When you spend, you probably don’t pay much attention to the size of the business you’re buying from. If you’re a small business owner though, your perspective would be different. You’ll know first-hand that being on the other side of that spend is a huge win. Small businesses have major headwinds to contend with, from financing to pricing woes. But there are some latent benefits of smallness that could bolster their position in the marketplace. Here are a few to ponder.
A Human Voice
Small businesses have a unique advantage over their larger counterparts in that their messaging is inherently more authentic. This is purely a function of their size. When large organisations put a message out there, you don’t know who is speaking: marketing, product design, or the CEO. You wonder who initiated the message. You also wonder how much of that initiative carries across to the final copy, post a legal review. The message loses the very essence that connects it to its intended audience: the human voice. Small businesses have no such problem. They get to speak from the heart and to the heart. We can already see small businesses taking advantage. This coincides with the reality that organisations today are held to a human standard on topics like diversity and inclusion, the environment, and ethics. Small businesses get to speak to these issues in a recognisably human voice. True, actions indeed speak louder than words, but words still matter. Through their words, small businesses are effectively defining their posture on a growing list of pressing issues. And by doing so, they’re forming deeper connections with consumers and other stakeholders in ways that their larger counterparts simply lack the humanity to muster.
An Avid Listener
Here’s where it gets interesting. Without making any effort, small businesses are naturally good listeners. There’s a logic to this truth. These (small) businesses often serve a demographic of which they are an integral part. As bona fide members of the community, they are in close contact with their stakeholders. Close enough to discern changes in interests, preferences and sentiments. Proverbially, small businesses are on the ground when it happens.
Contrast this with large business and the dividends of smallness are telling. In large businesses, insights may come through the door but they hardly reach executive ranks. As a result, large businesses rely more on data than observation. They’ll typically have dedicated roles for this, and depending on their size, it could be an entire team. Since insights come to light through dashboards and data, and not lived experiences, large businesses have a second-hand awareness of reality. It doesn’t translate as deeply. The irony is that large businesses commit a lot of resources to discover what small businesses already know.
A Nimble Navigator
In a fairy-tale world, organisations would go to market with a proposition that’s eagerly embraced. Automatic validation. Reality is a bit more nuanced. The market will test an idea, accepting only the most relevant and compelling. What plays out is a symbiotic relationship through which both organisations and the markets shape the proposition. But markets are not so patient. Being able to respond speedily is critical to realising both new and evolving value propositions.
This is precisely where small businesses outshine their larger counterparts. To understand this better, we hold businesses (large and small) up to Mckinsey’s 7-S Framework for organisational effectiveness, examining their ability to generate value by coordinating activities on these critical levers. Due to their size, small businesses are nimble. As such, they can better negotiate and renegotiate their value proposition in an increasingly dynamic marketplace, making the necessary changes fast enough to seize opportunities.
Larger enterprises can do the same, but it’s not as easy. They’re typically at a stage in their life cycle where the value proposition is clear and compelling enough. They have several safeguards in place to assure consistent delivery. These critical controls (both policy and otherwise) often get in the way of change, stifling their ability to respond quickly to the market.
Final Thoughts
The last time I bought from a small business was just yesterday. I ordered beef pad kea mao and my wife had the kimchi fried rice with chicken. We don’t patronise them nearly as much as we’d like to. But every time we do, we’re reminded that we’ve done the right thing for two reasons:
- We can taste the value and
- They’re in our neighbourhood, part of our community
I’m guessing you can think of a small business you’re fond of.
While the fundamentals of business don’t change with size, the dynamics are remarkably different. When exploited, the right levers can help small businesses thrive and gain market share, or at least outlast a storm.
These are benefits that small businesses can’t afford to leave on the table.
