Tesla, Google, IBM and other big companies attract much of the media's attention. As a result, enterprises get free publicity and form part of the national conversation. However, small businesses actually create 90% of new private-sector jobs in America.
Enterprises with thousands of employees compete on economies of scale, large R&D budgets, political clout, global supply chain, brand prestige and global salesforce. But these also lead to internal turf wars, resistance to change, inflexible procedures, silos and slow decision making.
Startups possess certain attributes and advantages that let them serve customers well and produce millions of new jobs. Small businesses should use these advantages to gain an upper hand in the marketplace.
Understanding of the Local Market
Entrepreneurs often have a better understanding of changing local conditions, while enterprises often ignore disruptive change until they're threatened by competitors' actions. Additionally, disruption instills fear in bureaucracies: Entrenched personnel might lose their jobs, and therefore fight to protect their cushy salaries and benefits.
Small firms can be more nimble and responsive to product needs, whereas the supply chain of Fortune 500 companies are mostly set in stone due to immense volume requirements. For example, business owners can quickly take advantage of growing preference for plant-based food by offering dishes like plant-based pizza and pasta. In contrast, global food manufacturers have multi-year contracts with behemoth suppliers, which reduce adaptability.
"Trust and human bond are fundamental aspects of business. They foster growth and development and provide a safety net when there could be vulnerabilities," says Julian Jewel Jeyaraj, CEO of Jjaibot, a non-profit organization that uses technology to create awareness towards the environment. For centuries, merchants around the world established a personal connection with patrons, many of whom also happened to be a neighbor.
The shopkeeper and shopper will have known each other for years, and communicate on a first-name basis. There is mutual interest to see how families are doing. And an entrepreneur will occasionally keep his shop open after-hours to accommodate a friendly conversation. Modern marketing methods cannot replicate goodwill established over time, and it imparts a timeless lesson in treating people with respect and dignity as a pillar of business success.
Las Vegas-based Boxabl is an example of a growing small business that uses customization and the personal touch in the construction industry. The firm drastically cuts the cost of home ownership by building and assembling small homes through 20 x 20 foot box-shaped modules, connecting with local home owners on a priority need.
Ability to React Quickly
Entrepreneurs wear many hats and run a lean organization. With fewer layers of management, business owners and employees can better understand customers' needs and meet them, without the filter of management feedback. A streamlined operation also allows startups to pass cost savings directly to patrons.
An example of a peer-to-peer lending platform is Constant which allows borrowers and lenders to transact directly. Banks, brokers and other third parties are cut off from any deal, and therefore access to financial data is minimized. Constant lowers borrowing costs by removing middlemen, and thereby streamlining processes.
Customers are much more critical of small businesses, most of whom are undercapitalized: Losing a dozen patrons can force a shop to close permanently. Whereas big companies enjoy diversified, billion-dollar revenue streams that make people at the cash register impersonal and insignificant.
The battle doesn't necessarily go to the strong. Small businesses can leverage their size to be an advantage.