Why do representational logos work for big companies like Merrill Lynch, but not for small businesses?
For a small business, I strongly recommend an abstract logo – abstract logos are more high-end looking, and they make you look more professional. Abstract logos are also easier for more clients to quickly identify with – which is important for a small business brand where you don't have a lot of time or budget to spend educating your clients. You want your logo to tell as much of your story as possible – which is more possible with an abstract logo than with a representational logo, which can usually tell a bit of the story but not much.
Companies like Merrill Lynch have representational logos (ones that look like something) because back when those companies were started, there was no such thing as an abstract logo. And, since they've had many years to build up their brand message, they have educated their clients through more than just the logo in what their company's all about, through their advertising campaigns, etc. – things that a small business won't really be working with (at least not immediately, and not on a national level like Merrill Lynch).