We hear all the time about how small business is the engine of economic growth; they create the most jobs, and so on. But as James Surowiecki points out in this article, the small business sector isn’t an economic panacea – partly because most small businesses don’t aspire to be larger businesses. Their role as an engine of the economy is overstated by politicians who want to be seen to have the common touch.
“Small may be beautiful. It’s just not all that prosperous,” concludes Surowiecki. And he’s right. Many industries are dominated by very small businesses, most of which will remain tiny.
The interesting challenge, though, that we think about every day in our business, is how to grow beyond small? We’re a pretty small b2b marketing business here at Mezzanine, and we are interested in growth for ourselves, but we also work with small and medium sized businesses and not-for-profit organizations to help them achieve breakthrough growth.
In our experience there are a few ingredients that a business needs in order to turn it into a true engine of growth:
- A vision for growth. This may seem obvious, but it’s important to note that not every small company has a founder or leadership that actually wants to grow the business. Sometimes that’s about scope of personal ambition; sometimes it’s about life stage, such as if someone is easing into retirement.
- Driven, smart, brave leadership; a founder or team who understand that there is no substitute for hard work, but who also are willing to pick their spots and be strategic about them.
- A product or service that fills an honest-to-goodness niche; without a strong core value proposition, it’s hard to imagine getting beyond a small business. People might sometimes buy something just because it’s handy, or because of inertia, but if you want to expand, you’ll need to deliver genuine value to a clearly defined market.
- A coherent plan; this doesn’t necessarily mean you need to spend a lot of time planning, but you do need to have a road map that takes you a certain direction and make some genuine commitments – choose to do this, and not that. Depending on your industry, the plan’s time horizon might vary from 6 months to 6 years, but you have to be navigating based on something that makes choices.
- Adequate capitalization; crunch the numbers to figure out how you’re going to pay for your expansion. Maybe there are ways to approach your cash flow or supplier agreements to buy you some flexibility, but many businesses run into trouble because they don’t think through what the costs of growth will be. And what a shame that would be, especially if you run into a squeeze – or, better yet, a great growth opportunity - at the same time as the banks do.
What else do you think is a key ingredient of growth for a small business?
And if you are interested in growing your business in 2012, we’d love to help. Our marketing services involve both consulting and B2B Outsourced Marketing Management.