Photo by RDNE Stock project
There’s a trap I want you to avoid. I want you to stop reading articles and watching videos that show how great big business is.
Too often, I see small companies without resources try to copy what large enterprise businesses do. When you or your peers do this, your business suffers and often will suffer to the point of running out of cash. Then, you can no longer play the game, and another good, private business bites the dust for no good reason.
Big business focuses on profits, small business needs cash
Let’s get one thing straight—big businesses have the luxury of focusing on profits. With ample cash reserves and robust profit margins, their primary goal is maximizing shareholder returns. They have deep pockets because they can afford to take financial hits and weather economic storms.
For small businesses, the story is entirely different. Imagine running a small café in your neighborhood. You don’t have the luxury of waiting months for profits to trickle in. You need cash flow—steady, reliable income that keeps the lights on and your employees paid.
Complexity vs. simplicity
Big businesses thrive on complexity. They have entire departments dedicated to strategic planning, financial analysis, and operational efficiency. Senior executives spend countless hours in meetings, crafting elaborate strategies to stay ahead of the competition.
Small businesses need simplicity. There’s no time or money to waste on complicated plans. You need to find straightforward solutions to everyday problems. When I hired employees from big corporations, they often struggled to adapt. They were used to having tons of resources and support staff. A small business has to roll up its sleeves and get things done with minimal resources.
The time crunch
Senior executives at large corporations can dedicate their entire workweek to refining business strategies and improving operations. They have the time to focus on high-level planning because day-to-day operations don’t bog them down.
Small business owners don’t have that luxury. Most of your time is spent juggling multiple roles—manager, marketer, customer service rep, and even janitor. The idea of spending hours on strategic planning is a pipe dream.
Funding struggles
Big businesses have access to vast amounts of capital. They can secure loans, attract investors, and even issue bonds if needed. This financial muscle allows them to invest in innovation, expand operations, and weather downturns.
Small businesses rarely have enough cash to fully fund their operations. Every dollar needs to be stretched to its maximum. This means prioritizing cash flow over profits, finding cost-effective solutions, and avoiding unnecessary expenses. You’re often left scrambling for funding, whether it’s through personal savings, bank loans, or crowdfunding.
When less is more
The central theme here is that small businesses need to keep things simple. Your business shouldn’t be about complicated financial models or elaborate growth strategies. It should be about adding value through straightforward, effective methods.
Remember, less is more. Focus on what you do best and find simple, effective ways to deliver that value to your customers. Your business should operate on basic arithmetic—adding and subtracting to manage cash flow, multiplying growth opportunities, and dividing tasks to maximize efficiency.
Personal experience: Turning challenges into opportunities
When I started my small wealth management firm, I quickly realized that many strategies I’d learned while studying big corporations were largely irrelevant. There was no generous marketing budget to fall back on, no team of analysts to run detailed reports, and certainly no time to indulge in lengthy brainstorming sessions. Instead, I had to think on my feet and adapt rapidly.
I remember one particularly tough month when a major client unexpectedly pulled out. My immediate reaction was panic—how would I make payroll? But then I turned the challenge into an opportunity. I contacted smaller, local businesses that could benefit from my services but couldn’t afford the prohibitive rates of more prominent consultants. Pitching my services directly to these smaller clients filled the financial gap and taught me valuable lessons about resourcefulness and resilience.
Embracing flexibility
Unlike big corporations bound by rigid structures and protocols, the beauty of a small business lies in its ability to pivot quickly. When an approach wasn’t working, I could change course immediately without needing endless approvals. This adaptability has been indispensable, especially in an ever-changing market landscape.
The pandemic, for instance, was a true test of this flexibility. Many small businesses, including mine, had to change their operational model overnight. We pivoted to online services, leveraged social media for customer engagement, and tapped into new revenue streams. While the transition was far from easy, it highlighted the power of quick, decisive action—something big businesses often struggle with due to their sheer size and bureaucracy.
Final thoughts
Small businesses face unique challenges but also possess unique strengths. It’s easy to look at big corporations and feel dwarfed by their resources and reach. However, remember that your ability to remain agile, build meaningful connections, and make quick decisions is your superpower. By focusing on these aspects, you can carve out a niche that survives and flourishes.
Equip yourself with the right mindset, leverage your community, and embrace the flexibility that comes with being small. When you do so, your small business can adapt, evolve, and thrive in ways that larger corporations can’t. Remember, it’s not about how much profit you make but how effectively you manage your cash flow and resources.
The above is a slightly edited version of a new article from Josh Patrick, founder of The Sustainable Business.. It is published here with his permission.
