The Advantages of Being a Small Start-Up – Part 2

This is the second installment in a four-part series designed to encourage small start-ups by recognizing some of their inherent advantages.

Small start-ups face a myriad of challenges. They are undercapitalized, unproven and have no market traction. They are up against the status quo that will use its established power and influence in the marketplace to suppress any new challengers. Buyers are reticent to take a risk on anything new or unproven.

The big boys have might and muscle, but there are still several advantages the little guys have that can move them ahead:

6. Being New. The small start-up has not yet established its direction and can turn on a dime. This advantage affects everything from plans to budgets, from design to being responsive to consumer feedback.  Flexibility is a big advantage when it comes to satisfying your customer and improving your product. The big corps are well established with set ways of doing things that can bog them down.

7. Closer to the Ground. If you are the little guy, survival is dependent on having your ear to the ground and in most cases, your feet as well. Starting out requires a lot of hand-selling and “missionary” work. You are painfully aware of what needs to be done in the market place. Because it’s your company, you deal with your customers up close and personal on a daily basis. You can’t afford to be isolated and insulated. You don’t have MBAs and focus groups to rely on. You rely on yourself.

8. Faster Communication. Information can cross departmental lines easily in a small start-up. For one thing, there are fewer departments. For another, staying in business is more important than “going through channels,” which can be a maze of department heads, divisions, silos, and, if you’re lucky, ending with the intended recipient. The big company keeps order by installing informational gatekeepers. They can stop, change, or delay a critical message based on their perception of priorities, and, too often, job security.

9. Out-of-the-Box Thinking. Because the small companies are usually under financed, they are always scrambling for inexpensive and effective ideas to stay in business. This apparent financial hardship forces you to discover and employ unorthodox ideas, strategies, and tactics that the big guys wouldn’t dream of. They don’t have to. In a small company, cost-saving ideas, customer retention, and marketing concepts can come from anywhere. The big guys tend to want ideas to originate from their proper divisions, which can miss or kill some gems in an effort to defend precious turf.

10. Better Risk Tolerance. Just starting something new is a big risk, and most start-ups don’t make it. Because they are desperate to survive and have less at stake, they are more risk tolerant than the established companies. Small companies tend to tell their legal advisors what they want to do, then ask how to do it. The big guys are more risk adverse and tend to be guided by their legal advisors. Risk adversity can blind companies to new, unproven concepts.

So when you feel overwhelmed by big, established competition, remember that your flexibility and freshness can help you survive. The benefits of being a start-up give you the flexibility to grow and ultimately improve not only your own company, but also your industry.

Next time we will see how being an outsider, with enhanced concepts and simplified processes can have an advantage over an insider with simplified concepts and complicated processes.