What Is a Mom-and-Pop Establishment?

"Mom-and-pop" is a colloquial term used to describe a small, family-owned or independent business. These types of operations often struggle to compete with more substantial establishments, such as big-box retailers, who generally boast more buying power than smaller players.

The term "mom-and-pop" also refers to inexperienced investors who casually play the market.


Mom and Pop

Understanding Mom-and-Pop Entities

The term "mom-and-pop" was historically used to describe local family owned and operated general stores or drugstores. Today, mom-and-pop establishments are synonymous with various different types of businesses, including restaurants, bookstores, automotive repair shops, and insurance agencies.

In many ways, mom-and-pop businesses stand at a steep disadvantage to large corporations, e-commerce sites, and franchise businesses, who enjoy bigger economies of scale, greater capital for investments, and larger advertising budgets. This collectively gives larger players a competitive edge over mom-and-pop businesses, who frequently shutter their operations in response.

Fortunately, there are signs of hope for mom-and-pop stores. More than ever before, consumers are demanding more personalized products and services. And with an assist from the Internet, small businesses can expand their target audience and broaden their geographical reach. Furthermore, mom-and-pop businesses benefit from local consumers who are determined to pump their money into their communities to promote local economic growth.

[Important: Mom-and-pop drugstores are typically owned and operated by the same family for generations, where the druggist or pharmacist would also be the proprietor of the store.]

Mom-and-pop outfits also benefit from a phenomenon known as "Small Business Saturday," which is a recent American tradition of shopping locally on the Saturday following Thanksgiving. This shopping holiday is a logical answer to Black Friday, where large retailers offer enticing discounts to consumers.

Mom-and-pop business owners tend to have a vested interest in the community, its citizens, and the local economy. Consequently, they offer highly interactive and personalized services that large corporations cannot replicate. For this reason, mom-and-pop stores often win increased brand loyalty among consumers.

Mom-and-Pop Investors Versus Mom-and-Pop Establishments

"Mom-and-pop" also refers to inexperienced investors who minimally invest in the stock market. Despite limited capital commitments, mom-and-pop investors often count on significant returns on their trades, in order to supplement their income. But many mom-and-pop investors are unfamiliar with market research and react impulsively to market changes and fluctuations, by rashly dumping their positions, rather than riding out rough patches.

Some mom-and-pop investors combat their inexperience by hiring brokers to facilitate trades, or by using one of the many online trading platforms to facilitate their investments.