To view SBA report click here

Company of One

                                          
                                                COMPANY OF ONE

                            Written by Lori Williams and Published on Start-Up Nation

At one time landing a large corporate client was the golden goose. Today, that may not be the case. Working with smaller companies is often more profitable, not to mention enjoyable. More importantly, given the trends it may offer the best opportunity for growth.

According to the latest data released by the SBA, “In 2011, there were 28.2 million small businesses, and 17,700 firms with 500 employees or more. Over three-quarters of small businesses were nonemployers; this number has trended up over the past decade, while employers have been relatively flat.”

(Nonemployers refer to businesses with no employees. To see report click here).

So what does this mean?

The report is good news for companies that target small businesses. Trends suggest this market will continue to expand providing a myriad of future opportunities.

Contrarily, if you company targets larger corporations the report may yield some concerns. Given the lack of substantial growth in this sector, there will be less capital available to invest in new products and services. As with most competitive environments, this could lead to pricing pressures.

With that said there are inherent advantageous and disadvantages when working with small businesses.
On the positive side, given the lack of internal politics or lengthy purchasing processes, the sales process is less cumbersome. It is easier to get direct access to the decision maker and owners of small businesses tend to make faster decisions.

If your company offers an innovative or unique product you may have a better audience. Entrepreneurs of smaller companies tend to be early adopters, open to try new products. The type and terms of the relationship can be negotiated. Small business owners are open to partnerships that benefit the growth of both companies.

There are also some negative aspects to consider. If your product is a higher priced item, smaller businesses have less access to financing options. Owners juggling a myriad of task can get easily distracted causing delays in making a final decision.

Smaller businesses, especially start-ups have a harder time balancing cash flow demands and may stretch payments beyond the desired terms. Since smaller companies buy at a reduced volume and frequency, you will need to target a larger number of customers to meet sales goals. Moreover, since these companies are often home-based they are more difficult to reach via traditional sales and marketing methods.

The company of one is a growing and highly lucrative market. It is beneficial for companies of all size to develop a strategy to work with these smaller entities. In fact, if trends continue it may become more than beneficial—it may become necessary for survival.