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8 Reasons Why Small Businesses are Effective

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by Startacus Admin

You might not know this, but small businesses – an enterprise with fewer than 250 employees – actually account for 99.3% of all private sector businesses in the UK. 

When you think of a small business, you might think of a sole trader who’s struggling to make ends meet, but that’s far from true. Some entrepreneurs like Sir Richard Branson and Bill Gates worked hard to turn their businesses into world-renowned empires, but that doesn’t mean your business needs to do the same. Many business owners prefer to stay small, and rightfully so. If you’re undecided about the direction your business should be going, here are some tangible benefits and reasons why small business benefitsstaying as a small business could actually be the smarter strategic move.


Micro businesses have fewer managers, so the decision-making process is streamlined. They can react quickly to external factors that may influence their trading, compared to large companies that need to hold board meetings and seek approval from higher ranking members before taking action. Because there is minimal bureaucratic resistance, small businesses are in control when it comes to dealing with volatile situations.

They’re Run With Passion

Businesses that are managed by a fewer people, or by the founder themselves, tend to be driven by passion rather than profit. That passion is still pure and hasn't been diminished by crowded workplaces or affected by numerous competing viewpoints.  
Operates Independently

Entrepreneurs who are in charge of their business can experiment and take risks whenever they see opportunities. They do not answer to anyone but themselves. This independence also helps develop leadership skills since entrepreneurs learn to accept consequences and adjust to situations.

Helps the Local Economy

Unlike multinationals, small businesses mostly reinvest their revenue into the local community. They hire locals, purchase equipment and supplies from other local businesses, and invest in community assets like real estate and promising entrepreneurs.

Less Stressful

Don't be mistaken, running a business is still hard work and you may even fail in your first few tries. When compared with running a large conglomerate, however, a small business is more fun and less exhausting. Remember, you’re working for yourselfsmall business benefitand you can witness first-hand the successes of your business.

Customer Focus is Key

Although large companies employ thousands of customer service staff, nothing quite beats the truly personalized service that small businesses offer. They can truly focus on their customers by building long-lasting relationships with them, and it shows – 80% of British people said they felt happy or content when they shop with a small company. This is because running a business at a micro scale puts you in touch with your customers on a daily basis, rather than only seeing them as numbers on a monthly report.

Encourages Innovation

Because small businesses have greater competition regardless of niche, it encourages a small business owner and their team to collaborate on new product or service ideas and become more innovative to avoid getting trampled over by competition.

Lower Costs

It’s obvious, but the bigger your business, the more costs you have. Business expenses are increasing year-on-year too, and a small business may struggle to meet these costs if they upscale too quickly. By keeping your business small, you’re also keeping your overheads (such as rent, staff, energy, and equipment) down too.

If you’re a small business owner, there’s no rule that says you need to upscale. Remember, running your own business isn’t just about making money – it’s also about enjoying what you do for a living and making the most of it. If you’re happy with your finances and enjoy running your business, then keep it that way!  

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Published on: 9th September 2015

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