There are many advantages that the larger businesses have over small. Diversification of venders offers the opportunity to receive the best prices. Diversification of geography means that they even out the problems of microeconomic crises. Diversification of industry gives that company the possibility to ride out current market downturns by not putting all of their eggs in one specific commercial endeavor.
A small business cannot access many of these strategies. Without the benefit of bulk buying, prices are always an issue. The small business is generally limited to a restricted locality. It is hard enough to keep track of one type of industry without having to worry about completely different businesses.
We all know about the advantages that large corporations have over us. What we often do not recognize are the advantages of being a small business rather than a large one.
There was an excellent book written a few years ago entitled, It is Not the Big That Eat the Small, It's the Fast that Eat the Slow written by Jason Jennings and Laurence Haughton. In it they talk about the volatility of the current markets. This book was written years before the current financial situation but their theory has only proven more apt rather than less so. With the pace and global scope of business today, the ability to move quickly is paramount.
My husband was telling me about an article he was reading regarding restaurant owners in an economy where going out to eat is becoming more and more a luxury. One of the featured examples was the owner of a high end Los Angeles restaurant. The owner was feeling the business downturn and was sitting one night thinking about what he was doing wrong. The conclusion he came to was that in this market he was continuing to provide "diamonds and rubies". But his customers seemed more interested in spending on glass than on fine jewels. So he scaled down his offerings (still providing quality faire) so that he could lower his prices. Business picked up because of a fundamentally different approach.
What I immediately saw from this story was that small business can do things large corporations cannot. It is the same advantage a power boat has over an ocean liner, mobility. This restaurateur made the determination to completely change how to serve his customers. He did so without having to go through committee. He did not have stock holders, a board of directors or multitudes of bureaucrats to consult with before his decision was made. He simply saw the trend, hopefully read it correctly and implemented changes that could benefit or even save his business.
When we talk of regulations and compliance we again deal with this ying-yang balance of who is better off, small or large enterprises. A larger corporation has the ability to hire in-house experts, employed to keep the company in compliance. If large enough they might even have the political pull to exclude themselves from regulatory tangles.
A smaller company has employees that wear too many hats to specialize in compliance law. They need to focus on how to best serve their customers and keep the business running. On the other hand we again talk of mobility. When new regulations are written, which business do you think will have fewer issues with implementation? Will it be easier for a business to change their culture regarding a specific regulatory requirement with 15 employees or with thousands?
Oft times when an agency proposes huge changes in their regulations, there is a fundamental cultural shift that has to occur in the workplace. A great example is the implementation of the privacy laws. Although these regulations are ever changing, when they first appeared the thinking of every employee in the country had to transform. No longer were signup sheets allowed to be left out on the counter. Going on break had never necessitated completely clearing off desks beforehand. Concerns about customer, employee and vender privacy were not such huge fears.
To transform the method of viewing privacy was so much simpler for smaller groups. On a more individual level, the necessity of counseling, coaching and correction was a simpler procedure. The challenge was for those smaller groups to know that shifts were now required and for the small business owner to know how to implement those alterations.
I often hear about Wal-mart (most often the current culprit) or some other big corporation coming in to squeeze out the "little guy". If, instead of bemoaning the inherent unfairness of the situation, we look at how we can take advantage of our relative strengths, we can exploit our strong points and "eat the slow."
Karen Dennison is helping small business comply with state and federal regulations. For you free regulations checklist, visit http://www.icancomply.com
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