Do Small Businesses Have Big Advantages Over Large Corporations?

  • June 6th, 2011
  • Dan Bischoff

Timothy Clark, an author, consultant, and former two-time CEO, wrote an article in the Deseret News about the advantages small businesses have over big corporations.

He said, “Leaders in large organizations don’t like to admit it, but they often look to small business for guidance.”

Do Small Businesses Have Big Advantages Over Large Corporations?When I read that, my mind immediately went to a guy like Steve Jobs, for those who live under two large boulders, he runs the mega-Goliath, Apple, one of the biggest corporations in history. A company that has a religious affect on its customers. Makes me wonder, does Steve Jobs ever look to small business for guidance? Does he ever envy the small business owner? Or the small business CEOs that runs a startup?

I bet if you ran a poll, most CEOs out there running startups would trade places with Mr. Jobs in less than a microsecond. Entrepreneurs around the planet look up to Apple for guidance, as a model to create a product and a cult-like following around a brand. Does Apple look up to any small businesses?

Clark then writes, “Most corporate CEOs would trade their annual bonus to have the agility of a small business.”

Is this true? Having never been a CEO, I can’t speak to this. But I can imagine all the bureaucracy, decision makers, etc., that surround large brands. Making a change could be like turning around this thing in a small harbor:

Do Small Businesses Have Big Advantages Over Large Corporations?

Those CEOs probably envy small businesses, which can rapidly make changes to improve their business model. In comparison, small business CEOs are driving the equivalent of this:

Do Small Businesses Have Big Advantages Over Large Corporations?

However, I assume Steve Jobs annual bonus is pretty heavy. Would the prophet of Apple leave all that money for an agile boat?

Can’t imagine he would. But, there aren’t a lot of people like Jobs in the world, either. Other CEOs out there might revel in having a responsive ship to stear, and would even sacrifice money to have it.

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Four Tactics for Small Business CEOs

In the article, Clark also gives 4 ways small businesses can use their strengths to succeed. Those include:

    1. Using your speed to communicate a new imitative, and respond in a fraction of time that Fortune 500 companies can

    2. Letting everybody weigh in. This creates loyalty, and gives you input into business practices that large companies can’t get.

    3. Cultivate trust, and create a strong emotional bond from frequent interaction. Employees in small organizations can interact often with the lexecutives, which may or may not be what the CEO wants, but it does create a level of trust large corporations can’t duplicate.

    4. Smaller organizations can maintain tight accountability. In larger companies, employees try to get recognition on the front end, but neglect the back end. They have a tendancy to behave like a rockstar, to give attention to “that which is under the C-suite.” Small companies can maintain tight accountability on all responsibilities.

What do you think? Would you rather be a CEO for a Fortune 500 company or a small business? If you’re a CEO, please share your thoughts, too:

About the Author

  • Dan Bischoff

Comments

  1. There are certainly advantages of nimbleness that are inherent in small businesses. These advantages apply to improving business models, but also to disruptive technologies or methods, which can potentially allow small business to out-perform their larger competitors. The Innovator’s Dilemma by Clayton Christensen is a great book that discusses this topic.

    On the other hand, some industries experience significant economies of scale that give large players incredible momentum. This makes it difficult for smaller firms to remain competitive, and it also lowers expected profits for new entrants. Financial Services and Utilities are two examples of this.

    Another point to consider is that large firms generally do not have as much growth potential as smaller firms. The best fit for a potential CEO then could come down to that person’s temperment. It is not uncommon for CEO’s of small, growing companies to lose their passion once the business becomes larger (David Neeleman, founder of Jet Blue is a prime example). While overlap certainly exists, the skill of growing a business, and the skill of navigating a competitive industry with a large business are distinct from each other, and not everyone can naturally do both.

  2. Great comment, Lincoln. I think you nailed it when you said, “The skill of growing a business, and the skill of navigating a competitive industry with a large business are distinct from each other, and not everyone can naturally do both.”

  3. we are a small business been for 30 years and a big corp. who has been granted fed money for grants has came in our area and is underbidding our service and has not did it to our competitors is that legal