The business world held a strong fascination with “unicorns” which referred to enormous startups that developed at extraordinary rates while sustaining monthly losses of millions. However, the tide is turning. The investors and founders now comprehend that “bigger” does not lead to “better” results in their business operations. The market currently sees the emergence of profitable small enterprises which people refer to as “zebras” and “lifestyle businesses” as proof that maintaining a streamlined approach toward business operations helps them achieve greater long-term success.
Freedom from Investors
Big startups need Venture Capital (VC) funding to support their operations. The startup founders must report to their board of directors who demand that the company achieves a tenfold increase in revenue every single year. Small profitable businesses typically obtain their funding through self-financing methods that people call “bootstrapping.” The business owners obtain complete authority to decide between customer-centered or shareholder-exit-plan-centered decisions.
Profit Is the Best Safety Net
The major startups spend money until they achieve profits which they expect to reach in five years. The company will experience a breakdown when either economic conditions worsen or financial support becomes unavailable. Small companies have built their business model on achieving profitability from their first operational day. The company uses “real” cash reserves as a protective mechanism against market crashes that destroy its larger competitors who have high debt levels.
Ability to Pivot Quickly
The process of changing a large startup operates similarly to steering a cruise ship which requires extensive planning and numerous staff members to execute. A small company operates like a speedboat. The business can adapt its complete product range and operational procedures to market changes because they do not need permission from multiple management levels.
High-Quality Customer Service
Customers at giant startups only exist as data points which the company systematizes into its customer database. The “human touch” customer service of small companies enables them to serve customers better. Small companies can establish deep personal connections with their customers because they handle fewer accounts. The brand loyalty that this generates, proves impossible for big corporations, which lack personal relationships, to achieve through their advertising efforts.
Focus on a Specific Niche
Big startups try to be everything to everyone so they can justify their massive valuations. The small company achieves victory when it succeeds at delivering outstanding results in one particular area of business. The business achieves market leadership in its specialized field which enables it to charge more expensive fees because generalist competitors cannot match its expertise.
Lower Overhead Costs
Big startups waste millions on fancy glass offices, massive marketing teams, and “free” perks for hundreds of employees. Small profitable businesses maintain their operations through basic methods. The organization spends money on remote work operations along with their minimum employee count, which enables them to achieve maximum cost reduction. The organization reduces its operational expenses through this process which enables them to keep more revenue for their business.
Sustainable Employee Culture
The “growth at all costs” mentality of big startups often leads to burnout and high employee turnover. The small company establishes stronger employee bonds which create tighter team connections. The organization provides its employees with a better work-life balance through their business operations which do not require them to complete impossible tasks.
Better Product-Market Fit
Big startups create products that customers do not require because they possess unlimited financial resources. Small companies need to create their products, which customers want to buy, because that is the only way for them to survive as a business. The process of forced discipline requires teams to develop products that provide effective solutions to actual market needs.
No Pressure to “Exit”
The major startup companies achieve their business success through either corporate sale transactions or stock market initial public offerings (IPOs). The process of selling a business destroys its product quality. The operations of small profitable businesses enable the business to continue functioning without needing to sell its assets. The business can operate for five decades, which gives its owners consistent income while delivering dependable services to the community.
Direct Communication
In a small company, the CEO often still talks to customers and helps with the work. The absence of “corporate game” elements and “office politics” enables the organization to function without activity delays. The organization achieves instant information transfer, which improves its decision-making capabilities while decreasing operational errors.
Resilience Against Competition
Big companies often ignore small competitors because they don’t seem like a threat. The giant corporation becomes aware of the situation when the smaller competitor has completely taken over its best clients. The small company achieves victory through its capacity to maintain operations until the company gains sufficient strength to become an industry leader.
Founder Fulfillment
Small companies give founders the opportunity to engage in the work that makes them truly happy. The founder takes on fundraising duties while becoming the full-time manager of the startup. The founder of a small business can continue working as a “craftsman” who maintains their control over product development and team management, which leads to a more satisfying life.
