Times are tough. Corporate America is squeezing out the little guy. Small businesses can't compete with the resources of their larger competitors.
Before you start yearning for your neighbor's much larger yard next door, take a step back and think about the advantages you have. You may discover that your much larger corporate neighbor actually wants to become more like you.
Here is a list of four advantages smaller businesses have over large corporations-advantages you can leverage to drive growth in your business.
1. You are nimble.
In the convoluted culture of corporations, a single strategic initiative often needs dozens of approvals before it can be pursued. Not so in the entrepreneurial environment of small businesses and start-ups. This is why many market disruptors and great innovations come from small businesses: Their flexibility enables them to be iterative and experiment in product development.
Larger corporations often try to emulate this advantage by developing small business incubators that are separate from the corporate governance structure. A nimble culture enables small businesses to react to and benefit from the opportunities market changes create.
2. You do things at half price.
Almost every small business has a little scrappiness in its DNA. The lack of resources and financial backing in many small businesses and start-ups makes them far more resourceful. In fact, 53% of small businesses are run from home.
When the coffers are flush with cash, spending hundreds of thousands of dollars can seem like pocket change, but this is not an option for small businesses. Attention to cost detail enables smaller firms to maintain lower cost structures and greater profitability.
3. You take risks.
Risk taking is part of the culture of entrepreneurship. Investing in an uncertain product or market enables small businesses to survive and compete with larger corporations, who might defer pursuing a new opportunity because of its potential impact on their core business or its relatively modest size.
For small businesses, the risk of a new opportunity to the core business is lower and the potential benefit of a niche market is greater, allowing them to take more chances. The ability to enter markets that larger firms ignore shelters smaller businesses from excessive competition, allowing them to refine their offering and protect their market position.
4. You're innovative.
Innovation defines the U.S. economy, and while Corporate America is not absent of innovation, small businesses define it. Small businesses produce 13 times more patents than larger firms. Furthermore, they are often closer to their customers and better understand their needs.
This makes small businesses more apt to respond to customers' needs rather than the needs they think or wish their customers had (a common mistake of larger firms). Innovation is driven by understanding and responding to consumers' needs. The deep connection between small businesses and their customers allows them to be at the forefront of innovation.
Larger firms certainly have advantages in the marketplace, but do not be mistaken: The economy is and will be defined by small business. Over half of the private, non-farm GDP is driven by small businesses, and that isn't likely to change. Corporate America envies the culture that permeates Silicon Valley and Main Street.
So before you wish you were a market Goliath, know that the Goliaths wish they were you. Advantage, little guy.
Do you have unprofitable products in your portfolio? Send us your comments and questions at firstname.lastname@example.org.
Avondale Associate Matt Cunningham contributed to this article.