The mouse that roared: the true story of small business - includes definitions of what a small business is by the SBA, Dun & Bradstreet, SRI Consulting, and Cognetics Inc

Entrepreneur, Sept, 1996 by Janean Chun, Cynthia E. Griffin

Phillips notes that the nation experienced record numbers of new small business start-ups in the past two years, as the U.S. Department of Labor recorded 807,000 new firms in 1994 and 819,000 in 1995. Though the SBA doesn't have specific statistics on the number of jobs these new firms created, Phillips points out that "[since] on average, a brandnew firm has two to three employees, you're looking at several million new jobs right off the bat."

Despite the numbers exalting all small businesses, however, it's hard to deflect the spotlight from the more glamorous gazelles. "People like to talk about power players," says Phillips. "They make good press. Everybody would like to have the next Microsoft in their district, but that's atypical in terms of the average growing small business."

* THE RACE IS ON

The event starts getting interesting when you consider that, according to Birch, 97 percent of gazelles go into their growth stage with fewer than 100 employees--in other words, they start out just like mice. In that sense, even the staunchest supporter of gazelles can't discount the importance of mice, as it's practically impossible to predict which small companies will morph into gazelles.

Birch acknowledges that a company can become a gazelle at any point in its life span--Wal-mart, for instance, attained gazelle status after 30 years in business. "Most don't become a gazelle in their first few years. It takes time to figure out how to manage people, learn where your market is, and get your system and your accounting in place," he says. "God knows which company will become a gazelle. But if you don't have the seed being planted, you're not going to get any sprouts."

Phillips agrees that gazelles, like mice, typically spend their first couple of years "trying to survive and meet a payroll, bouncing around in terms of number of employees. At some stage, they may get a large infusion of capital, and then they take off."

Yet Birch believes it's not merely the numbers that give gazelles their identity--it's their mind-set. "Size is a relatively uninteresting way to look at companies," contends Birch. "The dynamics of the firm are more important."

Birch also claims he doesn't prefer gazelles to mice but merely recognizes they fulfill completely different purposes. "The mouse, in general, is looking for an independent source of income, while the gazelle is looking to create wealth, sometimes at the expense of income," says Birch. "In other words, they'll take a salary reduction and do anything to conserve cash and grow. The mouse, [in contrast], may be looking at their enterprise as a source of as much income as possible."

Yet Jere W. Glover, chief counsel of the SBA's Office of Advocacy, refutes that mice and gazelles differ in their motivation, charging that very small businesses, even individual entrepreneurs, are just as interested in establishing a presence over the long run as they are in making a quick buck. "People start a business because they think it's the right thing to do at the right time," says Glover.