The advantages of having a small business instead of a large one are real. Don’t get me wrong, large businesses are awesome, but there are some things that small businesses are better for. Here is a list of the things that give small businesses the upper hand over larger ones.
They can adapt easier to changes
Small businesses are like toy ships. Large businesses are like large cruise lines. You can change the direction of a small business easily, but turning the direction of a cruise liner, that is harder to do.
The world is changing all the time. If your business is now focusing on one that might be gone after a year, it is easier to change the direction of your business when it is small. You probably won’t have so large an inventory and long agreements with suppliers* (hopefully).
*when starting a brand new business, avoid making long rent contracts, for example. If you rent a place for your business for 10 years straight ahead, think about how big the deal is and what are the chances that the small office will be enough for you even after one year? Keep the flexibility and ball in your hands by not making long contracts with landlords or suppliers.
It is also easier and cheaper to experiment with small businesses than larger one. You can easily see if one product or service could be a good addition, if you only have one or two locations. You don’t have to get the item for all 100 stores right away. So, in a nutshell, small businesses are way more flexible than larger ones.
They can offer more personalized service
Another thing smaller businesses can do to beat larger competitors, is that they can offer more personalized service to their customers. That can be business to business customer or business to customer, which ever is the case, small businesses can change their product or service easier to match the needs of their customer.
Smaller businesses can also maintain closer relationships with their customers, since their customer base can be relatively small compared to larger ones. They can know their customers on a more personal level and that way connect better with their audience. This way they can be more flexible and open to negotiations with each other.
Customer service overall can be much better and flexible when the business is smaller and not filled with rules and restrictions like larger companies could be.
Small businesses can fill even smaller market gaps
There are market gaps that are not yet filled, but that are too small for larger businesses to even look at. This, however, is a perfect edge for small businesses. Even if the gap is too small for large businesses to be interested in, there might be room for a small business that employs even 10 people, for example.
These small business gaps are good, since large businesses are not there to compete in prices with you. This way, you can keep your margins higher without losing your customers to bigger competitors so easily.
With smaller market gaps, it is also easier to get the market leader spot in the location you work in. These kinds of gaps are probably easier to be found in physical stores, since the internet is already pretty crowded with all kinds of different businesses and larger operators have very large selections.
Small businesses can have higher returns on investment
If you find a good market gap, become a market leader, and give very personalized service to your customers, you can keep higher margins without losing customers. This way your return on investment can also be larger compared to large businesses that sell in bulk to their customers with lower margins.
Even if your sales are way lower than the bigger companies, with higher margins and smaller costs, your business could be way more profitable. Focus on making your business the most efficient version of itself and stay on top of market trends. More about maximizing your business efficiency on this post.
Small businesses can be better places to work
Small businesses can also be more pleasurable places to work for both, the management, and other workers. Without complicated hierarchy systems, the power gap between workers stays small or non-existent and all of the employees can be on good terms.
Another reason small businesses can be more fun to work at is that the feedback the business receives can be easily directed to the person responsible. If you do good work with the customer, and the company gets good feedback, that must feel good.
Comparing that to if you worked in a large business and someone wrote a google review on the global brands site, that he had good service, nobody would know who that comment was meant for. With small businesses, if you get feedback for doing something wrong, that will also be forwarded more easily to the source of the problem, and it can be fixed faster.
Small businesses can form networks easier
There are networks all over the world. With small businesses, networks are important, but they can also be easier to maintain. Everything doesn’t have to be so formal, when you are not talking about billion dollar deals on every dinner.
Networking is more essential in some fields of business than others. However, if you feel like you could use some backup for your new idea, find your local small business networks and get yourself introduced.
Every large business has once been a smaller one
This may be better said that every business had to start from somewhere. But let’s think about very large businesses such as Apple. Apple according to the stories, started from a garage. It was once a small business as well, and look where it is today.
I think Apple is a great company and has shown all of us, what a business can become when they play their cards right. Even if you didn’t have goals to become as large as Apple is today, nobody knows what the future holds for your business.
Final words
This was my take on the advantages small businesses can have over larger ones. Some might have more impact on one industry than another. These are also not the absolute truth, just my opinions, but hopefully these gave you some value on your journey of building your business.
If you have not yet started, I have a post about how to come up with business ideas, you can read it here.
However, if you already have a business, you might want to read my post about risk management in your business. You can find that post here.
Hopefully this was helpful, have a nice day.