Five things start-ups can learn from large companies

Five things start-ups can learn from large companies

Adopt the practices of successful corporations and give your SME the best chance of success.

Whether you’re launching your first start-up or setting up your latest venture as a battle-hardened serial entrepreneur, there’s no doubt that the early stages of running a business are hard work.

Fortunately, there is plenty of information out there to help you navigate the first months and years. One source of information that’s often overlooked is the successful business techniques of large corporations. Here are five key lessons.

Focus on productivity

One advantage large companies often have over small businesses is higher levels of productivity. However, by investing in technology, hiring skilled staff or reducing waste, it’s possible to improve output per worker, even as a small business.

“Smaller firms tend to be less productive than larger firms,” says James Hayton, Professor of Innovation and Entrepreneurship at Warwick Business School. “In the early stages of life as a business, you need to increase productivity to be successful.”

There is a balance to be struck, though. A growing business necessarily requires more formal processes to ensure targets are identified and met. Yet increasing bureaucracy can dampen some of the start-up spirit that made your business successful in the first place.

James adds: “You need the bureaucracy to execute – people have to know what their role is and what they must do to succeed – but you also need to find time to be entrepreneurial and explore new opportunities.”

Get serious about planning

“Gut feel can get you only so far,” says Simon Viney, owner of Guitar FX Direct, an online retailer of globally sourced boutique effects pedals. “Large businesses often manage their potential programmes and projects as a portfolio, carefully evaluating and ranking how each project will contribute to their overall goals.”

Simon, an accountant with a background in management consultancy and programme management who has worked with both FTSE 100 and SME businesses across many sectors, adds that these principles can be adopted by small companies. “This approach is easily transferrable to a small business and is helpful in balancing the ‘urgent’ with the ‘important’ tasks and setting them out in a clear plan,” he says.

Having a clear business plan can help you focus on growth, so it’s worth updating yours if you haven’t done so for some time, especially during the pandemic.

“If you’ve been putting out fires for much of the past two years and focused mostly on survival, then it’s reasonable that you haven’t dedicated much time to refreshing your business plan,” says David Ciccarelli, CEO of Voices, an online marketplace for hiring voice-over actors, audio producers, musicians or translators.

“Having this document updated means you’ll be ready should you require more capital for your operations or if an expansion opportunity presents itself. Being proactive by updating the document means that you’ll be able to move quickly with the bank or other financiers.”

Look at leadership

When you start a business, it can feel like you’re doing everything yourself. Yet as the company grows, it’s important to focus on how you lead the organisation by setting an example from the top – just as chief executives at the best big companies do.

“As you move beyond the start-up phase, that’s when you have to begin adopting more formalised business practices,” says James. “The business leaders who have strong ability in influencing, motivating and directing behaviour, as well as the entrepreneurship skills that allowed them to identify and pursue opportunities, are the ones who are more successful in their financial activity.”

Automate to succeed

“Larger companies tend to have a clear focus on technology investment and how it can add value to the business, the customer experience and help manage costs,” says Simon. “Early investment in automation and integration before a growth spike pays dividends.”

“Small companies can rely on manual, more people-intensive ways of working to save the cost of investing in IT,” he adds. “However, in a high-growth business, manual systems can quickly become costly, don’t scale well and are more error prone as the business expands.”

Look after your people

Hiring the right staff and keeping them happy can be a critical part of your success. Big companies have entire human-resources departments that identify and attract the best talent. They then monitor staff morale and maintain lines of communication with them.

This isn’t a luxury that start-ups can afford, but there are certain practices you can learn from big business, such as communicating regularly with employees, giving them a financial stake in the company and taking more care when selecting people to become part of the organisation.

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