July 16, 2019
Lessons From Small Businesses
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Unarguably small businesses present a number of unique challenges compared to large corporations. However, there are some valuable lessons that large corporations could learn from them, especially during challenging economic times. The very strength of larger corporations can sometimes be their biggest weakness. This feature would focus on four of those aspects of small businesses which larger corporations can aspire to learn from.
Lesson 1: Agility
Small businesses are more flexible in their approach and are geared to respond swiftly to the market and economic forces. This is mainly due to their flat organization structures, in comparison to corporations’ large structures and hierarchies. Larger corporations bring together layers and layers of decision-makers which automatically introduce red tape and bureaucracy, thus costing them time and money without them realizing it. It is vital to remain agile and help shape the market and economic forces. Thus corporations should introduce flat structures, empower managers and reduce other bureaucratic elements and red-tape.
Lesson 2: Personal attention
Small businesses cultivate a personal relationship with their customers while corporations attempt to duplicate creating the same relationship by spending an enormous amount of money. A smaller company will go out of its way to satisfy customers and provide personalized service. This is when they really begin to experience rapid growth in demand and evolve to become a large corporation. Once they become a large corporation they often lose the personal touch and forget the building blocks of their business. Hence, it is necessary for corporations to understand their customers and cultivate a genuine relationship with them.
Lesson 3 – Specialize and/or Niche Markets
Corporations tend to capture the entire market, whereas small businesses tend to specialize in niches by targeting a select group within the market. Niches generally provide small businesses with enough revenue to continue operating, while corporations typically need a broader revenue stream to recover costs. But eventually, customers would demand more specialization than one size fits all resolution. Corporations should not let short-term cost pressures forego profitable revenue streams, and worse – long-term revenue prospects.
Lesson 4: Cost efficiency
Corporations have multiple peripheral divisions which are not directly linked to providing the core service, e.g. Finance, Human Resources, IT, etc. Adding to this burden are other mammoth overheads. Generally, this results in small businesses spending less than a corporation in order to earn an extra unit of revenue. This is the most difficult thing to emulate. Corporations need to be innovative and be creative – probably looking into outsourcing, business process re-engineering, re-structuring, etc. Basically, they should not only focus on the core business and the costly peripheral divisions.
Small businesses may not agree to these advantages as they are clouded with bigger issues of their own, but for the corporations, the benefits should be more obvious.
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