Statistically, large companies produce $250,000 per year in revenue per employee; while the average small business generates $100,000 per year in revenue per employee. This is a 70% advantage… WHY?
Corporate Mind Set
A large company needs to continually provide a return on investment or their stock will plummet; and a lot of anxious investors will lose equity. This reality means that the management team needs to be on top of its game. The CEO and managers of a large company are professionals who know how to get the most value out of the human resources they have on board; they value leading, financial management, and all sorts of metrics that are required to produce at a very high level. When they need a person, they take great care to hire the right person and pay them the right amount. They understand how important it is to create and maintain strong sales and marketing. They also understand how important it is to create compelling value proposition to their customers to keep them buying more and more.
Small Business Mind Set
A small business owner thinks much differently than a corporate leader; and for the most part, they are quite proud of these differences. Often times a small business owner used to work for a large corporation and desires to create a much different culture than the stiff and unyielding corporate environment he or she just left. They want to create a more casual atmosphere of family instead of corporation; they want to have customers who they have personal relationships with instead of large, faceless corporate clients; and they want to keep most of the profits for themselves instead of giving their hard-earned money to faceless investors.
As a small business owner starts growing their company, they find they need to develop the same types of infrastructure as the big guys. They find they need to learn how to sell or hire a sales person. They need to learn how to answer phones or hire a receptionist. They need to learn how to produce their product or service, or they need to hire employees to do it for them. If they hire employees, they need learn how to lead and manage. The energetic small business owner will proceed with their growth undaunted…. thinking, “I can do it!”. Unfortunately, the small business owner creates a mind-set that is comparable to the hermit who lives hundreds of miles from civilization.
The prideful small business owner ends up doing most of the work themselves; trying to sell ; and trying to produce… and everything in between. Their business ends up being a make-believe small business that has mediocre and low-paying clients, bottom of the rung employees, and revenues that keep the business on the verge of bankruptcy on a continual basis.
Small Business Excuses
The small business owner is not without plenty of believable excuses.
- The big companies have more money.
- The big companies can attract the best talent.
- The big companies have more people to do the work.
- The big companies are impersonal and mean.
- The big companies charge too much.
- The are too big to fail.
- They have the government eating out of their hand.
I get it. The big companies are big companies and they have all of the advantages of big companies. However, the small business owner has as many or more advantages; if they would just get their business act together; and start thinking like business people.
Successful Small Business Mind Set
For some reason, a person leaves a business and thinks they have all of the answers that somehow eluded their old company boss. They think they can do it better and then proceed to do it worse and call it better.
In my experience, a small business owner needs to ditch their small business mindset in order to succeed as a business owner. There are eight areas where I see most small business owners failing to keep pace with their larger business counterparts:
- Marketing – The Small Business Mindset is to meet a few people, network and hope that you get referrals.
- The successful business person understands they need to find a specific niche and then create a compelling value proposition.
- Sales – The Small Business Mindset is to hope that a prospective client eventually asks them to sell them something they need.
- The business professional has a specific sales process that matches the way his or her prospective customer buys. The professional also knows how to CLOSE when it’s appropriate.
- Pricing – One of the biggest reasons small business owners fail to achieve the revenues of a larger company is that they undervalue what they do to the extent they can’t afford to hire quality employees or pay for other necessities in their company. Instead, they choose to under price and provide an inferior product or service that nobody wants at any price.
- The business professional understands what his competitors charge, what his customers expect and what it costs to product quality products and services; and prices accordingly.
- Profitability – If I hear one more small business owner say, “It’s not about the money!”, I will explode.
- A business professional knows they need profit, or they will cease to exist. Their focus is not on money; but money becomes the measuring stick of most wise business decisions.
- Leadership – Small business owners fail to trust their employees and do the work themselves and cannot find a way to effectively lead the people they hire.
- The business professional spends an inordinate about of time and money training new leaders on a continual basis knowing that leadership is the key to gaining amazing productivity out of any group of people.
- Personal – A small business owner is destined to end up divorced because they can’t separate themselves from their struggling business for even one week to take a vacation with their family.
- Business professionals are like any people… they take breaks knowing that others will fill their shoes while they are away.
- Staffing – A Small Business Owner mindset says that you cannot afford to hire one more employee because you don’t have enough revenue; and can’t afford to feed them.
- A business professional understands that they will be much more effective and efficient when multiple people team together to work within their expertise.
- Growth – Often, a small business owner is trying desperately to make a reasonable income for himself; and feels like growth is either out of reach; or unwarranted.
- A business professional knows that a business is either shrinking or growing; and intentionally chooses growth.
You see, I had all of these problems of a Small Business Owner; and now know that it didn’t matter what sales fad I tried, or management fad I tried or what other business gimmick I tried; I still had the wrong mindset. If you want to succeed as any kind of business owner, you must ditch the Small Business Owner Mindset; and adopt a the business professional’s way to grow your business.
As a business coach, I work with business owners to transform their thinking. Not all business owners need help in all areas of business leadership; but if you’re a small business owner; and have even a few employees, you’ve probably run into some major “small business mindset” challenges. If you’d like to know what I can do for you, please contact me using the contact form below.
Note from the Author
My name is Jeff Schuster. I am a certified Life and Business Coach serving small business owners, corporate executives and others who want to transition from “expert” to “entrepreneur”. I have been a small business owner for most of my 30-years in the workplace. I grew an energy efficiency and renewable energy engineering and construction company from nothing to over $10-million/year and sold it in 2013. I now help other business owners make amazing progress toward their own dreams of business ownership independence and success.