The Benefits of Staying Small

By

At first it may seem that entrepreneurs are facing insurmountable competition from huge multinational corporations. They assume that because their established competitors have larger budgets and more manpower that they are better positioned to be competitive in the marketplace. Start ups face many other challenges to such as few customers and low credibility, that are inherent in all new businesses. However, these do not always need to be disadvantages. There are many different ways that startups can utilize all the factors working against them and turn them in their favor. In his chapter, “Do More Faster”, David Cohen discusses several different ways start up companies can do leverage these apparent obstacles to their advantage.

 

  • Start ups don’t have the bureaucratic baggage of larger corporations. Bureaucracy slows down larger companies by discouraging risk. Risk takers have a higher chance of a political fall in a large established business because when they are wrong they usually are fired or lose credibility. In a good start up environment the opposite of this happens. Risk taking is encouraged, and failures are not looked down upon. They are seen as lessons.
  • Start ups can better adjust to their customers’ input. One of the best qualities of startups is that they can be so open minded to what their customers want. An example is how one startup began as an image sharing website, but when its customers started using it for something totally different (embedding photos on other sites) they were able to shift at a moments notice and start making the customer’s new found use for the service easier and more direct.
  • Start ups only focus on one specific market. This specialization allows them to perfect one small specific product to best cater to their customers’ need. The wide variety of products that the larger competing companies offer can actually act to their disadvantage. This could happen when a company with a broad product line lets one of their products slip. If they lose credibility for that product their customers are likely not to purchase other products from them. This prompted Jeffrey Powers, co-founder of Occipital, to warn startups against trying to grow too big too fast in his chapter titled “Be Tiny Until You Shouldn’t Be”.

 

 


Matt Renzo is a junior at Rhodes College completing an academic internship at Start Co. You can reach him at renmj-17@rhodes.edu.