You Need Customers to Succeed in Small Business | Hacker News Reader

You Need Customers to Succeed in Small Business

goodenough.us

43 pointsbjhess51 comments

One of the best pieces of business advice I ever got was that a small business has advantages that a large business can only dream of. Ignoring those advantages and instead trying to act like a large business acts means that you're not playing to your strength and are instead playing a game that the large business is likely to crush you at.

If you're a small business, lean into being that and you'll have a much larger chance of success. Don't try to pretend that you're something you're not.

That was a long-winded way of not saying anything of substance.

Tautologically all business (big versus big included) are fundamentally different, and hence have different strengths and weaknesses.

Hence, it is not a priori true that the category of small businesses has unique advantage (as a category) over big businesses. You of course have done nothing to argue that they do.

That was a long-winded way of saying “I didn’t read your comment very closely at all.”

This exchange is headed for peak HN territory

Have to disagree there, champ. This comment is now peak HN, as we've entirely derailed from the original topic but are still arguing about something with polite but arrogant undertones.

Also here's a link[1] to an article tangentially related to what I'm saying. I haven't read or, nor will you. It doesn't quite confirm what I'm saying, and it's possibly behind a paywall.

1. https://news.ycombinator.com/item?id=37068695

"... and I'm in a mood to be unnecessarily argumentative."

It's a good point of comparison and common trap businesses make. They are pointing out that exclusively acting like big corp as a small business could lead to missed opportunities.

You basically dismissed someone for making a fair comparison because they didn't give you a concrete example like: A local coffee shop remembering customer names vs a large chain with a impersonal script.

Giving an example in this way is not a requirement, you can use your brain as well. Unless you just didn't read what they typed thoroughly enough and mistook their point.

This is true, but really the original comment was pretty abstract. It could literally be boiled down to "Small businesses and big businesses are different. Play to your strengths".

It might seem vague or rudimentary but it is a common occurrence in business. We can take the conversation deeper now if we'd like, If you don't feel the need to expand on the idea yourself or feel the poster didn't set you up to do so, that is understandable.

I think it's interesting to talk about how "act your size" can also be wrong. Sometimes fake-it-til-you-make-it is the goal. Contextually you should hold both ideas to be true and apply them appropriately.

Maybe you just thought the original post is a vague platitude and you don't want to give them the satisfaction but maybe we can share some of what we've experienced.

One thing I always think about is hiring generalists vs struggling to maintain departments you can't sustain. I understand businesses think this way, so it influences how I think about applying to roles. I'm currently in a generalist role and when searching I always look for smaller businesses because I find my impact is higher, and repetitive work is my greatest fear.

> it's interesting to talk about how "act your size" can also be wrong. Sometimes fake-it-til-you-make-it is the goal.

And sometimes they can both be useful at the same time. A while back I was contacted by a Fortune 500 company to build them some custom hardware. I'm the proverbial "one guy in a basement" so I could respond quickly to change requests without having to go through multiple meetings and their engineers appreciated that.

OTOH, as we got deeper into it, when I realized that they were planning to do most transactions by Purchase Order, I was really concerned about scaring them off by telling them I was really just one person, so I very quickly spun up an LLC in an attempt to look larger, at least to their Purchasing Dept. At the time I didn't realize that you can get an EIN (Employer Identification Number) while being a Sole Proprietorship, but creating the LLC just took a few minutes on the state Attorney General's site anyway.

> I think it's interesting to talk about how "act your size" can also be wrong. Sometimes fake-it-til-you-make-it is the goal.

This is a really interesting point, I think.

In my opinion, it depends on what your larger goal is. If your goal is to eventually become a big business, that changes your approach and "fake it till you make it" gains some validity. In a sense, those sorts of businesses are less "small businesses" and more "large businesses in their infancy".

You’ve also not added anything to the conversation. Instead of a snarky response, you could have asked for some examples of how small businesses have used their small size as an advantage. This may have led to insightful and constructive responses.

One example:

- A small business can live very well on delivering a product that makes a few hundred thousand dollar profit. Large companies can't be bothered with such small numbers so they don't even try.

When you think about those advantages, which ones seem most generalized to all small businesses?

(Of course many advantages will be unique to a particular industry or business)

what are those advantages?

Not GP, but flexibility and adaptibility is huge, as are personal relationships.

Yes, exactly those.

Plus the ability to do extreme pivots on a dime. Also, you tend to get treated a little better generally as you aren't an impersonal corporation. You're a businessperson, with the emphasis on "person".

That is a challenging balancing act, although worth it to work on mastering.

Technology is a particularly difficult place to balance those things.

When we opened our small business we took the marketing approach that (not the exact pitch) we “bring the best of enterprise” with the “agility” of not being an enterprise.

We don’t market like that anymore because it’s not a good fit for small business customers, but we still have a focus on that idea internally.

Balancing that with the realities of a small business are hard. For example, we have internally managed 3-2-1 backups of almost all customer data, replicated geographically, and persisted with credentials that can’t also mutate backup data. That is somewhat time consuming to manage on the front end.

I’ve written on HN before about how we suffered with QuickBooks and eventually moved to an ERP. Most businesses our size would scoff at that, but some things are worth the expense to integrate various processes into a single pipeline.

Part of the problem for SMBs is that you can’t scale your humans like you can scale your servers. So for every hour I spent connecting the dots, sending DocuSigns, and fighting with QB was an hour I couldn’t spend on product/service/customer. Sometimes you can buy your way out of that. Sometimes you can engineer your way out of that. Figuring out which is which is one of the hardest parts.

> we “bring the best of enterprise” with the “agility” of not being an enterprise.

If I read "best of enterprise", I'd wonder what was meant by that.

Broadly speaking, one of the big differences between large and small companies is what they're good at. The old saying that "small companies make it possible, large companies make it inexpensive" holds as true as always.

For us the meaning was market specific. We provide application hosting and consulting. Many of our customers came to us from other firms that clearly were run by people who did not understand the basics that an enterprise would expect. An example of this would be backups.

We had several customers jump to us from another local firm. When we got in, we noted that the prior firm had “implemented backups”. This was a script that just made a zip file of their data and stored it right alongside the running application. Sometimes even in a web/network accessible directory. But hey, most of our customers didn’t have backups before they came to us at all.

We’re also talking no MFA, guessable passwords, customer domain names owned by accounts associated with email addresses that no longer existed, etc.

So, stuff like that. I guess to sum it up you could say “we pay attention like an enterprise should,” and that many SMBs in the space don’t, for clients that don’t know what to pay attention to at all.

> The old saying that "small companies make it possible, large companies make it inexpensive" holds as true as always.

I hadn’t heard that. Love it. We don’t come cheap, but our clients don’t have to manage S3 buckets, and we don’t have to run geographically redundant SANs.

This article makes some good points but it is really fudging some facts about the American economy:

> Small businesses don’t get the spotlight, but they are the engine of the economy. To wit, in the United States: 99.9% of businesses are small, nearly half the private workforce is employed by small businesses, they generate over 43% of the country’s GDP

This is lying with statistics.

- "Number of businesses" and "percentage of all businesses" is a silly metric, because there are zillions of one-person LLCs for everything from hosting a blog to renting out a spare room in your house, which are not "businesses" in any real sense.

- Every franchise location (i.e. every fast food restaurant, gas station, etc.) in America counts as a separate "small business" and its employees are "employed by small business", even though franchisees have little independence or control, and for all practical purposes are just extensions of the megacorp they are franchising from. Franchising is mostly a way for megacorps to offload the risk of setting up new locations onto the taxpayer, via letting franchisees qualify for government-subsidized "small business" loans.

Do not uncritically repeat facts from sources like the "U.S. Small Business Administration", which for all intents and purposes is a lobbying group for U.S. Large Businesses.

Agree

Small businesses don’t get the spotlight, but they are the engine of the economy. To wit, in the United States: 99.9% of businesses are small, nearly half the private workforce is employed by small businesses, they generate over 43% of the country’s GDP

Hardly. Look at the concentration of the nasdaq 100--it's all huge companies. Same for the DJIA. Big companies play an increasingly important role.

> Look at the concentration of the nasdaq 100--it's all huge companies. Same for the DJIA.

The nasdaq 100 is the largest companies that exist. That's why that index exists. Ditto for S&P-500.

The DJIA is also exclusively large capital businesses.

Pretty much any index out there is going to be primarily composed of the largest players in the market, that's just how these things work.

But relative to the other parts of the economy and GDP. In 1980s the biggest of companies were not so dominant relative to today.

I get that, but your statement was a little off to me. "Look at this index which tracks large companies, it's filled with large companies!" is effectively what you said.

> Big companies play an increasingly important role.

I’m sorry that line sticks out to me. Are you implying that big businesses already don’t dominate the economy?

I don't know how you arrive at that implication. The word dominant is pretty obvious what it means.

Of course the nasdaq 100; the 100 largest (qualifying) companies on nasdaq is all huge companies. If there's hundreds of thousands of companies, and you pick 100 of the largest, they'll be huge. Very few small businesses will be listed on Nasdaq at all.

The stat says 43% of gdp is from small business and 50% of non-government workers, too. That means they're important. Of course, the large businesses are the other half of the economy with just 0.1% of the number of businesses.

I think the point is, if you ignore small or big business, you're ignoring half the economy.

> not "businesses" in any real sense.

They provide a service and receive revenue in exchange. How else would you define a "real business?"

Before dismissing small businesses as just a tiny part of the economy, try this: count how many times you interact with them in a single day. They might make up a small percentage of GDP, but they are a huge part of our everyday lives - and probably critical part.

Here’s my quick list from just today:

- Dropped my kid off at daycare — small business

- Picked up a burrito from Express Burrito on Taraval — small business

- Ordered coffee — small business

- Called a handyman to fix the lights — small business

- Called my dentist — small business

- Wrote a rent check to my landlord — small business

And yeah, I’ll probably spend a good chunk of money at Costco this weekend… but that doesn’t change how deeply woven small businesses are into my daily life.

The inability to contact a human who can make meaningful decisions is one of the reasons why I quit using companies like Google and Amazon. They’re too big to care, but small companies aren’t.

EDIT: I have hooves for hands and accidentally submitted before finishing my thought.

> You Need Customers to Succeed in Small Business

I wonder if there is a way to automate them with AI.

I mean, the biggest consumer of AI writing is probably AI scrapers…

scariest stat was .1% of companies generate >60% of US GDP? seems false but?

That doesn't mean anything. You can accomplish that by having a very large denominator, which is possible if creating a business is trivially easy.

In the US, it's generally very easy to create a "business," which doesn't even need to be a separate legal entity.

I'd guess that a substantial portion of the companies in the denominator have no employees and are just entities for owning a piece of property, or for someone's occasional graphic design work, or whatever. They are legally businesses, but not businesses in the way that we commonly think, such as a local auto shop or retail store.

> You can accomplish that by having a very large denominator, which is possible if creating a business is trivially easy.

This is correct, but misleading. In the US, something like > 60% of GDP come from just the US companies in the Fortune 500.

Reverse also true, many of the big businesses have hundreds of legal entities but only are counted as a single big business

I once worked for a F100 sized healthcare firm that had a separate LLC for each physician it 'employed'. Quotes because the LLC invoiced the parent and then paid the physician, so they were technically an employee of the LLC, but it shielded the company from certain risks and had some tax reasoning and various other mumbo-jumbos

Your forgot government, which is about one third in the US

Most US companies are actually tiny, with pretty low revenues. Per Copilot, 82% of businesses have no employees and generate an average annual revenue of just $44,000.

For every US Steel, there's a thousand potters throwing vases in their backyard shed.

Copilot is not a source. Find where it got that number or don't post. Seriously. It's actively harmful to cite a language model. Would you cite Autocorrect?

It's a tool like any other. Get used to it.

It's a tool, not a source of empirically valid data. No one's going to 'get used' to LLMs being cited as sources of factual information any more than they'd complacently accept someone's Monte Carlo simulation or a hypothetical thought experiment being cited for the same purpose.

Additionally, outputs from LLMs can vary by user or prompt, making the data unreliable without clear sourcing or context.

If you said you Google’d it, we’d still ask for a source.

The thing I find amusing is that if I hadn't mentioned Copilot, no one would have batted an eyelash!

If you claimed that your source was The Onion, you’d get similar responses. You can make a claim, with no source, and expect the traditional answers. When your source is a “known to produce crap” source, what would you expect to hear?

Quick google gives ballpark figure of 30 million businesses. Companies are something like 17-19 million, 0.1% would be simple divide by 1000.

So we get 30 000 or 17 000. Which is entire SnP 500. And probably even every publicly traded company.

You Need Customers to Succeed in Small Business

Unless you're AI, social network, or one of many other examples of start-ups having a large valuation despite not having obvious customers.

I guess we would define these companies differently right?

They're definitely classified as small businesses but they're on a different track. That being said I think both "tracks" could learn from each other despite having different problems. They can even share goals.

You might not need customers initially if you raise 200 Million for your AI startup, but eventually you will, unless you maintain escape velocity or sell. I think it's more likely that chasing word-of-mouth marketing is an excellent goal for all companies and thinking you're above that will increase your risk.

startups by definition aren't really small businesses. they might not have a lot of employees, but they don't stay that way. a small business is successful and sustainable at that size and is structured to be so. a startup either becomes a large business or ceases to exist entirely.

I think they would agree with you and were mostly drawing attention to this distinction, be it cheekily.

You're definitely right about the difference and thank you for mentioning it.

I do think that the point of the article can still be applied to both types of business. The point I take from the article is more about not missing out on your identity or thinking your britches are too big, which could be applied to startups as well.

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