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20 Hidden Advantages of Small Businesses and How to Leverage Them

9 Mins read

From the nimble nature of startups to the personalized touch of family-owned ventures, twenty industry leaders, including founders and CEOs, reveal one hidden advantage of small businesses. Spanning from optimizing operational costs to branding as a boutique service, this article unpacks the unique strengths that give small enterprises their competitive edge. Discover how these insights can empower your business to leverage its size for success.

Optimize Operational Costs

Small businesses can often operate with lower overhead costs. They have the flexibility to be more cost-efficient and to allocate resources strategically. Many small businesses also operate from their own homes or co-op spaces, which makes it cheaper to operate. 

In order to keep your small business more cost-effective, it’s important to continuously review and optimize operational costs. Look for ways to increase efficiency without compromising the quality of products or services.

Mark Baldwin, Founder, Baldwin Digital

Leverage Personal Customer Relationships

One often-overlooked advantage of small businesses is the power of genuine human connections. In the landscape of commerce, small businesses have the opportunity to form personal relationships with their customers, similar to the familiar exchanges in a neighborhood. 

This intimacy allows for a deeper understanding of individual needs and preferences, transforming transactions into meaningful interactions. It’s like having a trusted friend behind the counter who understands your preferences. 

To leverage this, small businesses should embrace their ability to be nimble and responsive, tailoring products or services based on real-time feedback. By being authentically human in their approach, small businesses can create a loyal customer base that values the personal touch, setting them apart from larger counterparts with a more distant corporate demeanor.

Mike Harvey, Managing Director, 1st Move International

Utilize Authentic Storytelling

As a small business owner, I’ve noticed our capacity for genuine storytelling is a unique edge. We often have compelling stories behind our businesses—why we started, the challenges we’ve faced, and our personal connection to our work. 

This authenticity resonates with customers. Others can leverage this by sharing their own stories, connecting with customers on a more personal and emotional level than larger businesses typically do.

Diego Cardini, Founder, The Drum Ninja

Capitalize on Quick Decision-Making

Small businesses have the advantage of being speedy decision-makers. They can quickly adapt to changes in the market, grab opportunities, and put new ideas into action without lots of complicated rules. 

To use this advantage, create a culture where people feel free to share their ideas, and don’t be afraid to try new things. This flexibility helps you stay ahead in fast-moving industries and keeps you ready to respond when customers’ needs change.

Maxi Extrakt, CEO, Fort Lauderdale Pergolas

Gain Insight Through Direct Interaction

Small businesses tend to know their clientele far better than corporations do. Corporations need to go through long, tedious channels and sell indirectly. Small businesses, on the other hand, can reach the customer directly and interact with them daily. This has several advantages. 

First, customers are more loyal when they can see and interact with the face of the company. The service can also be more customizable and adaptable. You can more easily adjust for changes for the customer. Most importantly, you can gain key insights about your customer base through these interactions. 

While mega-corporations spend on data harvesting, you can find out a lot about your customers just by talking to them. You can advertise something new or ask questions before you start production, just while making a sale.

Khunshan Ahmad, CEO, InsideTechWorld

Harness Entrepreneurial Innovation

Small businesses are typically driven by an entrepreneurial spirit, with owners and employees deeply invested in the success of the company. This passion can lead to greater innovation, creativity, and a willingness to take calculated risks. I know from my personal experience that there is a major sense of integrity and ownership when you have a small business, and every small decision counts. When you put all of your investments and energy into starting a business, you are more apt to make it a success.

I would suggest leaning into your own intuition and taking risks as much as you can. Nothing ever happens by just sitting around, so if you want something, you should always be looking ahead at how you can make it possible.

Sam Rock, Owner, Infinity Laser Spa

Build a Tight-Knit Team Culture

A subtle yet notable advantage of small businesses lies in the ability to foster a tight-knit company culture. Unlike large corporations, small teams can build strong bonds, enhancing collaboration and morale. 

Small businesses can take advantage of this early on by prioritizing team building and intentionally creating a positive work environment. Employees will also begin to feel a genuine sense of belonging through shared goals and values. In a smaller setting, everyone’s contributions are more visible, paving the way for a culture of appreciation. 

This close-knit atmosphere ultimately boosts employee satisfaction and translates into better teamwork and increased productivity, giving small businesses a unique edge in creating a thriving workplace.

Viktor Meier, CEO, Glice

Compete with Authentic Experiences

Large businesses and chains often surrender a great deal of authenticity as they grow to a certain size, and consumers who look for more authentic experiences and products with soul will avoid them if a local alternative that capitalizes on that is available. 

I’ve seen many small businesses thrive by offering a significantly more expensive version of something sold by a major brand, by spinning a good story about why their version is the more authentic one. 

Think about coffee shops, for example—ask a college student where they think the best coffee would be, and the answer is never going to be Starbucks. It will always be at their local “hole-in-the-wall.”

Dragos Badea, CEO, Yarooms

Offer Flexible Customer Service

The more clients a business has, the harder it is for them to pay attention to each one. They have to use standardized procedures to keep up with orders. Modern consumers look for personalization and customizability when they pick a product. 

Small businesses are uniquely geared towards catering to these requests. Since they don’t have a set bureaucratic structure, their processes are more flexible and can accommodate special requests. Moreover, I can offer much better customer service and build brand loyalty.

John Hughes, CEO and President, ElectricianShield

Beat Major Brands with Visibility on Google Maps

Small businesses can easily beat out larger brands on the most popular search platform people use when looking for local businesses—Google Maps. Unlike PPC ads, where large brands can easily outspend SMBs, on Google Maps, the smaller businesses have the advantage. Create and optimize your Google Business Profile, and you’ll find that you get more customers than you expected. Best of all, it’s free!

Justin Silverman, Founder and CEO, Merchynt

Price Competitively with Low Overhead

Due to their lower overhead, small businesses have less expense to factor into their sales price and thus have the advantage of more competitive pricing when compared to larger businesses. 

The effect of economies of scale can nullify this advantage, but in many industries, small businesses can out-compete large businesses in pricing. We personally beat our competitors’ pricing by literally tens of thousands of dollars, simply because we have less overhead.

Thomas Borcherding, Owner, Homestar Design Remodel

Improve Customer Experience with Agility

I think one hidden advantage of small businesses over large ones is that they can be more flexible.

Large companies often have to follow a lot of rules and regulations, which can make it hard for them to adapt quickly. They also have more bureaucracy, which means they have to move slowly through the ranks before they get permission to do something new.

Small businesses don’t have these same constraints, so they can move much faster and make decisions based on what their customers want rather than what internal regulations dictate.

For example, in my company, we’re constantly making changes—from how we organize our meetings to how we handle email—to ensure that we’re always improving our service for our customers. This flexibility allows us to stay on top of our game and provide an excellent experience for all of our clients, no matter what industry they’re in or what size company they run!

Gert Kulla, CEO, Batlinks

Turn Quick Pivots into a Strategic Advantage

One often-overlooked advantage small businesses have over larger ones is agile adaptation. In my experience, this agility stems from fewer bureaucratic layers, allowing for a rapid response to market changes. 

For instance, in my Basic Life Support Training business, when a new CPR guideline was introduced, we seamlessly integrated it into our curriculum within a week. Larger competitors took months. This agility kept us relevant and attracted clients seeking the latest training methods. Other small businesses can leverage this by staying informed and ready to pivot quickly, turning their size into a strategic advantage.

Hafsa Unnar, Manager, Basic Life Support Training

Take Advantage of Direct Decision-Making

In my experience, it’s often easier to get things done in a small business than in a large one. In a small business, you’re more likely to talk directly with the person who can decide about what you need, and you’re more likely to get that decision made quickly. 

For example, if I need something from my company’s IT department, I know that if I talk directly with the head of the department, she’ll be able to make the decision herself that day and prioritize it accordingly. If I were working for a larger company, though, I’d have to go through multiple layers of management before getting an answer. And even then, it’s not guaranteed that I’d get an answer at all!

Rengie Wisper, Marketing Manager, SupplyGem

Maximize Profit, Play Up Small

Listen, a small business is much easier to manage than a large one, and in many ways, the profit can be bigger as well. A bigger business has bigger expenses and sort of becomes a monster of its own. It’s out of your control, and you can’t oversee everything, so you can’t maximize profit or make the process as efficient as possible.

Small businesses are easy to steer because it’s all manageable. You see where every single cent goes, and you can put a stop to any hemorrhaging of funds that may occur. Plus, the marketing just can’t compare—we’re in an era where people value small businesses and go out of their way to patronize them. 

Big business is villainized, so this is where you’ve got a lot to gain as a small business. Play it up and present the advantages of shopping small in a positive light.

Rick Berres, Owner, Honey-Doers

Use Local Knowledge for Growth

An often-overlooked advantage of small businesses is their local knowledge. They understand their local market and community better than any large corporation ever could. This insight can be invaluable in tailoring products and services to meet local needs. 

To make the most of this, small businesses should actively engage with their local community. Participating in local events, supporting local causes, and collaborating with other local businesses not only increases visibility but also builds a strong local network. After all, local support can be a solid foundation for business growth.

Lilach Bullock, Founder, Lilach Bullock

Collaborate for Innovative Solutions

In my experience, one of the greatest advantages of small businesses over large ones is their ability to innovate through collaboration. Small businesses are often located in close proximity, allowing for easier communication and the formation of meaningful partnerships. With such a strong network of connections, small business owners can more easily find ways to combine resources and come up with creative solutions to problems.

So, if you’re planning on starting something new or hoping your current business could reach greater heights, then definitely consider collaborating with others. Not only will combining different viewpoints enrich your idea, but it will also allow you the flexibility necessary for coming up with innovative projects that may offer immense value for yourself.

Justin Cole, President and SEO Strategist, Tested Media

Involve Senior Leadership Directly

The biggest hidden advantage of small businesses is the direct involvement of owners and senior managers in the sales process.

It’s no secret that would-be customers love speaking with the CEO, and this dramatically increases close rates. Even just a five-minute introduction from the CEO during the initial stages of a demo can vastly increase the probability of new deal acquisition, which is a powerful tool for small businesses.

This effect can also be used elsewhere, including with existing clients, potential channel partners, or any other stakeholder who would appreciate an introduction to the organization’s leader.

For large businesses, however, the CEO is far removed from the business’s core functions and is simply unable (or unwilling) to help in this way.

Small businesses can best capitalize on this effect by giving sales executives a certain number of CEO drop-ins per month, spreading the CEO’s time fairly across the business.

Oliver Savill, CEO and Founder, AssessmentDay

Adapt Quickly to Customer Needs

Small businesses have more flexibility because they have less bureaucracy. Big-name companies rely heavily on a bureaucratic system to keep things uniform and efficient, which makes the most sense for larger operations. Unfortunately, this bureaucracy means that approval processes for practically anything take a long time. This isn’t necessary for small businesses, which is why they have the luxury to be more flexible in their processes and operations.

For example, small business owners can decide on the spot to give customers a special discount to de-escalate a situation and encourage customer loyalty. Something like this isn’t possible for large businesses because it would need to go through a lengthy approval process first. Adaptability to the customer’s needs is a big advantage when it comes to customer service. It adds a personal touch to what would otherwise have been something transactional, and that encourages brand loyalty.

Meg Hellerstedt, President, Sylvane

Brand as a Boutique Service

The one hidden advantage of small businesses over large ones comes down to customer service. Larger companies typically lose sight of their earlier commitment to exceptional customer service. What this eventually results in is a reduction in quality but an increase in the quantity of customers. 

For the small business, they typically will have a smaller volume of clients, but they will be able to serve them with a much higher quality of service. A higher quality of service means that the smaller business will be able to charge more for the service because they truly go the extra mile for the client. Companies that are smaller and go the extra mile can brand themselves as more of a boutique service and attract a higher caliber of clients who will also be able to refer them to other people in their own circle when they see the high quality of service that they receive.

Sebastian Jania, CEO, Alberta Property Buyers

Brett Farmiloe is the founder of Featured, a Q&A platform that connects brands with expert insights.

Small businesses stock image by loreanto/Shutterstock

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