As a small business, you have many advantages and disadvantages over a larger business. As a small business owner, you have the ability to go after smaller opportunities, be more prudent with expenses, and offer customers improved flexibility. While you may be taking advantage of the benefits of being a smaller business, you may not be looking at bigger businesses for ideas on how you can run your business more efficiently and catalyse your businesses growth.
Hedge Your Bets
Larger businesses will sometimes utilise hedging strategies to address over-exposure to a certain economy, asset-class, or commodity. To give an example, as an airline your business may be particularly vulnerable if oil prices rise. Therefore a larger business would consider going long on oil, perhaps through a leveraged account, so if oil prices rise they will earn money from their position and earn less money from tougher trading conditions. If oil prices fall, they will lose money through their position and earn more money from trading. An airline’s focus should not be on how they expect oil prices to move; it should be about focusing on their core competencies.
Hedging can be used in your small business too. Particularly exposed to a certain economy? Consider buying and selling certain currencies. It’s also not necessary to have large cash reserves to enter positions in currencies. You could use a leveraged account, and enter a $200,000 position for $1,000. If you reach the stage where you get hit with a margin call, your business should be thriving from its improved trading conditions.
Invest In Your Brand
Small businesses very rarely spend money on their brand. Most small business owners believe advertising and marketing serves one purpose: to drive action there and then. Larger businesses have patience and are willing to invest in winning business on longer sales cycles.
When Nike spends $150,000 on a TV advertising campaign, they don’t see an immediate lift in sales. They expect that those who view the advert will engage with their brand at a later stage, and when it comes time to buy a pair of trainers they will be at the front of consumers’ minds.
Consider how your brand is perceived. Consider how your company is positioned within your industry, and consider public relations too. What unique qualities do you want to portray in your business, and how do you intend to get the message across?
Say Goodbye To DIY
Smaller businesses are always focused on how they can do things cheaper. Bigger businesses are too, but only when there isn’t an obvious sacrifice involved. Many small business owners have their hands in too many pies; they will do their own accounts, create their own website, write their own terms and conditions, and create their own logo. For those that are bootstrapping their business, this may be the only way to get things done. But you should recognise that in most cases you are making a sacrifice; use an expert, and make sure you do your due diligence to ensure the expert is qualified.
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