How being a small company can work to your advantage

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Jack Ma stands at 5-foot-tall and leads one of the world’s largest ecommerce company. He has a personal net worth of $22b and in 2014, listed Alibaba on NYSE at $25b with a market cap of $231.44b.

Jack Ma has many big ideas, and one of them is the advantage of being small. He certainly knows the benefits of being small, not only physically when faced with a larger opponent in martial arts, but also when running his own startup. After all, Jack Ma grew his startup, Alibaba, from his one room apartment into one of the world’s largest conglomerate.

Given that 99 percent of startups will eventually fail, what are the advantages of being a startup, and how do you leverage these benefits to take on your larger competitors?

A small team is a nimble team. Try to keep it that way.

WhatsApp only had 55 employees when it was bought over by Facebook for $19 billion. WhatsApp found its formula of growing big with a small team.

WhatsApp found its formula of growing big with a small team.

The small number of employees in a startup, in comparison with its bigger competitors, allows the top management to be directly and deeply involved in most of the strategic decisions. These decisions can then be implemented through a flat organisation, which translates to quicker execution. Such swift execution would not be possible in a massive, complex organization, where a large number of decision-makers would have to buy in. Each decision-maker will then need time to deliberate, and there is less risk appetite to act quickly.

Some startups who have initial successes in scaling find themselves hiring more resources than required. Human resource expansions require time and effort to interview and on-board new employees, result in a faster burn rate, and run the risk of not innovating through existing processes. Therefore, try to keep the team small and focused, and solve operational bottlenecks with innovative processes and technologies, instead of adding manpower.

Keep a laser focus on your mission.

Airbnb offers a connection between people looking for a lower-priced alternative to hotels with home owners. That is all Airbnb does, and it does it very well.

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This kind of laser-like focus means that the top management team commits to a mission, and focuses on achieving that mission. Larger corporations usually have two or more business lines that bring them similar proportions of revenue. Therefore, larger corporations run the risk of scattering managerial attention among different strategic challenges.

Embrace risks and failures.

Conclusion