Small business finance is very different from publicly traded corporation finance. Furthermore, the difference is much more than just the size of operations. While small businesses have many differences with their larger publicly traded cousins, perhaps the most significant difference is in the objectives of the owners.
While all businesses, both big, small, publicly traded or private have profit making as an objective, a small business, and particularly an owner-operator small business, has a variety of other objectives that should be considered to be just as important as making money.
These alternative objectives may be to capitalize on a hobby or an interest; to make a difference in the world by offering a unique set of products or services; to allow for freedom or flexibility for the owner operator; or to provide a sense of personal accomplishment and achievement.
While a large publicly traded corporation may have advantages in terms of scope, scale, resources and access to capital, it is the unique objectives of the small business that give it a true sense of character. Never underestimate the power of the character of the business as reflected through the unique objectives as a truly powerful source of competitive advantage. David used his unique objectives against the far bigger Goliath, and we all know how that turned out.
Embrace the small business difference. The “why” will almost always create an answer to the “how” if you never lose sight of why your business exists.
Rick and Dan are the authors of Small Business Finance and Valuation, published by Business Expert Press. You can find it here
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