Internal Control As It Relates To Small Business
by MALCOLM M. DEVORE Partner, Executive Office
Presented before the 36th Annual Accounting Conference of the Michigan Association of Certified Public Accountants, Ann Arbor—October 1962
THERE is a delightful play now being shown on Broadway titled How to Succeed in Business Without Really Trying. I heartily recommend this play to you should you be in New York and should you be able to get tickets to it.
The play opens with the hero, center stage, reading from a book, following which he says fervently, "I can! I can! I can!" As the play develops it becomes clear that what he is saying is really, "I can succeed in business! I can succeed in business! I can succeed in business!"
Small business, like the lead in the Broadway play, can also say, "I can succeed in business! I can succeed in business!" Admittedly, this takes a lot of doing, for the mortality rate in small business is quite large. Now, small business is variously defined. The Small Business Administration has a definition that runs as follows:
... a wholesaler with annual sales of less than $5,000,000; a retailer,
or dealer in service, with a volume of less than $1,000,000; a construction company whose annual receipts for the preceding three years have been less than $5,000,000; a manufacturer with 250 or fewer employees. Manufacturers with between 250 and 1,000 employees may be classed as large or small depending on the type of activity.
There are today somewhere between 4.5 and 5.0 million separate entities now engaged in conducting business on the American scene. Of these, between 95 per cent and 98 per cent are small as measured by the SBA's standards. The SBA estimates that small business accounts for at least 35 per cent of the total dollar volume of sales. Studies by Dun & Bradstreet bear out the general accuracy of this estimate.
Each new year brings a net increase of 50,000 or more units to the business population, the vast majority of which are small. An estimated increase during the next twenty years of a million new, mostly small, businesses seems a conservative estimate.
Strangely enough, the number of small business per dollar of