Small businesses and large businesses are different fundamentally. None of the two is superior to the other. Each has its own natural strengths and weaknesses. It is no longer true that small companies have to struggle to compete against their bigger rivals. As there are many factors to take a business off the ground, size alone does not guarantee absolute advantages. A savvy entrepreneur who understands and exploits well the distinct edges of his company’s size can make his small business flourish. A few key advantages of small businesses over their large competitors are:
1. The pioneers of change
Being a small business means you have the natural advantages of flexibility in business strategies and faster response to market move. While bulky organizations lumber forward and struggle through their bureaucracy for every single decision, small businesses, thanks to their being less hierarchical in decision-making process, can launch a new product or introduce new technology to market much faster than their larger competitors. Moreover, the small size enables small businesses to adapt their products and services based on customer feedbacks much quicker and easier then huge organizations. Upon identifying a new opportunity in the market, small businesses can also change their business strategies and implement action plans almost immediately to align with the newly explored direction. This ability to response faster to market move and flexibility are the very key drivers of innovation which bulky organizations have to trade off as they grow bigger and bigger in size.
2. Greater autonomy and sense of purpose
Nowadays, organizations start to acknowledge that financial rewards do not always work to build a creative-thinking and driven workforce. The most powerful workplace motivators are now autonomy and strong sense of purpose. That means people work more productively and innovatively if they are given room to make decisions, to have their voices heard, to initiate own ideas and to take on meaningful responsibilities. Working in a small firm, therefore, is attractive as it empowers every staff with the chance to try on new approaches, to have better ownership of their jobs and to do things differently. In most cases, people working in start-ups are well connected by greater sense of purpose and find rewarding when they see their contributions meaningful and impactful. Taking good advantage of this aspect, small businesses can develop strong and dedicated teams with high level of employee engagement, morale, productivity and innovation.
3. Customer intimacy
Understanding customers are essential for a business’s success. Thanks to their scale and focuses, small businesses can have more meaningful and personal interactions with customers in the way that than huge organizations cannot. Small businesses are often seen as more approachable and dedicated; they can handle feedbacks, complaints faster, more flexible and on a more personal level. This customer intimacy is no doubt one of the key factors that will give small businesses the competitive advantage against the big players. A company that delivers value via customer intimacy builds stronger bonds with customers and gains the long-term benefit from their customer’s loyalty. Customer intimacy also allows small companies to spot changing market trends earlier and take action timely to catch the opportunity.
4. Lean structure and low overheads
Smalls businesses are lean in structure with fewer employees and fewer layers of management. Fewer employees generate a feeling of family, which creates critical amount of energy and reinforce strong bond within the team to overcome challenging projects and tough times. Flat structure of management means decisions are made quicker and communication is effective and transparent. In big companies, the decision making process is constantly slowed by various internal checkpoints and approvals. The top management is often unapproachable and does not have the first hand market exposure to make decision without inputs from various departments. Additionally, due to their small scale of operation, small businesses also incur lower overhead costs. All of the above, therefore, allows them to operate more efficiently and dynamically than large companies.
5. Best in their niches
The relationship of niches and small businesses are like chickens and eggs. When human demand for new products and services becomes more diverse, niches have been increasing in number. They present more and more entrepreneurial opportunities, resulting in creation of many small businesses. On the other hand, due to the limitation of fund and resources, most small businesses generally choose to concentrate their effort on a few niche markets. While large companies have to spend enormous resources to satisfy a large scale of customer base and maintain their huge market share, small businesses can just zoom into a niche market and provide the customers with exactly what they need. By specialization and continuously developing the excellence in their niches, small businesses gradually build premium reputation in specific fields and gain greater customer loyalty, which are critical for their business growth.