Advantages of being a small business: you can change the game

Most small businesses are focused on growth.  They should be, since at least in the start and grow phases, growth is crucial to creating a business that works for you.  

But there is also a point at which businesses become too big. That may mean too big for you as an individual – you might want the simplicity of something smaller.

There is also an inherent advantage in being smaller.

As a small business, you make decisions more quickly, you can be more nimble and you have less to lose.  Small businesses have the opportunity to completely change the game. 

Running a small business can feel like the Hunger Games

Small businesses scurry around the business arena with strange and inventive weapons attacking each other.

There is a tendency to look at business as a zero-sum game, where there is only one winner and, banding together is self-defeating and to succeed you have to kill everybody else.

In fact, this is why small businesses stay small. When you see the world as an infinite game rather than a zero-sum game, growth is easier.

In the world of small business, there is plenty of space for most, and there is no need to attack each other.  Competing, one small business against another, and trying to destroy each other is a waste of time, money, and resources.

Instead, focus on the advantages that you have as a small business compared to large enterprises.  You are better off banding together and going after big wide-open spaces that are poorly served by incumbents than attacking other startups.

There are structural advantages to being a new company in the world of incumbents

Large companies are cumbersome and struggle to keep up with change.  Smaller companies can be nimble and adjust.

In their book, The Underdog Advantage, Scott Miller and David Morey start with the observation that “the advantages of the incumbent seem to have diminished or even disappeared… It’s the underdog’s day. Whether it is Coke versus Pepsi … Special Ops versus Al Qaida – these rules will apply.”

Yeah, it would perhaps be nice to have the advantages of huge amounts of money and advertisements that run during the Super Bowl.

But too often these become crutches, end up backfiring and slow companies down rather than speed them up.

The largest companies, those on the S&P 500 die off at a surprising rate. A study a few years ago showed that the lifespan of companies on that index had come down from over 60 years to about 18 and was dropping.

Size does not guarantee resilience.

However, as an MSP owner who has been on both sides of the fence, I can tell you first hand that the underdog advantage is real and there are pros to small business. Yes, there are cons as well. However, I’ll save those for another post.  Let’s focus first on the good stuff.

There are three significant advantages that I see, which also relate well to film:

Advantage 1: Small companies work fast and furious

Grammar aside, the ability to quickly make decisions is a huge advantage.  While large companies will spend weeks hemming and hawing over small changes, small businesses can jump in try something and see how it works.

Small business owners don’t have to deal with all the legalistic and political crap that big companies have to manage that takes weeks and layers of approvals.  Admittedly one reason is that you have less to lose. You likely don’t have investors breathing down your neck ready to sue you over every decision.

Though, the idea of less to lose is a mirage: large companies continuously fail because they are so worried about losing what they have that they don’t develop what they could be.

You can also try things, see if they work and adjust. So, you can iterate many times before your larger counterpart has built their first spreadsheet.

As relatively flat organizations your decision processes should consist of three steps:  

• Step #1 – see our business partner (which may be looking in the mirror).
• Step #2 – Conduct a 5-minute conversation.
• Step #3 – Act

Your ability to act quickly and efficiently enables you to seize opportunities that big business may miss out on because of their bureaucratic processes.

Advantage 2: You live in a mission impossible world (every problem has a solution)

It may seem undoable, but you make it work.   You can create non-traditional solutions for your customers’ non-traditional problems.

The best part: with the breathtaking rate of change all problems are non-traditional.  

Unlike large firms that have one specific process and technique that will cure all problems, you only have creativity and the ability to change.  

Enterprises are concerned with how they did things last week or last year. You focus on solving the problem right in front of you.

When you need to defeat a high-end security system by breaking into windows 100’s of feet of the ground while suspended from fishing line all while not making a sound … talk to a small business.  

They will solve the problem and create the tools.

Advantage 3: The Death Star has weaknesses, and you can see them

The Empire in Star Wars is comfortable in their Death Star – a space station capable of destroying a planet in one blast. Any large ship coming to attack it will be dust in seconds.  

However, a small ship with an explosive payload is not seen as a threat.  So, the rebels figure out how to drop a small charge through a small hole in the side of the Death Star and blow it up.  

Large companies are fighting large companies – they don’t see small companies as a threat.  That is where you can come in with something new and innovative that changes the game.

They may have unbelievable power, but you can find the weakness in that power. 

Incumbents have more power, more money, and a better market position.  However, they are slow lumbering beasts that continue along the same path without much attention to what is going on around them.

As a small business, you have the opportunity to run circles around them and change the game without them even realizing it. They may be on the same path, but you change the destination.

Use your advantage, not to compete with other small business but rather to reinvent the game and tackle the big guys.   

Grow, but keep your advantage

If you want your business to work for you instead of you for it, you must grow and get the big business fundamentals right.  

But don’t lose sight of your advantages, being small allows you to compete in different ways.  

Of course, the magic is to grow while maintaining the advantage of a small business, not an easy feat but worth thinking about.