Big advantage of small business



In recent years, in the context of a series of large corporations and companies in the world continuously facing scandals that have made investors lose confidence, many small companies (with revenue from 50 to 150 million USD) has "turned against the tide" to become bright spots.

So what is the reason for the success of small companies in a market context where there are so many "big guys" with long-standing reputations and remarkable financial strengths? According to a recent survey conducted by Business Week magazine, during the period from 2002 to 2004, the average revenue of small companies with assets under 100 million USD increased on average each year by about 28.7%. , profits increased by 61%, while the 500 largest corporations according to the “Poole 500 Standard” Industrial Composite Index only increased their revenue by an average of 8.3% and profits increased by 13.8%. The average capital recovery rate of small companies is 25.4%, while that of large companies is only 6.9%. And this surprising result in the business world is causing many large corporations in the world to "lose face" before the "little guys".

The achievements of small companies are praised by many investors. The Lascel 2000 index (composite stock index of 2000 small companies in the US) over the past year has grown above 29%. American economic experts believe that the strong growth trend of small companies will continue for a long time. “Since the late 1990s, the Lascel 2000 index of small companies has increased 1,18% and is still increasing,” said John Siuman, a small-company operations analyst at JP Morgan. giving investors the mentality to focus on companies that are as small as possible."

That's right, business today includes many extremely profitable industries. If small companies know how to invest and have the right development strategies, they will succeed quickly. More specifically, small companies also have certain advantages to achieve outstanding growth.

1. Compact management structure

To some extent, compared to large corporations, a clear advantage of small companies is compactness and flexibility. Small and medium-sized companies are the ones that stay closest to the market and can adjust their business direction at the fastest speed. Among the 100 small companies with the fastest growth rates, many companies have "won big" thanks to the above strengths. The most obvious manifestation is in the field of education: Korithos Academy ranked 6th, Apollo company ranked 14th, Dervy company ranked 32nd all developed strongly thanks to targeting the right weaknesses that large companies and corporations do not. get, that's the dynamism. For example, Apollo Group can easily open additional foreign language training classes for working people with high-level, prestigious certificates, or reorganize registration and class progression to make it most convenient. .

Or the airline Ryanair, Ireland, was established not long ago and is just "nobody" in the eyes of the world's airline "giants", but now Ryanair is emerging as a phenomenon and a typical model of aviation. high business efficiency. In the last financial year, Ryanair's profit reached 239 million EUR (an increase of 59% compared to the previous financial year) on total revenue of 842 million EUR. According to incomplete statistics, in the first 8 months of this year, Ryanair transported 28 million passengers. Ryanair's success is partly due to its extremely lean management and operating model. The airline only has a total of 1,200 people (pilots, managers, employees, cleaners...). Ryanair is the only airline in the world with the proportion of online ticket registrations accounting for 95% of total tickets sold. To handle this, the airline only needs...3 employees, while in many other airlines, the online ticket booking department has up to several dozen people, if not more. Ryanair practices cost savings to the maximum at all stages, even CEO Michael O'Leary does not have a personal secretary and his office is very simply equipped.

In terms of management, compared to the cumbersome, multi-layered apparatuses of large corporations, making business decisions of small companies does not require "advice" at many levels, so when facing difficulties, everyone can all be quickly resolved. With a compact organizational structure and a relatively small number of employees, it will ensure consistency in policy decisions from leaders to employees. From there, the process of implementing and implementing business plans will also be easier and success will come more easily to them. Starting from the 90s of the twentieth century, many large companies in some fields such as transportation, education, tourism services... globally tended to adjust and divide into small companies to increase their growth. efficiency in business operations.

2. Be proactive and flexible in pricing

Thanks to its compact structure, price is considered one of the most powerful weapons of small companies to meet the needs of the ever-changing market. While large corporations struggle with cost-cutting plans to lower prices, small companies continuously offer many different flexible prices to suit every customer's budget.

The price factor is perhaps most clearly shown in the aviation sector. In the US there is Southwest, in Australia there is Virgin Blue, in Asia there is AirAsia, and in the "old continent" of Europe there is Easy Jet, JetBlue, Ryanair..., all of which are small-scale airlines. but is "doing well" thanks to the low price strategy.

These airlines all have some common characteristics such as airfares that are many times cheaper than the regular fares of other major airlines on the same route; Same-class seating regardless of economy, business or first class; Does not serve food or drinks on the plane and almost only uses one type of aircraft (most commonly the Boeing 737). Michael O'Leary, CEO of Ryanair, said: "Ryanair's policy is to compete on quality and price, especially on price, while ensuring profitability to develop. Our airfare on some routes is even cheaper than bus fare, only about a few dozen EUR."

To prove his words, Michael O'Leary gave a specific example. The terrorist attack on September 11, 2001 at the twin towers of the World Trade Center (WTC) in New York, USA, took the lives of 7 senior managers of Ryanair. Many airlines in the world are still paralyzed for fear of not having customers, so on September 14, Ryanair launched a "unique move" to set aside 1 million tickets, with the same price of 15 EUR for passengers. on any of the airline's routes. As a result, Ryanair's planes are still fully booked and operating normally, while many flights of major airlines such as British Airways, UK; Air France, France, had to cancel due to lack of passengers. People have asked the question: why does Ryanair sell tickets at such low prices and still make a profit? "That's because we are completely proactive about ticket prices and low-cost business strategies, not through decision-making or approval like at major airlines in the world" - Michael O'Leary replied.

In addition to the aviation sector, many small companies in the retail sector have also achieved great success with their low-cost and flexible strategies. Since its establishment in 1995, British retailer Dostic has always maintained an average growth rate of 25%. Finding out the reason, people realized that in addition to the uniqueness and attractiveness of the goods, Dositc also showed wisdom in adjusting retail prices.

The goods that Dostic sells include countless types with diverse designs, and a special feature is that the company's prices do not use even numbers but only use the number 99. For example, 20 sewing needles packed into a small bag are sold at a low price. $0.99; 10 pencils in a box sell for $0.99; a pan sells for $9.99; a pair of batteries costs 0.99 USD… Dostic's “$0.99 strategy” gives customers the impression that the product costs less than 1 USD, which seems much cheaper than 1 USD. This is clearly a purely psychological impact. Of course, Dostic's price is indeed 5 to 10% lower than other companies. Although the selling price is slightly lower, the company relies on a large total sales volume to compensate for the low profit margin.

Don't think that small companies have any less advantage. When starting a business career, many small companies wonder: I'm just a "little guy" so how can I compete with the big "giants"? The truth is opposite. Small companies have many advantages over large corporations such as flexibility, the ability to respond quickly to the market and the ability to provide low-cost services. If you are the owner of a small company, try to make the most of your advantages to develop and gain market share - something large companies struggle to achieve.

According to Bwportal