Mighty Oaks do not Survive Storms, Humble Grasses do

small business tips
Why small businesses have better chance of survival?
If you’re worried about starting a small business because of what has been happening to big banks in Europe or mining companies in China, don’t be. Small businesses don’t face the same kind of problems that big businesses do. In fact, a small business is often far more flexible and nimble than a big company with a bureaucratic board of directors. It’s entirely probable that your business won’t be affected by global market debacles and there are several really good reasons why:

Your Company Doesn’t Trade With Other Countries

One of the major problems for large technology companies is that they must source rare Earth minerals from places like China. because of this, they rely on international trade. If China imposes a trade cap on exports, which they try to do, it could hold up your business operations. However, if you’re running a “mom and pop” shop, you don’t have to worry about this sort of thing.

A small restaurant can source much of its food locally or from suppliers that are inside of the U.S. if you run a construction company, you do rely on commodity prices for lumber, and other building materials, to remain stable but again there’s usually no direct relationship with foreign countries or third parties that could directly hold up your business.

Your Company May Not Need Financing Like Big Companies

Your company probably doesn’t need the type of financing that a large business needs. Let’s face it, unless you’re like Facebook, Google, Microsoft, or Intuit, you can probably get the kind of financing you need from your local bank. Local banks are sometimes a bit more stable than large banks, especially if your local bank only invests in prime loans and does business in your local community.

If you do need financing, you can build your own cash reserve using your company’s retained earnings. Since you’re not a large, publicly traded company, you don’t have to worry about stockholders or third-party investors that want to see that capital flowing back to them. Using your own capital can also keep you out of ridiculous disasters like the Greek debt crisis because you control where your business’s cash reserve is invested. If you don’t like the bank where your money is kept, you can switch banks, buy gold, invest the money with a life insurance company, or open a brokerage account and invest directly into the companies you think are well-insulated from global crisis.

Local and Vertical Saves The Day

Sometimes, a small company thrives when big businesses fail because it’s easier for a small company to avoid selling a commodity. Take Google, for example. That company has basically commoditized information. It relies almost exclusively on advertising revenue to survive. If a country decides to block Google’s search results pages from showing, it could create a huge (and negative) impact on the company’s bottom line.

If your company is a boutique computer programming operation, you won’t deal with these kinds of issues. If, for example, you write custom computer code for other businesses, then by definition you’re not selling a commotitized product. many big companies survive because they appeal to the masses and sell products and services at cutthroat prices. Small companies can specialize, offer superior service and customized solutions. You don’t need to “go global” in order to be successful. In fact, staying small allows you to become very wealthy without having to endure the kinds of headaches that Google will always have to deal with.

About the Author: Blog post contributed by Charlotte, on behalf of Customer Care.

SMB Authors

This article is one of the excellent contributions from small business owners, decision makers and professionals.