Startups

6 Advantages Startups Have Over Established Businesses

When you first start a business, it can be nerve-racking. You’ll have to face many difficulties and challenges because you’re starting the whole procedure from scratch, whereas established businesses never have to worry about it. In a startup, you will deal with problems like limited resources, funds, lesser experience, and nonexistent reputation. Still, on the other side, you also get endless opportunities to grow and target the bull’s eye (target customers) by offering the latest and problem-solving products and services.

When you look at it in this way, it seems impossible that a startup could ever compete with a more prominent firm unless you have a good market reputation, problem-solving products, and services. No one on this planet will go towards your brand until you have these. Chances are, you will struggle within your small space. Your limitations at your startup will push you back and put you at a disadvantage against the bigger and multinational companies in your space.

Don’t be sad; that’s only one side of the story. The complete truth is that startups hold several outstanding advantages over biggies. In this article, we will highlight the six advantages of startups against big companies, and this will also give a reason to start your own startup.

Here are the six big strengths of startups over big companies. 

1. Agility.

2. Easier to Take Risks.

3. Less Bureaucracy.

4. Competitive Pricing.

5. Understanding of the Local Market.

6. Team Coordination.

 Let’s Begin:

1. Agility.

Startups are like young guns, it’s new, and you don’t know how long it can fire. You have a solid business plan and strategy, but nothing is confining you to those structures. In contrast, big companies are forced to keep their models the same to keep the directors, investors, and customer base happy. As a startup, you can do whatever you want.

This agility comes in handy when something disrupts the industry, such as new technological development or tough competition from your competitor. Big businesses must absorb the blow and respond slowly as their massive gears begin to turn. As a startup, you can turn on a dime and rebuild everything from the ground up, if necessary. In short, startups always have an edge when changing plans and strategies, which helps startups respond quickly to the situation.

 

2. Easier to Take Risks.

We all know if you want to grow, you have to take risks, and a startup is a perfect example. Let me tell you how? We know small businesses search for space to grow, and if they find an opportunity, they never step back. Starting a startup is all about risk; in short, it’s like a ‘Share Market’ you never know what will come tomorrow. But the good thing is that startups take risks, and some succeed, and some fail, which is ok because this is the nature of business. You have to step out of your comfort zone and perform. Overall, taking risks is a win-win situation for most startups because they don’t have anything to lose (it means they don’t have a hefty amount invested in their startup).

When it comes to large companies, it’s a bit difficult. They can test new products in smaller markets with minimal investment, observing variables and obstacles before deciding to try an idea on a larger scale.

In fact, sometimes large companies masquerade as smaller businesses when testing new ideas, such as when Starbucks opened an eco-friendly location in Seattle under the name 15th Avenue Coffee and Tea. The relative anonymity of a lesser-known brand is an advantage when trying a risky idea, in part because it lessens the possibility of negative publicity if the venture isn’t successful.

 

3. Less Bureaucracy.

In large companies, everything must be formalized. Every minute process is well-documented, and there are rules surrounding everything. Usually, when a decision is to be made, it must undergo rigorous evaluation by multiple people in the organization. In essence, the gears of bureaucracy slow everything to a crawl and formalize processes that never needed standardizing in the first place.

While you might have some solid rules and formal processes in place, your startup doesn’t have a fraction of the bureaucratic rules that your large competitors do. You can make decisions faster and work more efficiently because of it.

 

4. Competitive Pricing.

When it comes to pricing, it’s difficult to speak broadly. Each industry follows its own factors when it comes to pricing. For example, larger companies have a pricing advantage in food product development because they have access to more equipment, do larger runs, and save money on items per piece. However, for most industries, startups have an advantage when it comes to pricing.

 

5. Understanding of the Local Market.

Entrepreneurs often better understand changing local conditions, while enterprises often ignore disruptive change until competitors’ actions threaten them. Additionally, disruption instills fear in bureaucracies: Entrenched personnel might lose their jobs and fight to protect their cushy salaries and benefits.

Startups can be more nimble and responsive to product needs, whereas the supply chain of ‘Fortune 500’ companies is mostly set in stone due to immense volume requirements. For example, small business owners can quickly take advantage of the growing preference for plant-based food by offering dishes like pasta and plant-based pizza. In contrast, global food manufacturers have year contracts with behemoth suppliers, which reduces adaptability. So overall, startups have an edge in understanding the local market with a growing preference.

 

6. Team Coordination.

Some major organizations have casual atmospheres, but for the most part, any big business you walk into will be filled with walls, offices, and cubicles. The people from accounting don’t know the people from marketing, and the CEO probably doesn’t know anyone below him/her.

In a startup, every team member bonds with each other and works in a friendly environment. In small organizations, employees are also in touch with founders, and they also cooperate and help team members in their work to get the best out of them.

Coordination matters more than you might think. It means your workers will be more productive and more satisfied with their jobs, giving you more reliable work and a slower turnaround.

So after knowing the advantages of startups over the established business, we are sure you will follow these techniques in your startup. Always remember it doesn’t matter how big or small your business is; all that matters is how effectively you utilize the resources and implement strategies in your startup.

Final Thought

We have come down to the last stage of this article, so our final thought is, use these strengths (advantages) during your first few years of business operation. Your big competitors may have the drop on you when it comes to resources and influence, but your agility and underdog status will balance out the odds. If you can utilize strategies that emphasize these natural startup advantages, you’ll be in a far better position to succeed in the long term.


Related Article: Startup or Established Company? Which Is Best for You?

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