IDN2 The Changing Personality of Small Business

Is small business different from big business? Or, is small business simply a newer enterprise on its way to becoming big business? Is it like a child who will grow up to do bigger things in a larger market?

Over the last century there was a belief that any capable business owner would continue to develop its markets, and its capability, until it became big. That a business without such motives was somehow wasting valuable opportunities, a sign that it was not well run.

Is this view accurate? If not, should it be? Can a business remain small by design, and if so, what does this tell us about the entrepreneur behind the enterprise?

What has become clear in the past 25 years is that small businesses are as diverse as their owner-operators. They have different goals, missions and personalities.

Part of the realization that small business is unique grew out of the business school experience of the heady 1980s where legions of newly minted MBA grads rushed out into the workforce.

Most were trained using the big box American business model. Most realized that and they were pleased to seek employment in like-minded firms. But a nasty recession put a wrinkle in their plans.

Across North America larger corporations were downsizing, a trend that continued well into the next decade. The well of comfortable entry level positions with large firms dried up.

Graduates had to do something unique: they had to create their own opportunities or take a position with small to medium sized businesses. The experience proved that many didn’t have the skill sets or the vision that was suitable for entrepreneurship.

Suddenly, entrepreneurship became a hot topic. Research began to shift from studying the managerial habits of corporate America to exploring the nature, trends and success factors of businesses which were previously considered too small to make a difference.

This renaissance of small business made it more respectable to be small by design and by choice. Suddenly, experts were focusing on the contribution of small business to the economy.

But a duality still exists. Most who think of owning their own business have two different perceptions of what it takes to succeed. Some like to use a very big box approach to business, trying to command large market shares with less diverse products. Others see themselves as providing a solution for a unique market segment.

What has risen out of the last quarter-century is an understanding that the small to medium sized business is as unique and eclectic as its business owner. That the small business is a platform by which entrepreneurs express their own values and concerns while earning a living and making a contribution.

To understand the focus and the need of the small business one also needs to know something about what matters to the person behind it: a view that would have been considered wasteful and irrelevant two decades ago.

Small business provides unique and innovative solutions to business. It is a viable market segment for other businesses of all sizes. For many, entrepreneurship is not just a profession, but a way of life.

Our understanding of entrepreneurship has changed the way that we view many types of business ventures. Family farms are actually million-dollar enterprises that are still small businesses because they employ fewer people than a large industrial complex.

We have the SOHO market, a trendy acronym for small-office and home-office operations. The SOHO market is as eclectic as it sounds.

So what works? Can a small business emulate the big box approach of tapping into large segments with a variety of homogeneous and price-competitive products? Or is a focus on unique segments with customized offerings more effective?

Both of these approaches can work in business, but many believe that small businesses cannot do a good job of marketing to large segments by competing more on price than other value-added features.

There is some validity to that concern. Small businesses do not have the ability to compete effectively with big-box firms that cater to those segments. They also tend to be too small to achieve economies of scale that allow them to gain a price advantage in the long term.

Using a smaller market segment and obtaining greater market penetration through exceptional products, services and customer care is a much easier, and more profitable, method for small businesses to use.

The approach that you take will be impacted by your personality and individual goals. As a business owner, you make your business as unique as you are. Gone is the cookie-cutter approach to business excellence. There has never been a better time to follow the dream!

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Karen Blotnicky is a marketing professor at Mount Saint Vincent University in Halifax, Nova Scotia and President of The Marketing Clinic in Bedford, Nova Scotia. She can be reached at karen@themarketingclinic.ca