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The Mouse That Roared

The true state of small business

Once upon a time, in a kingdom called American Business, there lived three animals. One animal, the elephant, had ruled the kingdom for many years, using its mighty size to intimidate the citizens of the land into submission. However, when a nasty drought plagued the kingdom, the elephant became considerably weakened and was forced to give up the throne.

To determine who would inherit the kingdom, the citizens set up a race between the two remaining animals: the gazelle and the mouse. The citizens showed up at the race to cheer on the mouse, who had become a familiar sight around town, always willing to help others in times of crisis. But when the gazelle, a newcomer to the kingdom, showed up at the starting gates, the citizens were awed by its beauty and dazzling speed.

With the race moments away, the people began to fervently chant the gazelle's name. Meanwhile, the mouse, trying its hardest not to be dismayed by the fickleness of the crowd, began to warm up . . .

This '90s-style parable began not once upon a time, but about 10 years ago, when business researcher David Birch stumbled across a pattern in his data. While word was spreading that small businesses were creating all the jobs in America, Birch discovered a relatively minuscule subset of companies wedged between the large companies that were declining and the small companies that he claimed were stagnant. This group contained both large and small businesses, all of which had one thing in common: at least 20 percent increases in annual revenues over a period of four or five years. VoilĂ , Birch's pet project was born--the large businesses he named elephants, the fast-movers he called gazelles, and the smallest companies he dubbed mice.

Since then, whether by studies or merely by virtue of the name "mice," small businesses have fallen prey to veiled disrespect, even among professed advocates of small business. The contradictions, meanwhile, intensify, as illustrated by the mixed messages typically sent out by statisticians and the media. Are small businesses really the heroes of the economy, the ones creating the jobs in America? Or are they in fact merely overhyped, pesky little creatures content to hide in the shadow of the gazelles that go before them? Do gazelles alone truly deserve the glory being heaped upon small businesses in general?

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This article was originally published in the September 1996 print edition of Entrepreneur with the headline: The Mouse That Roared.

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