Supporting the Small Business Loan: Consolidation vs. Diversity

Small Business Loan

I’m sure you’ve heard politicians talking about strengthening the economy by creating jobs in small business. The theory here is, if you use federal programs such as the Small Business Administration (SBA) to filter funds into new small businesses through their small business loan program, this will create jobs. This is a perfectly good working theory that assumes that diversity of business and thought is the best way to stay competitive. However, is this necessarily true? We’ll be comparing and contrasting the advantages of consolidation and diversity, in today’s article.

Wal-Mart’s inventory control system is second to none. They can tell when a product has been sold at any store in a central database within 18 minutes of that purchase, for all purchases. They use this information to drive a vast network of factories, warehouses, shipping and receiving, and transportation departments. They use their massive network to drive down their cost per unit drastically. After that, they pass some of the savings on to their customers.

This is a shining example of consolidation, but before you jump on that bandwagon, you must realize it has its own problems. For one, efficiency doesn’t create jobs, at least not right away. Also, they represent one way of thinking and doing things. On top of that, their size lets them impose that on their suppliers. What if there is a better way? The other option is diversity.

Diversity simply means encouraging small companies (those under 500 employees) to flourish. The theory is that the more companies we have of this size, the more diversity of thought we have, and the more jobs are created. This diversity creates better processes through distinctly different viewpoints while driving efficiency. If you subscribe to this, then you would likely also support small business loan funding.

For more information, go to Small Business Loan at

Supporting the Small Business Loan: Consolidation vs. Diversity was last modified: October 12th, 2011 by Amit Kraidman
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