The Advantages of Being a Small Start-Up – Part 1


Today we need new products, new services, and new ideas to invent our way back to prosperity. Small start-up producers have always been the backbone of the economy, not just because they provide the most new jobs, but because they improve the very quality of our lives by bringing more good ideas to the market. This is the first in a four part series on why small start-ups have an advantage over big companies.

“Build a better mouse trap” is the challenge to today’s inventors, entrepreneurs and start-ups. If you have a good idea, why wait 10 years just see someone else take “your” idea to the market, and say, “I had that same idea ten years ago!”

Sure, you’re undercapitalized, inexperienced, and up against the “big guys,” but you have several advantages that can make the difference:

  1. Humility. Small start-ups tend to be more open about what they don’t know and are more likely to hire, contract, or otherwise engage the experience of experts outside the company. It’s OK if “it wasn’t invented here.” Your people’s jobs and raises are not dependent on coming up with all the good ideas or even pretending they can. Its OK to give someone else credit because you and your people’s concern is company survival. No one thinks he will have a job if the company goes under. No one thinks that company survival is not his concern. Your company is small and fragile, and your people know it.
  2. Positive cash flow earlier. Being undercapitalized tends to force a cautious start that pays the bills as soon as possible. You simply won’t exist if you don’t. The big guys can get a budget for a new project that will lose money for years, or worse, they might not let a bad idea die because they have put so much time and money into it. The small company has to dump what’s not working fast to survive. Its OK to admit you’ve made a mistake and learn from it.
  3. Innovation and Resourcefulness. If necessity is the mother of invention, being undercapitalized is surely the “father”. A start-up is forced to be resourceful. In the process, you can discover advantages you may never find with a second or third round of financing or a bigger budget. Bonnie says, “I feel sorry for a person with a good idea and I feel doubly sorry for them if they have money!”
  4. Hire whom you want. If a candidate has all the skill and experience you need but lacks the credentials, you can still bring him on board. The big guys are concerned about liability and setting a precedent, so in their effort to remain safe and consistent they can miss out on some real gems. You can write and bend your own rules to accommodate opportunity when he or she knocks.
  5. Freely shared information . In a small business, your staff knows more about the total operation. They may even manage several different jobs. Information in the big corporations tends to be treated like a coveted commodity, often used as a type of currency to  buy a lunch, get a promotion, receive kudos, or trade for other information. Some information is down right suppressed because it may threaten some supervisor’s concept of job security.

Next time we will examine the advantages of being new, closer to the ground, communicating better, engaging in out-of-box-thinking, allowing good ideas to come from anywhere, and having an “outsider’s” view of your industry.







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    About Michael Houlihan & Bonnie Harvey

    Starting in a laundry room with no money or industry knowledge, they built the iconic Best-Selling Barefoot Wine Brand - with out advertising. In 2005 they monetised their brand equity and now offer proven business principals, and real world experience. Visit our YouTube Channel →

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