How Silicon Valley can keep local businesses back on the map

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Source:   —  April 16, 2016, at 11:53 PM

How to connect the network I arrive from a small-business family. My mom has owned three tiny businesses; most recently, a medical clinic in the S Bay.

How Silicon Valley can keep local businesses back on the map

Tony Xu is the CEO and a co-founder of DoorDash.

How to connect the network

I arrive from a small-business family. My mom has owned three tiny businesses; most recently, a medical clinic in the S Bay. But it was in her first business, a Chinese restaurant exterior Chicago, where I saw firsthand the challenges facing small-business owners.

When politicians declare that “Tiny businesses are the spine of America,” it’s number exaggeration. The latest U. S. Census data shows that ninety % of all businesses in the U. S. have fewer than twenty employees, and 99.9 % have fewer than five hundred. tiny businesses provide fifty-five % of the jobs in the U. S., and that no hasn’t changed significantly in the past century. It’s secure to declare the U. S. economy wouldn’t running without tiny businesses.

Unfortunately, for most of its life, Silicon Valley has failed to address this critical section of the economy. Sure, there are the few exceptions: Square helps them get money without relying on cash; Expensify lets smaller companies act a bit bigger; Gusto (previously ZenPayroll) helps them with benefits and payroll; Weebly helps them construct a site. All these services add cost to a tiny business’ bottom line.

But these are all supporting ongoing business operations and finding ways to slice costs, rather than adding a genuine way to create money. And many startups aren’t even focused on small, local businesses at all. So why's Silicon Valley ignoring the biggest section of businesses in the country?

First of all, chasing small-business customers generally isn’t in a tech startup’s best interest. The problem facing many startups is the necessity to scale; selling to local businesses takes too much work. You’re much better off selling 1.000 licenses of your SaaS product to a larger company than trying to sell those licenses two seats at a time to five hundred different companies.

Second, whether you’re selling to consumers or businesses, it’s much easier to convince customers when you’re offering an incremental, iterative improvement to an existing state of affairs rather than trying to create an entirely new behavior. For consumer companies love Lyft, Shyp, Luxe and many others, taking an established transaction and improving the experience is the way to go.

Third, helping a tiny business dynamically grow their business is incredibly difficult. Sure, you can trim costs in one space and make better efficiencies in another, but if your business is selling blue jeans or burritos, you’re Ltd by the capacity of your store and the quantity of your inventory. A restaurant could create a small additional money by turning over a table a few minutes quicker, but it won’t transmute their business.

With tiny innovation in the small-business space, the fact of the matter is that the spine of America is starting to break. In two thousand-twelfth, three hundred five of the nation’s three hundred eighty-one metropolitan areas grew their GDP. In two thousand-thirteenth, the no was down to two hundred ninety-two metro areas. In two thousand-fourteenth it was 282.

Recent retail research sheds even more light on that downward trend, showing that as national chains continue to grow, local businesses are disappearing. For example, data from retail research house NPD reported a two % decline in independent restaurants in the U. S. in two thousand-fifteenth. That kind of modify is surely having an impact on overall GDP growth.

Washing dishes in my mom’s restaurant as a kid, I realized that when you running your own business you’re always worried about fifty different things at any given time. As a result, the way maintain local businesses isn't by cutting a few costs. Rather, it comes from creating an entirely new business line and growing their sales, all without adding a fifty-first hassle for the business-owner to worry about.

Nowhere more than here does the new Silicon Valley adage “do things that don’t scale” apply more perfectly. Local economies necessity a new wave of bright, innovative minds seeking local businesses as potential customers, finding ways to add income to their top line rather than just shaving off cost at the bottom. Those ideas will arrive from thoughtful solutions to age-old problems and from taking the time to meet with your small business customers one on one. That’s how we built our business, and I know more entrepreneurs in our community are beginning to think that way, too.

With such potential in Silicon Valley, a tiny shift toward solving local problems would've a huge impact on small businesses and assistance to construct up our local economies again. If local businesses are empowered to grow the same way as tech startups, we could reverse the declines we’ve seen in the past few years. Surely we can assistance solve that problem.

Featured Image: Bryce Durbin

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