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Published:August 13th, 2008 09:48 EST
Big Companies vs. Small Companies

Big Companies vs. Small Companies

By Joel G. Block (Mentor/Columnist)

I have a lot of experience dealing with large companies. Always being an entrepreneur and making my way into a large corporate structure has provided me with a lot of insight about the way the game plays and about the way that the world works.

The truth is that big companies and little companies fundamentally do not get along. Big companies are worried about covering their back sides, while little companies are aggressive taking risks at every opportunity because they have relatively little to lose. Big companies are riddled with compliance paperwork and quality assurance matters that bog them down. Little companies fly by the seat of their pants " making executive decisions at every turn.

Although big companies love little companies for their innovation and for their ability to change course and bring new ideas to bear (this is a task which large companies can rarely if ever accomplish), the truth is that big companies have a difficult and almost impossible time of working with little companies. One reason for this is that little companies don`t have enough financial wherewithal " so if something should go wrong, the big company has little place to turn for their recourse.

Big companies also have a problem with the light staffing that tends to be part of the entrepreneurial mind set. Big companies want to bring tons of resources to bear " usually in excess of what`s necessary from the entrepreneur`s point of view and this inevitably makes life difficult for them to get along.

Large companies tend to get along better with companies of an equal or similar size. They tend to understand each other better, and they tend to sympathize with the problems that they have. But little companies when they work together with larger firms don`t often get the enormous catapult from the resources of the big company. Unfortunately, when big companies work together, they typically tend to get bogged down in each other`s bureaucracy.

I challenge big and little companies to work together more aggressively. I`m in the middle of two transactions right now where our little company is having the hard time of working with a giant company and we`ve had to back down and work with a more moderately sized company ultimately to get the job done.

The sad part is that the big company lost what will be an enormous account in the future. In the second situation, there`s just safety in numbers for the large company to go with the large supplier rather than selecting our small firm. Even though our product is demonstrably better and even though our ability to produce in the short run is unequaled, the big company feels that their counterpart would probably be a better choice just in case anything goes wrong and they have to look for some recourse.

So as you`re busy building your company or building your career, make sure that you think carefully about what the fit is between a big company and a small company like yours. If it turns out that it`s a good fit because you`re bringing innovation or you`re bringing something to the table that can`t come from anywhere else, it`s likely to work. And if you`re simply going to be a provider of services, you`re better off to look in a place where the relationship will unfold exactly the way you want it to.

About Joel G. Block

Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker and advisor. To bring Joel into your company, please visit www.joelblock.com or www.growth-logic.com.