Running head: In the Ring: Small and Large Businesses

In the Ring: Small anu Laige Businesses

Mariel Butler
University of North Carolina at Charlotte


In the Ring: Small and Large Businesses
2
My Understanding of Business:
Throughout most of my life, my understanding of businesses and their role in the
economy was very limitedin the smallest way possible. The purpose of this study is to
investigate the reciprocal impact of large corporations and small locally owned businesses. By
focusing on this, I can point out the distinct differences in business practice/protocol, as well as
pointing out the negative aspects of both of these different types of business. Then, after
collecting my data, I can hopefully see which style of business is more beneficial to the general
public and which one is better suited for a recently recovering economy. While I am the farthest
thing from an expert on the matter, I do know how to state my own opinion and pull from my
past as reputable support for my ideas. For example, having grown up with a self-employed
mother and a father who bounced from car dealership to car dealership, I always understood
smaller, more locally owned businesses to be key beneficiaries to the economy. However,
growing up, opinions change as well as circumstance. My opinion of smaller businesses was put
to the test once my father got a job at GM when I was in high school, around the same time that I
got employed as a receptionist at a local hair salon. While I saw the strengths and weaknesses of
the larger businesses with my fathers employment, I also noticed the benefits of owning,
operating, and being involved in a locally owned business within my experiences at my own job.
By addressing the audience of those involved in either large businesses or small businesses or
even those merely interested in the matter, I can hopefully provide some insight and even
reputable information as to which business style is more beneficial to that of a recuperating
economy.

Maggie Hinson 10/18/13 10:15 AM
Comment [1]: veiy goou vocabulaiy anu I
like how you make it a stiong statement,
iathei than just an opinion.

In the Ring: Small and Large Businesses
S
Literature Review:
Before someone can stare at listed statistics and point out the pros and cons of each small
businesses and large businesses, there are key ideas that must be understood of the businesses.
Some ideas, for example, may include the particular type of business structure. The different
types of structures include: LLP (limited liability partnership), LLC (limited liability company),
and LP (limited partnership.) A limited liability partnership is similar to an LP in that there are
two owners who share responsibilities for the business, but can split shared debts between the
two of them. While both LLP and LP styled businesses have fairly consistent ideals, an LLC
based company has differing regulations depending on the state. Most of LLC companies are
either classified as corporations, partnerships, or as a tax return. It is important to keep in mind,
however, that regardless of a particular type of structure label, certain businesses may operate
differently due to personal protocol. A hair salon is a good example of this. Because so many
aspects of business structure are left to choice, the business ownership type a salon uses may not
be evident, particularly if it operates as a sole proprietorship or partnership. However, many
states feature a searchable database of LLC, LLP and LP registrations on the Secretary of State's
website that can help rule out these business types or determine an individual salon's ownership
structure (Mott, 2013). A LP is the type of business where there is one general owner who
makes business decisions and another who is mostly an investor into the business itself. Each of
these titles reflects the particular structure either determined by taxes or by the owners of the
business, depending on the type of arrangement they wish to use when dealing with the
organizing of their business.
The following article goes farther into depth regarding the certain rules and regulations regarding
how Limited Liability Companies are filtered and monitored by the government. Limited
Maggie Hinson 10/18/13 10:18 AM
Comment [2]: The uiffeient colois ieally
help with oiganizing anu keeping up with
each teim.
Maggie Hinson 10/18/13 10:28 AM
Comment [3]: Even though you uo uefine
these all, it's still uifficult to keep up with
each of them thioughout this paiagiaph anu
iemembei what each one was. Although
you alieauy have uiffeient subheauings,
maybe split these into uiffeient sections as
well- each one having it's own explanation
anu elaboiation.

- 0i anothei iuea woulu be to cieate a Piezi
oi something as that that woulu fuithei
explain each anu just auu in a link. That
maybe make the ieauing easiei anu pioviue
a ieseaich to fuithei explain these teims.
Maggie Hinson 10/23/13 9:56 AM
Comment [4]: uo back anu look at youi
inuentions, make suie eveiything lines up.

In the Ring: Small and Large Businesses
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Liability Companies are classified into different subcategories depending on how they are run by
the owners. By learning the specific tax laws that correlate with this business style, I can take
into account different types of businesses that are classified as LLCs and determine their success
rate when compared to the other types of businesses. This article discusses in depth the smaller
details of LP and LLP styled companies and how they deal with legal procedures between
partners. A limited partnership is a partnership with two people with one person making the
business decisions and the other being the financial support for the business. This relationship,
however, allows the financial supplier to not be held responsible for any business debts that
come along with the ups and downs of business. A limited liability partnership is very similar to
an LP, except there is no main role in the business. Both owners are held with limited liability for
any business debts. These different styles for business can be compared with an LLC based
company to compare which one is more beneficial in the economy (Limited liability company,
2013).
Top-Down Effects: Large Corporate Impact on Small Business
If there is one thing that many people can agree on, without any prior knowledge about
businesses (small or large) it is that each one often misjudges the other. Most of the time in the
business world, larger corporations are more apt to have misconceptions on how smaller
businesses run their companies/deal with their clientele. Megalli lists and explains the five most
common fallacies that are normally associated within the field. The common misconceptions that
are most apparent are as following:
1) Lilliputian Misconception. This misconception harbors the idea that small businesses act
like big businesses, when in actuality they are much different. The differences are mainly
found in the comparison of cultures, and even behaviors between the two, therefore
Maggie Hinson 10/23/13 9:56 AM
Comment [5]: It woulu be awesome to
come up with some examples foi these
elements, you can seaich anu see what
businesses aie following these concepts.
Maggie Hinson 10/23/13 9:51 AM
Comment [6]: Naybe auu in a sentence oi
two elaboiating on this. Bow aie the
cultuies uiffeient (compaie). What aie the
uiffeient behaviois between the two. --
Again, maybe just a few sentences fuithei
explaining the uiffeiences, anu why this is a
misconception.

In the Ring: Small and Large Businesses
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proving to be valid as one of the delusions that are mainly suggested by larger
corporations.
2) Mom and Pop misconception. The misunderstanding here falls where larger corporations
believing that smaller businesses act just like consumers do. While even big business
owners can be guilty of having similar mannerisms as that of a consumer, many locally
owned businesses include owners who take their work incredibly seriously, and take
pride in their work as well. This is something that some small businesses may say that
large corporations lack: pride in their work.
3) Motivations misconception. This misconception is where most large corporations believe
that smaller businesses are only driven by the idea of moving up the success chain. This
is simply not true. While businesses growth is important and desired in many cases, most
entrepreneurs wish to keep their business on a smaller scale, for optimum management
and observation.
4) Algernon misconception. Many larger corporations tend to believe that they hold power
to the most clever and strategic ideas of how to better business/cause growth within the
company. This is probably the most ironic misconception, seeing as that many locally
owned businesses are more than likely just as concrete with their businesses decisions as
larger corporations are (Megalli, 2006). Some may even argue that smaller businesses are
more delicate to their decision making because their choices directly affect the owners
more than big businesses would.
5) Technology Lite misconception. I see this misconception much like how younger people
tend to perceive older people with technology. The bigger corporations are the younger
generation in this instance, thinking that the smaller businesses arent up to date with
Maggie Hinson 10/23/13 9:53 AM
Comment [7]: Bow uo they believe that
smallei businesses act like consumeis. Foi
someone not familiai with business, they
may neeu a sentence of claiification heie.

In the Ring: Small and Large Businesses
6
their knowledge of technology and most certainly not taking advantage of what it has to
offer. This is one of the most false ideas out of all the misconceptions seeing as how
many locally owned businesses depend on the use of new and upcoming technology to
get word out about their company (Megalli, 2006).
While reviewing these misconceptions, one might think that these would potentially hinder the
growth and discourage small business owners from further developing their companies. I look at
these ideas and see them as a motivation to continue on with the particular pace set by each
individual small business owner.

Bottom-Up Effects: Local Business Impact on Large Corporations
There are many obvious strengths of local businesses that most consumers, political
figures, and even big businesses owners admire. Diaz fights on the principle of how the
government needs to put all of its trust and expectations into locally owned companies in order to
have a more stable economy. Diaz supports this claim with the argument that these companies
will do all they can to stick through the tough times, including declining and threatening
economies (which are incredibly prevalent now). He also fights that locally owned businesses
supply a concrete income for the local government throughout the country (Diaz, 2013).
While statistics and facts are important, its incredibly insightful to view how a business
works by firsthand observation. By viewing smaller businesses it is likely to show the deeper
connections between employees in this type of setting as opposed to a corporate setting. In my
own observations, I was not surprised to see how the smaller, more intimate feel of the business
contributed to the overall staff morale and performance of the salon. When asked to describe the
community of the salon, the staff responded with: Theyre crazy but fun. A fun, crazy hard-

In the Ring: Small and Large Businesses
7
working group of people that I love to work withI feel that we are like sisters in a way where
we can get along, and fight and have snarky moments (Butler, 2013).
Meredith and Butler agree on the idea that community is key for a successful business, and
real genuine community is likely only found in smaller businesses. Merediths article is another
one that is primarily rooting for the smaller guysthe underdogs, if you will. By pointing out
that the customer is and always is the center of the business world, despite the size of the
company, it highlights how smaller businesses tend to cherish this relationship more so than the
big guys. Marketing is also put into play, and it is described to show the importance of making
the customer feel special, which is mostly more prevalent in smaller businesses as opposed to
bigger businesses (Meredith, 2012).

Entering the Conversation:
The Recovering Economy and Large Corporation/Small Business Struggle
In an economy such as the one America is currently being held under, its hard to tell
which structured businesses are fueling the economys recuperation and which are preventing it
from rising back up. While neither general large corporation or small business are fully to
blame for hindering the regrowth of the economy, surely both have their strengths and
weaknesses in the matter. I personally find more positive attributes for smaller, independently
owned companies as opposed to larger corporations. While most people would be quick to state
this opinion without support, I know now the benefits of locally owned businesses and how well
they can contribute to a local government, and in turn, the countrys economy. To be realistic
however, both models of business are going to be attacked and scrutinized by everyone to see
which model type should be praised for magically fixing the economy. While its impossible for
Maggie Hinson 10/23/13 10:04 AM
Comment [8]: Cool quote! I ieally like this
anu it auu peisonality into the papei.
Maggie Hinson 10/18/13 10:41 AM
Comment [9]: uo fuithei into the
stiengths anu weaknesses as each. You uo
uiscuss the stiengths of smallei
coipoiations baseu on youi expeiience, so
what aie some stiengths anu weaknesses of
the laigei coipoiations in contiast. This
might help to auu a bit of length.

In the Ring: Small and Large Businesses
8
one particular model type to rule out over another, it is possible that one have more pros then
cons, such as smaller businesses. People find it hard to like businesses once they grow beyond a
certain sizeSmall wonder that whenever politicians want to laud business they praise cuddly
small firms, not giants ("Small is not," 2012). The Economist gives a crucial point in this article
that while people like the idea of more backing behind locally owned businesses, it is important
that the economy keep hold of larger corporations as well, since they do so much to keep
efficient and up to date. The idea of larger corporations is much like how normal pedestrians
view celebrities. They like the smaller businesses to be more recognizedwhether it be by
themselves, political figures, or the governmentthan the big corporations because of the
familiarity (Small is not, 2012).

Which Business Model is Better? Large or Small?
While it would be a tad difficult to give a cookie cutter answer as to which business
model is going to fix the economy, there are different perspectives that can be used to make it
easier to determine which model works best. While many of my sources regarding business
support all that small and locally owned businesses do for the economy, the truth of the matter is
that neither a large or a small business model really are magic in the sense of fixing the
economy. The true answer is that neither one should be fully praised for any improvement in the
economy. The Economists article counters that opinion by listing that sometimes smaller
businesses are not better. This article, instead, proposes that instead of looking at the size of the
business, that the growth should be the major highlight or drawback of the business. While its
known that not every independent company has the desire to be the next supernova corporation,
it still does help to see how the companys goals and ideals are met over time. By observing a
Maggie Hinson 10/23/13 10:05 AM
Comment [10]: "it is possible that one
CAN BAvE" oi "it is possible that one BAS"
Maggie Hinson 10/23/13 10:11 AM
Comment [11]: is theie any example in
that aiticle that pioves "sometimes smallei
business aie not bettei". if yes, it woulu be
nice to say it anu compaie it.

In the Ring: Small and Large Businesses
9
locally owned business that has launched and remained stagnant since opening, it goes to show
that the company has little responsibility for improvement to the local economy. But by seeing a
consistent pattern of excelled growth and even expansion, one can assume that the company is in
it for the long haul. The journal states, In a healthy economy, entrepreneurs with ideas can
easily start companies, the best of which grow fast and the worst of which are quickly swept
aside. Size doesn't matter, growth does ("Small is not," 2012). The Economist points out that
smaller businesses provide jobs for locals, which is why so many people normally side with
smaller business models. By focusing on growth of a company, we as a country can see how the
growth of these businesses contributes to our healing economy.

























Maggie Hinson 10/18/13 10:39 AM
Comment [12]: Naybe just say a tau bit
moie about youi obseivation.

In the Ring: Small and Large Businesses
1u
Reference Page
1) Mott, A. (2013). What type of business are beauty salons?. Retrieved from
http://smallbusiness.chron.com/type-business-beauty-salons-32010.html
2) Limited liability company (llc). (2013, September 03). Retrieved from
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Limited-
Liability-Company-(LLC)


3) Pakroo, P. (2013). Limited partnerships and limited liability partnerships: The
partnerships that limit personal liability for business debts.. Retrieved from
http://www.nolo.com/legal-encyclopedia/limited-partnerships-limited-liability-
partnerships-29748.html

4) DAZ, A. (2013). Landmark study: Economys future lies in locally owned
companies. Caribbean Business, 41(14), 8.
(http://web.ebscohost.com/bsi/detail?vid=10&sid=cae7202f-e5f2-4e6c-a134-
e3472d59d53b%40sessionmgr13&hid=20&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=87331752

5) Butler, M. (2013). Fusions salon observations. Unpublished manuscript, University
of North Carolina at Charlotte, Charlotte, NC, .

6) MEREDITH, B. H. (2012). Small business gets it; big business doesn't. NZ Business,
26(10), 63.

(https://librarylink.uncc.edu/login?url=http://search.ebscohost.com.librarylink.uncc.edu/login.aspx?direct=true&db=
bth&AN=82948778&site=ehost-live&scope=site
7) Small is not beautiful. (2012, March 03). Retrieved from
http://www.economist.com/node/21548945
(http://www.economist.com/node/21548945)

8) Megalli, M. (2006). NO SMALL DIFFERENCES. B To B, 91(10), 12.

(https://librarylink.uncc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22052642
&site=bsi-live)
Maggie Hinson 10/23/13 10:00 AM
Comment [13]: Eveiy numbei is at a
uiffeient location, make suie they all line up.
Maggie Hinson 10/23/13 10:11 AM
Comment [14]: Bon't foiget one moie
souice!

In the Ring: Small and Large Businesses
11
9) Green, R. (2004). Get Self-organized--How Top-Down Businesses Exploit the
Power of Bottom-Up Self-Organization. Journal Of Organizational Excellence,
24(1), 85. doi:10.1002/npr.20040
https://librarylink.uncc.edu/login?url=http://search.ebscohost.com.librarylink.uncc
.edu/login.aspx?direct=true&db=bth&AN=15325077&site=bsi-live