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Mom-and-Pop Meaning and Examples for Businesses and Investors

Mom-and-Pop Meaning and Examples for Businesses and Investors

Mom-and-Pop: Meaning and Examples for Businesses and Investors

Andrew Bloomenthal has over 20 years of editorial experience as a financial journalist and services marketing writer.

What Is a Mom-and-Pop Establishment?

“Mom-and-pop” is a term used to describe a small, family-owned, or independent business. These stores often struggle to compete with larger establishments like big-box retailers, which have more buying power. "Shop local" and "shop small" are slogans in marketing campaigns that support these smaller establishments. The term "mom-and-pop" can also refer to inexperienced investors who casually play the market.

Key Takeaways

  • The popularity of mom-and-pop stores is on the rise, thanks to shoppers seeking boutique services or products.
  • Mom-and-pop businesses, such as bookstores and pharmacies, struggle to compete with large chain stores and online behemoths like Amazon.
  • Mom-and-pop businesses benefit from local consumers who choose to support their communities and promote local economic growth.

Understanding Mom-and-Pop Entities

Mom-and-pop stores were historically family-owned general stores or drugstores. Today, mom-and-pop establishments include various types of businesses such as restaurants, bookstores, automotive repair shops, and insurance agencies.

These businesses face disadvantages compared to larger corporations and franchises. Larger players have economies of scale, greater access to capital, larger advertising budgets, higher brand awareness, and better access to talent pools for hiring. This gives them an edge over mom-and-pop businesses, which often struggle to compete and may go out of business.

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However, there is hope for mom-and-pop stores. Consumers increasingly demand personalized products and services. Small businesses can expand their audience and reach through e-commerce and social media.

Mom-and-pop shops also benefit from "Small Business Saturday," founded by American Express in 2010 and cosponsored by the U.S. Small Business Administration (SBA). U.S. consumers spent an estimated $17.9 billion at independent retailers and restaurants on Small Business Saturday in 2022.

Mom-and-pop drugstores are typically owned and operated by the same family for generations, with the druggist or pharmacist also acting as the proprietor of the store.

Mom-and-Pop Investors vs. Mom-and-Pop Establishments

"Mom-and-pop" also refers to inexperienced investors who minimally invest in the stock market. These investors often expect significant returns on their trades to supplement their income.

However, many mom-and-pop investors lack market research skills and react impulsively to market changes. They may hastily sell their positions instead of riding out rough patches. Some combat their inexperience by hiring brokers or using online trading platforms.

National Mom and Pop Business Owners Day is celebrated on March 29. It was founded in 1939 by Rick and Margie Segel to honor the hat shop started by their parents.

What Is a Mom-and-Pop Store?

A mom-and-pop store is a small, often family-owned business that maximizes profits by providing personalized services for its customers and curating inventory to fit local needs. Examples include bookstores, grocery stores, delicatessens, bakeries, restaurants, auto repair shops, insurance agencies, gift shops, ice cream emporiums, butcher shops, clothing boutiques, drug stores, and more.

What Does It Cost to Open a Mom-and-Pop Store?

There is no set cost to open a mom-and-pop store. However, according to the online management platform BlueCart, it may take between $25,000 and $50,000 to open a small mom-and-pop grocery store.

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How Many Mom-and-Pop Stores Are There in the U.S.?

According to the U.S. Census Bureau, there were 7,936,977 small business establishments in the United States in 2019. A small business establishment is defined as one that employs fewer than 500 people and operates at a single location.

The Bottom Line

Small businesses are essential to the U.S. economy, and mom-and-pop stores are a significant subset of them. They inspire brand loyalty and, if successful, develop a devoted local clientele. In the context of financial investors, "mom-and-pop" refers to people with limited knowledge of the stock market who invest small amounts to boost their income.

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