I was reading about some local policy changes intended to make running a small business easier and that got me thinking. I go to restaurants and ethnic food stores which are usually small businesses, and maybe some of the gas stations I use are small businesses too. However, everything else I buy comes from big-box stores or the internet. These have replaced a lot of small businesses, but how is it that there are any little shops left at all? Sometimes I walk into a corner store because I don’t want to go all the way to the big box store or wait for delivery but the prices are so much higher (often by over a hundred percent) that I walk right out again unless I need something very urgently.
I’m not making a moral judgement here. I just don’t know how the economics work out.
Restaurants (including franchises of chains) are indeed a major segment of small businesses. Looking more broadly, any industry which: 1) offers a service/product/utility, and 2) has proven to not have a tendency to inflate beyond its fundamental target audience, those are likely to be small businesses. Those are the parameters which stave off any sort of corporate takeovers and consolidations, because they won’t invest in a small business if the prospect of infinite growth isn’t there. So the business stays small. And small is often perfectly fine.
That is to say, restaurants (humans can only eat so much food), bicycle stores (humans can only ride so much per day), and local produce shops (even in the Central Valley of California, there’s only so much produce to sell, and humans can’t eat infinite quantities) have these qualities.
But compare those to a restaurant supply warehouse or music equipment store, since those items can be shipped and need no customization by the end user. Consolidation and corporate meddling is possible and probable.
Then you have industries which are often local and small but are prone to financial hazards, such as real estate agents and used car lenders. Because they get paid as a percentage of the transaction size, if the price of houses or cars go up in an unchecked fashion, the profit margins also increase linearly, which makes them more tempting for corporate involvement.
There are corporate-owned national chains of real estate agents, self storage, department stores, and payday loan offices in the USA. But I’m not aware of a national chain for bicycle or bicycle accessories. Even regional chains for bicycles are few and far between. Some consolidation has happened there, but by most definitions, a bicycle shop is very much a small business.