The Dangers of a "Small/Micro Business" Mindset

The dream of owning and operating a “small business” is often alluring to many, until you consider the long term effect of settling for small. While Silicon Valley is filled with hopefuls who are building the next app or startup that will change the world, the far majority of visionaries have adapted to the “hustle” culture of juggling a job or side gig with a dream. 

Although nothing is fundamentally wrong with operating a small business, under $2M in revenue to qualify my metrics, there is something wrong with the theory that owning a small business long term is admirable. Over the past decade, more multi-millionaires and billionaires have been created from the foundation of operating a small business, while luring in major brands such as Walmart and Amazon to acquire them at market rate. 

Why does that matter?

Well, it’s simple - Small business thinking is dead! 

Imagine you have a candle company that you have been operating as a single person operation from your basement for the past 5 years, and your only customers are people in your community and co-workers, then the “business” has no competitive advantage in the marketplace. However, let’s take the same candle business that you have been operating in the basement, and you get into the market to become a vendor for big box retailers as Walmart, Amazon and Target, then the ROI of your time can be easily quantified if your concept can gain enough market share for an acquisition, or lucrative partnership. 

Essentially, the longevity of your business depends on your reach and access. One simple reason why "small business" entrepreneurs rarely make it into the acquisition stage is due to a mindset of scarcity. As a former small-thinking entrepreneur, I spent most of my time worried about other people stealing my idea(s). Subsequently, I realized that imitation worked in my favor if my exit plan was to attract a partner. Think of it this way -- Consider about how many “imitation brands” have started since the launch of Uber & Lyft. Every city has their own knock-off version, which will put Uber & Lyft in the acquisition game very soon. Also, remember Ring? Well, Jamie Siminoff started the doorbell company as Doorbot before re-branding, which led to a $1B acquisition by Amazon. Today, Ring is the go-to in home security and every home monitoring system is imitating its success.

Small thinking is emotional and continues to keep small business owners and solo-entrepreneurs in a consistent cycle of survival. The forced thinking of babysitting one purchase order, one client, one opportunity, etc., creates a level of severe vulnerability, as the small fish can’t compete in the bigger pond. 

This level of thinking originates from multiple factors - socioeconomic, race, gender, generational, education system, etc. Although there is no specific key factor which creates this level of limiting thinking, if you want to join the 1%, you must let go of small thinking. I am a firm believer that you can start small, but never stay small. The unfortunate reality is entrepreneurs who experience some level of press/publicity or financial success often reduce their plans to fit the arena where they are celebrated, rather than continue the journey to market competitiveness, recognition and 1% introductions. 

I want to give you 4 strategies that will help you get out of the "small" business category so your business can thrive in the 1% market share.

Start Local & Go GLOBAL!

The global market needs what you offer, however small business thinkers continue only serve their friends and neighbors. Whether you are a consultant, speaker, inventor, soap maker, designer, etc., get a passport and start shaking hands in other places. The untapped potential of markets beyond your own borders creates a conversation that there is a company that solves a specific problem, and the mark-up for your services will increase your margins. 

Raise Your Prices.

As simple as it sounds, it is a must. If you continue to be the most affordable solution because you are afraid of price rejection, then you are guilty of babysitting your business and stifling your own growth.

Raise your prices! The cost of business has increased, and your business must reflect today’s value. Otherwise, your customers will stay with you because you are a cheap solution to an expensive problem. 

Less is more. You may lose a few of your most loyal customers because of your decision, but you will increase your market share and competitive advantage. High volume does not always translate into high returns. Focus on your margins and your core target audience. 

Create a System

Successful businesses have duplicatable systems. The fault of today’s ambitious entrepreneurs is they are eager to hire cheap and too soon, rather that focus on building a productivity chain, which has a proven system to generate results. Once you have developed a proven system, then your business is “teachable” and duplicatable.

However, if you continue to remain as the one-man-band, the survival of the business is solely dependent on you, which does not have value. Remember, if the business cannot survive without you, it’s not a business.

Network Outside of Your Comfort Zone

As they say, "learning never ends." Small business owners tend to network with their competitors and engage in conversations that are centered around their survival - "Who do you know?" "Who is doing your marketing?" "How did you get that contract?" That level of engagement has limited results and quite draining.

Instead, focus on networking with the 1%. Remember, if you want to be acquired by Amazon, you must network where their decision makers are. In 2014, I owned a small retail shop, that was zoned for commercial and petroleum. When I decided to sell the real estate, I only wanted to sell it to a franchise so I can have perpetuity for the land, so I began networking with the real estate developers from Seven Eleven. I was aware that the property could sit on the market for YEARS if I did not make the intentional decision to be in the presence of franchise buyers, and it worked. I networked outside of my comfort zone and it paid off fast.

Stop networking with your competition, and think about your end goal!

Carol Sankar is a high level consultant and the founder of The Confidence Factor for Women in Leadership. She has been featured at TEDx, The Steve Harvey Show, Columbia Business School, The United Way and more. In addition, her work has been covered by Inc. Magazine, Glamour, O Magazine, Forbes, Harvard, Entrepreneur Magazine — to name a few. Carol is also a contributor for Inc., & Entrepreneur Magazine. For more details, visit www.carolsankar.com