, screw up, course correct, and onwards. But we can only persist if our communities neither idolize nor despise us, and instead celebrate the fallible yet trying human entities we are – realizing that if we’re going to support every community activity, the community needs to buy from us. “Buy local” is not simply a nicety at this point.
Small business entrepreneurs are the small percentage of people who create something brand new. They see a need and put their beautiful ideas into the world. So, fresh-eyed wanna-be business owners, PLEASE IGNORE everything written above. We need you! We need you to push forward with your dream. Our community needs you to continue to create authentic products and open restaurants, create authentic products, and beautifully curated shops that lend sparkle to living. And when you say to us, “But, if you could go back, you would do it again, wouldn’t you?” We will smile, grit our teeth, and say “Yes.”
Emily Vikre | Craft Spirits
Laura Mullen | Craft Beer
Michelle Cartier | Wellness
Kate Lindello | Fashion + Online Retail
Annie Dugan | Arts + Agriculture
Candace LaCosse | Craft Artisan + Retail
Sarah Lawrence | Arts Non-Profit
Lucie Amundsen | Agriculture