The same business model that works for a small company might not work for a larger one. It’s important to bear this in mind, particularly with respect to current or planned expansion.
Choosing or modifying a business model (i.e., an overall plan for generating profits or achieving other goals) can absorb hours spent researching and evaluating. Back when industry and marketing was relatively simple, so was managing the sales pipeline — but as manufacturing, buying and selling evolved in complexity, so did the possibilities for strategizing around and selling to different markets.
A clear business model makes a useful template to refer back to when making decisions later on, and acts as an essential part of communicating a company’s plans and objectives to potential funders or shareholders.
When researching workflow styles with respect to your own business concerns, it’s essential to keep its size and structure in mind. It’s natural to look at the highest performing companies for ideas on how to improve workflow, but scale is among the most significant factors determining a given model’s success: what works for Google may not work for your two-guys-in-a-broom-closet operation. (For a start, where would you put the slide?)
How Big Is Big?
The first point of order is to define what constitutes a “large” or “small” business. This can be determined by number of staff or by gross income: the US Small Business Administration defines a small business as having fewer than 500 employees for most manufacturing and mining industries, and less than $7 million in average annual receipts for most non-manufacturing industries.
Small organizations make up a large proportion of the number of firms in an economy, but employ a smaller fraction of the workforce: in the UK, companies with 9 employees or fewer constitute 82.3% of all businesses, but employ only 19.2% of the workforce; by contrast only 0.5% of organisations have 250 employees or more, but employ 48.6%.
Other differences include legal structure, how the business is financed, and typical market: usually, small businesses concentrate on a smaller range of products or services, while larger concerns are able to cast a wider net.
Do You Have That In My Size?
When researching potential employers, size is a crucial factor in predicting the kind of working lifestyle a job seeker can expect.
In a start-up, the pace can be gruelling, demanding every hand’s maximum effort to out-compete other eager new businesses seeking to colonize a new market. But there’s a lot to be said for being a big fish in a little pond: the multitasking necessary in a small team breaks up the monotony of a working day while growing employee’s skill portfolios, and the more informal culture common to new businesses makes a tempting option for people who hate wearing a suit or heels. Moreover, the earlier you join an outfit, the more influence you’ll have on its culture and direction.
By contrast, the pace at a well-established business can be easier, but in order to grab a promotion, workers will likely have to lean in just as hard as a start-up member to out-compete their colleagues. Still, larger, financially secure companies often make up for a stuffier atmosphere with more impressive employee perks, a trade-off for having less of a say in how things are run (though things are changing, with companies increasingly seeking input from lower echelons.) Both situations have pros and cons: the right fit depends on the person.
The reasons behind a given business model’s success can be varied, though they tend to correlate well with number of staff. Regardless of size, a business’s failure can usually be tracked down to poor management of resources — for small companies this resource is usually cash, whereas large businesses often topple after losing their best talent.
Generally speaking, small businesses are better able to leverage their agility and talent into profits, whereas large companies have the advantage in using their financial power to force-multiply their profits, or to provide stability as they maneuver into new markets.
In terms of client services, smaller companies can trade on their ability to get to know the customer on a personal level and give more one to one attention, while bigger organizations can bank on name recognition and a larger, more stable client base.
Finding The Perfect Fit
It’s particularly important to consider how a business relates to the market as it increases or decreases its staff. As management consultant Peter Drucker puts it, “sooner or later, some assumption you have about what’s critical to your company will turn out to be no longer true” — changing size can be the impetus that loosens the foundation under such assumptions.
That said, many large businesses benefit from keeping the rule-breaker attitude from their start-up days: describing their corporate culture, Google’s website states “We strive to maintain the open culture often associated with start-ups.” Both Amazon and Google have staggering staff numbers (57,100 for Google, 222,400 for Amazon) yet constantly make headlines by striking out into new and often undiscovered niches. And of course, they would never have reached those heights without maintaining flexibility while scaling.
The importance of business size to a given business model’s chances of success doesn’t mean advice aimed at different-sized businesses is automatically irrelevant. Large organizations typically consist of a plurality of small teams, functioning like small businesses that come together to provide one service. Similarly, small organizations with a view towards expansion should take note of the changes they can expect to go through and get prepared in advance.
Of course, general aspects of successful business models are the same no matter what the size of an organization. At the end of the day, every business model should focus on providing a high quality product or service which answers a genuine need in the market is something which everyone should aim for.
Longneck and Thunderfoot offer B2B content marketing services and strategies to transform your company blog into a sophisticated trade publication that builds influence and visibility in your market. Learn more about B2B content marketing here.
(Image credit: Luke and Kate Bosam/flickr)