While big businesses (especially those traded on public stock exchanges) get the press, the real news—and arguably the differences in day-to-day life and the economy—rest in the small business, in this country and around the world. The majority of existing and new jobs are in small businesses. Innovation and new technologies most often come from small businesses. Why are small businesses uniquely capable of creating the responsiveness needed by their customer, the marketplace, and doing so with the least amount of resources? Because they are small and have limited resources to use.
Small size becomes the competitive advantage that drives the business’ success. Lest we forget all businesses started small if you trace their origins back to the beginning. They all began with an idea, a concept, or a vision, and in a garage, a basement, or in someone else’s business (who wasn’t listening). Starting small and growing through opportunity—answering a need, solving a problem, fulfilling a desire—they built momentum: sales, profitability, customer base, number of employees (maybe), and pursued opportunity, perhaps until they reached that big opportunity that took them from small business to incredibly successful small business or even to “big business.”
Today, small businesses compete with other small businesses located next door, across the street, or on the other side of the world. They compete also against big businesses in local and global markets. Where once we had to be prepared to compete with the neighbor we knew, we now compete with “big box” retailers, technology solutions, and companies in foreign countries with practices and advantages that have to be overcome through our own capabilities.
The ability of a small business to compete and win, whether in local or global markets, isn’t a function of size. It is a function of expertise: Business expertise, which is the total package of what a business from sales and marketing to management and leadership to those back-office activities (that we often consider necessary evils): accounting, finance, human resources, legal, administration, and so on. It is our ability to be IN business—building an organization and a connection to our markets and customers—and the ability to deliver the product, service, and technology that the customer wants at a price they can afford that determines whether or not a small business can pursue and capture a big opportunity.
Opportunities differ for every small business. Every small business doesn’t have to have a dream of becoming the next big Google, Microsoft, Staples, or other “big thing.” The big opportunity may be for your business to have a company that provides a nice home, steady income, your kids’ college education, and money for retirement and nice vacations and “extras” every year (and time to enjoy those things). That may be the small business of your dreams. Whether you are looking to build the next big growth business or a steady lifestyle company, opportunity and preparation must intersect rather than collide. Whatever your definition of opportunity, the ability to capture that opportunity requires a clear definition of what it is you want to achieve of what it is you want to achieve. It also requires an understanding of your starting point and where you are today. Ask yourself these questions:
- What resources, skills, and obstacles do you face?
- Where do you want to go?
- What resources, skills do you need to get there?
- What is the gap between the two?
- What resources, skills do you need to get there?
Once you understand and have quantified your resource needs, then you must have a plan for obtaining those resources, and understand “the rules” to obtain them (e.g., debt, equity, grants) and requirements for doing business with each.
For instance, all sources have processes that require information on the market, business model, financial prospects, and history, as well as a demonstrated plan and understanding of what it takes to generate revenues and profits from the product/technology. Equity and debt sources examine the risks and the ability to get “repaid” for fronting the costs necessary to implement the structure to pursue the opportunity. For these sources, it is all about the timing of the returns and the investment. Grants, on the other hand, are generally about funding technology and generating products that have potential for public good, economic stimulus, and so on.
In order to pursue funding opportunities, the small business must recognize the need for business and technology capability to comply with the process, rules, and requirements of these stakeholders and markets.
Ultimately, the success of the small business comes down to the ability to build a viable business that is visible to customers and stakeholders, that is capable of delivering the “goods,” and that is credible as a player in the market for the long term. This is both an internal and external perspective. You have to be good behind the scenes where you are getting things done (effective and efficient using your resources). But you also have to be perceived by the marketplace, your customers, and anyone else observing your business as knowing what you are doing. The bottom line: It is important to get it right inside and outside.
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