Why Building a Successful Small Business is Hard.

A reader of this blog has asked my opinion about small business owners in general. I have made critical comments here about typical small business marketing strategies and advertising concepts, but I am a big fan of those entrepreneurs who create successful companies.

It is very hard for a small businessman to become a success, and I have great respect for those who create thriving organizations. The fact that it is hard to do, however, does not excuse the poor examples of marketing that one sees every day.

But why is it harder for the small organization?

Because the small company suffers from two significant drawbacks:

• lack of expertise in multiple disciplines
• lack of a regular infusion of new blood / new ideas.

If you examine the structure of a company with 100 or so employees, you will typically find 7-10 key executives involved in most major decisions, and they will often bring a large and varied experience set to the decision-making process. In the small organization (20 or less employees), you will commonly see on 2-3 decision-makers, and they often have most of their experience within the same industry.

The second phenomena found in larger companies is staff turnover in the middle and upper ranks. Each new employee brings in new ideas, and sees the industry / customers / competitors from a different perspective. It is the mixing of these new ideas with the tried-and-true that gives birth to creative solutions.

In the small, or family-owned business, operating ideas can easily become “inbred”, and can remain in force long after they have become stale. And groups that pride themselves on very low turnover (whether social, political, or business) tend to suffer from stagnation.

Isn't that why I pay outside professionals?

Yes, absolutely, and they have their place. Recognizing this disadvantage inherent in the small business environment, the entrepreneur should be constantly seeking sources for new and innovative ideas. Lawyers and accountants typically fall into this “outside professional” category. Unfortunately, they also tend to focus on specific issues that you bring to their attention.

Another source for ideas can be a board of directors or advisors. If the owner can build a network of people who will serve in this capacity, it can create a significant advantage over the competition. This strategy needs two elements to be effective:

• The advisors must represent several different experience sets and viewpoints
• They must be allowed to see the whole picture, warts and all.

Neither is easy to do. Too many small business operators prefer to stay in their comfort zone, don't go looking for new ideas that would upset the apple cart, and end up missing out on the benefits of outside viewpoints.


Practical Tip of the Day:

• Take a good look at the people involved in you major decision-making process. How many have had extensive experience outside of your company within the last 10 years?
• Take some time to review the strategies of your competition. Do they seem to be moving off in different direction? Are you still using the same basic game plan that you used 5 years ago?
• Do your customers consider your company to be “leading-edge”, or so they see you as being in the middle of the pack?
• If you are not happy with what you have found with this review, go out looking for new answers, from new sources, from people outside your industry. It could lead to some revelations.