Sunday, March 23, 2014

Big Business



Megalopolic "Providers" are the trend.  These are groups of businesses that work together to provide value chains to customers.  Think Walmart or Target working with Comcast and Farmers Insurance and Providence Health care.  These "providers" will join not as a monopoly but as a people integrator attempting to nudge employees and entire market segments to "stay within the family" or "ecosystem".

This one is going to take a while, but I think by 2025 (yes 11 years) you will see clearly that this has started.

Big Businesses no longer need little businesses.  This my seem obvious and it may seem silly but the reality is that there are enough large businesses that they can spin off small businesses that will grow into large businesses to better take advantage of economies of scale and the little guy will loose.

Ok so why do we have little businesses and what is going to happen?  Big Business will continue... (it is a huge trend now) to hire sole source small businesses, train them and provide them with the benefits of economies of scale to keep a perception of owning ones own business.

Chick-fil-A is not a traditional franchise but its model is an expression of where business is going.  They offer "Franchise for $5,000 to a highly vetted business professional who will retain no ownership, stake or value whatsoever when the franchise ends.  (I am available Chick-fil-A!  It is a great job franchise model.)  They get a good portion of the profits, so you might compare them to an employee who is paid commission on sales.  Work hard at this proven model and you will do very well. On average these Owner Operators earn $190,000 according the all knowing Wikipedia.

Other companies behaving similarly where they provide the know how and materials and the business owner provides the motivated behavior.  Large businesses are compensated for their participation in local economies.  This isn't just for government contractors.  It is a perk that all large businesses use to demonstrate value to the community and earn tax breaks.

So back to the wacky idea, of "providers" these Megalopolic "Providers" will be careful to compete with other "Providers" in 1 on 1 markets.  This will drive brand and eliminate real competition without creating a monopoly similar to the current two system political market.  (that has got to be another post)

Local companies like plumbers and lawn care providers will join these groups to take advantage of buying power and the flexibility offered by being part of a group of people.  Less competition, more days off.  They will seemingly retain ownership of their companies.  It is critical to understand that these business owners will be well compensated, the few and the proud.  Industries where human effort is still needed will earn a premium compared to typical employees, and the perceived cost will be offset by the many benefits.

So what do you think?.... Go ahead and tell me that I'm wrong.  This is just a silly guess.