America and Americans Need to Think Small to Win Big

Frank Islam & Ed Crego
9 min readMay 13, 2023


Image Credits: Tom de Boor, Adobe, Dreamstime, and a cast of millions

Small business is big business. That is why America and Americans need to think small to win big.

Those were thoughts we expressed near the closing of our first blog in this two-part series on small business in America.

For small businesses to win big, in 2023 and going forward, will require a trifecta of strategic thinking, followed by the appropriate actions based upon that thinking process. The key participants in this thinking must be:

  • Small business owners
  • Governmental leaders
  • Financial sector lenders

Small Business Strategic Thinking

In March, the Small Business Office of Advocacy reported that the average five-year survival rate for new employer firms from 1994–2020 was 48.9%. It did not provide a survival rate for non-employer firms (those with no employers other than the owner) for that same time period.

In its analysis, the SBA did find that the ten-year survival rate for small businesses was 33.7% — and the fifteen-year survival rate was 25.6%. Small businesses that survive come in all shapes and sizes, and do so for a variety of reasons.

Based upon our own experience as small business owners, and research we have conducted and reviewed, those that excel tend to have three things in common. They are:

  • Customer-centered
  • Planning-driven
  • Well-managed

Customer-Centered Businesses

Nearly every business says it puts the customer first. If you look at the practices and operations of many businesses, that is not true. They are constructed and operated to maximize returns for the owners and shareholders, as opposed to maximizing value for the customer.

Customer-centered businesses, by contrast, are constructed to deliver total customer value. As Ed Crego and Peter Schiffrin wrote in their book, Customer-Centered Reengineering, they do this not by meeting the customer’s expectations but by exceeding them.

The key to achieving this is having a precise understanding of a customer’s expectations, and using that understanding to put together and provide a customer value package that exceeds those expectations.

Customers whose expectations are exceeded are not merely satisfied. They are delighted. This causes them to pay the business back in return with the 3 R’s: Remember, Repeat, Refer.

This ensures that the customer-centered business survives and thrives.

Planning-Driven Businesses

Planning is central to small business thriving. The most successful businesses are planning-driven.

Note we said planning-driven and not plan-driven. That’s because planning matters more than plans.

Plans are things that some businesses put on a shelf to gather dust and to be ignored. Or that other businesses continue to implement even though circumstances have changed.

As Dwight Eisenhower put it, “Plans are worthless, Planning is everything.” What Eisenhower meant by that is the plan should be a living document.

At a minimum, a good plan should consist of the business’ vision, mission, goals, major strategies, and strategic action programs. The plan should also include contingency plans, as well as the process for monitoring performance and doing corrective action planning.

Well-Managed Businesses

Knowledgeable business owners and entrepreneurs recognize the pivotal importance of making the business planning-driven and managing the business properly to achieve the desired results.

They understand that well begun is only half-done — that the plan is the starting line and not the finish line. Based upon that understanding, they ensure that their businesses run the race by doing things right and also by doing the right thing.

Doing things right is using the metrics that have been established to manage the business in terms of effectiveness and efficiency. Approaches for doing this are presented in many business planning texts.

What is normally not covered, however, is the responsibility to do the right thing. The right thing is the truthful thing. Well-managed businesses are truthful businesses. They are run by owners and entrepreneurs who are honest with themselves, their customers, and their employees.

Well-managed businesses have a culture of authenticity. They are firms in which actions speak louder than words

Governmental Strategic Thinking

Small businesses have never been in the forefront of governmental thinking. The federal government support they have received in the 21st century has been variable.

As we observed in chapters on small business in our books, Renewing the American Dream and Working the Pivot Points: To Make America Work Again, small businesses fared poorly in federal assistance during the period from 2000 to 2008, and the bulk of the bailouts in 2008 and 2009 after the Great Recession went to very big businesses.

Things began to change after that. The stimulus bill of 2009 provided $730 million to the SBA for new lending to small businesses. The Small Business Jobs Act of 2010 extended the enhanced lending support, and included $30 billion in low cost capital for smaller community banks.

In 2012, President Obama elevated the status of the SBA by making its administrator Karen Mills a member of his cabinet. Key accomplishments that the Obama administration cited during his tenure as President include: enactment of eighteen tax cuts; increasing access to capital for small businesses; and making government programs and resources more accessible.

In 2019, Joyce M. Rosenberg, reporting for the Associated Press, gave the Trump administration a mixed report card, beginning her article by stating,

It’s Small Business Week, and the nation’s smallest companies in the aggregate are by many accounts doing fairly well. They’re not, however, thriving en masse in direct response to Trump administration and Republican policies.

One year later in 2020, the key accomplishments for small businesses cited by the Trump administration were the Paycheck Protection Program and the SBA Disaster Loan Program, implemented in response to the COVID-19 pandemic.

In summary, in the first two decades of this century, overall, the federal government support of small business has tended to be more reactive to deal with problematic conditions, rather than proactive to stimulate new opportunities.

In this third decade, things may be changing. That’s the key takeaway from Melissa Angell’s January 16 Inc article, in which she notes that 2021 and 2022 were the “most popular years” ever for new small business applications, with more than 10.5 million submitted.

Based upon a press call with Bharat Ramamurti of the National Economic Council and SBA Administrator Isabella Guzman, Ms. Angell reports the government is putting in place a strategy comprised of four categories to “keep this boom going.” Those categories are:

1. Expanding access to capital. This includes “reforming long-term capital and small dollar loans” and increasing authorized lending levels for its flagship programs by $9.5 billion.

2. Investing in small business support services. This includes the SBA “creating standard customer experience measures” in areas such as the loan, grant, and contracting programs.

3. Supporting small business contractors. This includes clamping down on “contract bundling” of federal contracts — “the practice of consolidation that makes contracts so large that small and medium-sized businesses cannot vie for them.”

4. Leveraging the tax code so that large corporations pay their share.

This four-category approach is an indication that the federal government is thinking strategically about small business. That perspective is reinforced by the final paragraph of Ms. Angell’s article in which she quotes Administrator Guzman as saying,

“In 2023, we’re committed to ensuring our small businesses — both those new 10.5 million firms as well as established businesses — can continue to get what they need to succeed.”

“We’re going to make sure that we can focus on revenue growth opportunities — that’s what small businesses are focused on.” [According to Angell, Guzman noted “that the president’s new infrastructure, broadband, and clean energy initiatives can help”.]

Financial Sector Strategic Thinking

While small businesses may be closer to the top of mind for the federal government, they do not appear to be doing as well in gaining mindshare with traditional financial sector lenders such as banks and financial institutions. There are a variety of sources that support this conclusion.

Drawing upon the U.S. Census Bureau Annual Survey of Entrepreneurs 2016, which looked at the banking relationships of small businesses and business start-ups, the Consumer Financial Protection Bureau provides the following statistics on the sources that entrepreneurs use to “get their businesses off the ground”:

  • 64.4% use personal and family savings
  • 16.5% use business loans from banks or other financial institutions
  • 9.1% use personal credit cards
  • 8.7% use personal family assets (other than the owner’s savings)

The Federal Reserve Banks Small Business Credit Survey 2022 Report on Employer Firms released on May 6, 2022, for a survey conducted from September through November 2021, revealed that:

  • The share of applicants receiving all of the funding they sought fell from 51% in 2019 to 36% in 2020 to 31% in 2021. The decline was particularly pronounced for firms with good credit scores, as the share of low-credit risk firms that received all the financing sought fell from 45% in 2020 to 39% in 2021.
  • The share of applicants that sought funds for operating expenses grew from 43% in 2019 to 62% in 2021, while the share that sought to fund business expansion fell from 56% in 2019 to 41% in 2021.
  • Among firms that were approved for at least some loan, line of credit, or cash advance financing, 76% of small bank applicants were satisfied with their experiences, compared to 62% of large bank applicants and 34% of online lender applicants.

Bringing it forward to the state of financing in 2023, Catherine Rampell, in her April 14 column for the Washington Post, writes, “Lots of measures have shown that businesses and consumers have found it more challenging to obtain financing recently, particularly in the wake of major regional bank failures in March.”

Rampell doesn’t comment on small businesses in her column, but in a tweet posted on April 10 she notes, “Goldman Sachs econ research: Smaller/regional banks most likely to tighten credit aggressively. And in over half of US counties, these are the banks that provide 90% of loans to small businesses.”

Add all of this up and it looks like small businesses and small business start-ups are getting less support today than they have in the past. And as the Board of Governors of the Federal Reserve System observe in the Availability of Credit to Small Business Report issued in October 22, “Despite the important role of small businesses in the U.S. economy, small businesses often have difficulty in gaining access to credit, as lending to small is generally considered riskier and more costly than lending to larger firms.”

The Federal Reserve goes on to identify other reasons which make it difficult for small businesses to access loans. They include:

  • The failure rate in the early years of a business is “quite high” relative to later years
  • The “informational opacity” of many such firms
  • The heterogeneity across small firms, together with widely varying uses of borrowed funds and smaller loan sizes, has impeded the development of general standards for assessing application for small business loans, and has made evaluating such loans relatively expensive.

Given the foregoing, here are three recommendations to enhance the strategic thinking and performance of the financial sector with regard to small businesses:

1. Conduct a targeted and stratified research study to determine whether lending to small businesses is riskier and more costly than lending to larger firms, and whether, in spite of the “heterogeneity across small firms,” it is possible to develop general standards for assessing applications for small business loans, and to reduce the expense of evaluating those loans.

2. The Federal Reserve Banks Small Business Credit Survey does an excellent job in presenting the perspective of the owners/operators of small business employer firms. Determine whether the Survey could be expanded and enhanced by including the lender’s perspective as well.

3. The Community Reinvestment Act (CRA) is used to determine whether a banking institution is meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. It was enacted in 1977 and last updated in 1995. A proposal was put forward in May of 2022 to update and modernize the CRA. Determine whether implementation of those changes will prove beneficial for small businesses, and what results are projected for their ability to access credit.

In closing, as we have discussed, the small business owner, the entrepreneur, can’t win big by her- or himself. Growing the businesses of today and for the future of America must be a collaborative effort. It is a job for us all.

Understanding this, we Americans need to think small to win big.

Originally published by the Frank Islam Institute for 21st Century Citizenship. For more information on what 21st century citizenship entails, and to see exemplars from around the world, please visit our website.

Image Credits: Tom de Boor, Adobe, Dreamstime, and a cast of millions



Frank Islam & Ed Crego

Frank Islam is an entrepreneur, investor and philanthropist. Ed Crego is a management consultant. Both are leaders of the 21st century citizenship movement.