Case Study of a Successful Little Business

I recently had the privilege to review the 10 year performance of a successful little business and want to touch on some of the general business principles that allowed this success. Confidentiality prohibits me from including specific details but you probably don’t care about those anyway; you want to know what you can take away for yourself. The company operates as a small business and has the volume of a good size organization with annual revenues over 10 million.
What makes this case study interesting is that the subject company has seen roughly a 20% annual growth rate for the past 8 years. In case you didn’t realize it a 20% annual growth is HUGE and to do that for 8 consecutive years is even more amazing. Another twist to the story is that this company competes in an industry consisting of large conglomerates.

So, how did they do it? Well, the answer isn’t a short one; there are many factors that played into their initial and continued success. The best explanation I can find for this dynamic is the “Fly Wheel” effect found in Jim Collins book Good to Great: Why Some Companies Make the Leap… and Others Don’t. Basically there was no one single decisive point that shot the company into the world of success. Rather, it was a continued effort (pushes of the wheel) that collectively allowed the company to grow. Interestingly enough each “push” is in itself unique and wasn’t required until the “push” before it was in place. This means that one of the biggest challenges of growth is the dynamic nature of changing needs.

Dynamic Needs of Growth  

As a business grows its needs change and efforts must be shifted to accommodate the new demands. This fundamental truth is in part the reason few people “Get rich quick.” Healthy sustainable growth happens at an organic rate and through iterative efforts. I believe this dynamic is also much of the reason small businesses have such a terrific failure rate.

The needs that exist when you start a business will not be the needs required to grow your business. Additionally the needs required to grow your business initially will not be the needs required to grow your business down the road. These needs will obviously be business and industry specific but what you need to understand is that your business is a changing entity that requires more than a single fixed solution to survive. Think of it like a plant that needs water to sprout, then apple juice for the next three weeks, then beer after that. If you simply continue to give it water it sprouts and flounders for a bit then dies. Wait, sprout and flounder for a bit before it dies? That sounds a lot like most small businesses. Hmmm.

Back to the Case Study  

An added advantage to our case study that I don’t want to leave out is that its parent company has the finances to pay for changes that need to be made. This may not seem like much but it is a big deal when a company has to find the money to make the changes needed to grow. If you can’t already foot the bill for your planned growth it means you will need to assume additional risk beyond that inherent to the change you want to make. The lesion here is that good old saying “Cash is King!” As a small business you simply cannot afford to be cash poor if you want to grow. In some respects this is where the art of business comes in. Depending on your circumstance the question of how to manage your business successfully will change.  
The subject company leveraged its parent companies willingness to foot the bill on many occasions. Resources were acquired and workers were put in place each time a legitimate need existed to do so.

Market Positioning

I mentioned earlier that the subject company was competing in an industry with many large players, how is this possible? It was made possible by sticking to a market position that played into the strengths of small business. As a smaller company it could provide a higher quality product and service to its customer base than its larger competitors. It could also offer these products and services in a fraction of time. The larger organizations have bigger pockets, a larger product scope, perhaps even greater human capital, but none of those matters when a customer needs a high quality solution with a fast turnaround. What would take the large company 2 months the subject company can do in 3 weeks. When problems arise the large organizations have layers of bureaucracy between the customer and the person with the solution while subject company has a non-automated phone system and customers are patched directly through to the parties they care to talk to.

The subject company has also decided not to compete on cost. Meaning, they will pass on jobs if they don’t feel they are appropriately compensated. This is hard for most small businesses because business is not always coming in at a constant rate. Consequently the subject company receives more money for the time and resources it puts into its work. This is justifiable because of the quality and speed with which the customer is served.  

 K.I.S.S and Get ‘er Done

As an engineer I must admit that I have had trouble with these principles but have learned to greatly appreciate them. At the small business level the K.I.S.S (Keep It Simple Stupid) and Get ‘er done attitudes can go a long way with the customer base. Over complicating a solution or following a bloated process can actually get in the way of solving the customers true problem. Remember, the customer doesn’t want your product or service, they want what your product or service will do for them. In other words if you can address their problem not the means to the end you could be offering more value to the customer. The subject company recognized this and removed all layers that didn’t speak to the customer’s core problem. Upper management is kept thin with no middle managers, everyone wears many hats, and open communication is maintained among the staff. The human capital element is highly leveraged making each employee more of a craftsman if you will rather than a number.

Do You See a Bright Future?

After witnessing all of these realities in such a successful little business I am certain they have a bright future ahead of them. My hope with this assessment is that you will find ways to apply these principles and consequently see similar success. If you are having luck let us know, and if you have questions feel free to leave a comment.

For more information on starting and running a successful small business using the skills, talent, and finances you already have check out; Zero Risk Startup

TJ

About TJ

Engineer and Entrepreneur