When being small is a big deal
It is unlikely that your business can afford to hoist their name atop a 50-story skyscraper and fill that building with diligent employees, selling and making and accounting for your business. You probably can't produce television commercials with celebrities, sponsor charity golf tournaments or take up a spot on the Fortune 100 list. But there are distinct advantages to being a small business, and leveraging them can keep you competitive.
Flexibility in Customer Offerings
In a small company, it is possible to offer a customized solution, even if it hasn't been offered before, almost immediately. A salesperson may recognize a need from a potential client, and the whole team can develop and execute a new service or product, often within a week. I have seen this first hand and know that tailored products fill gaps in the marketplace and can also often be offered at a premium. For a large corporation, rolling out a new product or service is a cumbersome, multi-tiered process. It is for a good reason, as this product will be sold many times over and needs to be properly thought through. But there are also distinct advantages to a company that can be flexible to meet the needs of a diverse and changing customer. Take advantage of being able to meet customers needs when competitors cannot.
Potential Pitfall: Although you may be able to meet a variety of needs, be sure that you understand and stick to your core business. This business is what you are good at, and straying too far can leave you (and the customer!) confused and with subpar results.
Agility in the Marketplace
On a larger scale, not only can you offer specific products to clients, a small business is much more nimble in a changing marketplace. Early in my career I worked for a Fortune 500 food manufacturing company, and I witnessed how long it took to get anything done. At the time, the company was looking to get out of a certain sector of food. I worked on the project for over a year, dealing with everything from the tax accounting of a divestiture, to the invoices for remaining inventory on military bases. If this was an unprofitable sector, this company would have had to manage those losses for over a year until it could stop the bleed. For a small business, who can compare it's offerings to the marketplace every week or month, cutting out unprofitable products and services or changing them to be more efficient is a simpler process. Because of that, you can often be first to market if there is a good opportunity, and get out quickly if the market turns.
Potential Pitfall: Jumping in quickly can also backfire if diligent research isn't done before investing in a new opportunity. Take enough time to ensure it is done right the first time.
Creative Employee Benefits
A common complaint from small businesses is that they just can't compete with the capital it takes to recruit and keep great employees. While a total salary definitely matters to an employee, there can be other ways to attract people who are a good fit for your culture. Having worked for the large company I mentioned above, as well as a mid-sized company (50-100 employees) and now for a small company, the biggest difference in day to day responsibilities comes down to variety. In a small company, an employee can take on a range of responsibilities, have a lot of variety in their day to day work, be close to the main business of the company, and make a real, tangible difference in the outcome of the business. Use these facts to find people who are attracted to those opportunities, and don't mind the "unknown" that can sometimes come with it. Similarly, ask a recruit what is most important to them - good health insurance? ability to see son's baseball games? flexibility around holidays to travel to see family? access to a gym? Just as you can modify your products to suit customers, you can modify compensation packages to address a variety of goals, lifestyles and priorities - all while keeping qualified and competent people in your business.
Potential Pitfall: Be clear on your expectations from employees, even those areas that may change as the business grows. A little transparency goes a long way!
Dollars are More Important
If I gave $20 to two people, would it matter more to one than the other? Possibly. In my example above, my company had to potentially manage losses of a business sector for up to a year. A small business cannot do that. They will run out of capital much more quickly than a large corporation. Because of this, the decision making process is sped up, both on revenue earning and cost cutting decisions. By moving quickly to expand areas that are successful and fix costly problems, a small business can maximize its profit margin as quickly as possible. This key differentiator is often what keeps a small business competitive when they do not have the benefits of volume and scale. It also speaks to the points above regarding flexibility. A small business owner has a passion for what they do and are willing to go the extra step for more revenue, because the dollars are simply more important to them.
Potential Pitfall: Going the extra step is almost always worth it, but know your margins so you don't work hard for nothing.
Companies of all sizes fight the same issues: How do I stay relevant in the marketplace? How do I compete against others while maintaining a profit margin? How do I have the best possible product, processes and people? Use the key attributes of a small business to find your niche and create success for your employees, customers and bottom line.