You may have been hearing a lot of buzz surrounding the JOBS Act lately - Twitter and political blogs are in a small business frenzy about it. The Jump-start Our Business Start-ups (JOBS) Act is making its way through the House and Senate with overwhelming, bipartisan support. Among many things, the act has specific initiatives to create jobs and opportunities for existing and emerging small businesses to succeed.
Upon deeper investigation, I found the name to be somewhat misleading. For example, the act's long-term goals include creating jobs, but in reality the legislation will make it easier for so-called "small" businesses to file initial public offerings. In doing so, the Act will effectively undo some legislation that came about during the post-Enron and WorldComm era, as they relate to shared audit information and financial regulation.
An even more misleading point can be found in Title 1 of the bill - the section that defines a small business. According to the JOBS Act, emerging growth businesses - which the government also classifies as small businesses - are businesses with less than $1 billion dollars in annual revenue. Yes, you read that correctly. I said billion. That's much larger than your average small business, don't cha think?
Naturally, this distinction spurred conversations in the Planning lair about the small business mindset - small business is more than just size, it's attitude. Interestingly, we all came to the same conclusion: A billion dollar business, though it may be classified as a "small" business, is not necessarily a small business at all; and if you ask me, it sounds more like an entrepreneur or Silicon Valley tech start-up than a corner grocer or local handy-man. The way we see it, small, localized businesses would prefer an easier loan process or a higher credit limit to simplified IPO filing.
There is a distinct personality difference between the Mom-and-Pop shop on the corner of 10th and Pine and the Yelp's and Facebook's of the world. Local businesses don't care about IPO's or investors or shareholders. They like being small, making their own rules and improving their product. Most importantly, smaller, localized small businesses work at improving their local economies through job creation and reinvesting in the community. These businesses aren't thinking of changing the entire world, they're concerned with changing their world and their community.
For companies one billion dollars strong, going public makes perfect sense - perhaps loosening the reins a bit might open the door for entrepreneurship in this country and speed along a tedious process. I just wonder if skewing a "small business" bill so heavily toward larger businesses will alienate local small business owners.