The size of a business is typically defined by its revenue, management and decision making structure, number of employees, level of output and number of customers served. However, the size of a business can also be deduced from its approach to financing and marketing.
Financing: Typically businesses are financed through loans (personal or business), venture capital, grants, personal savings and angel investors. The key difference between the options available to large and small businesses, however, is variety. Larger businesses tend to have access to a broader variety of financing options as they:
- Are often perceived to be less risky, since they've usually been in business longer and have developed reputations, and also have more assets that can be used as collateral. As a result the cost of borrowing (i.e. interest rates) for larger businesses tends to be be lower than it is for smaller businesses.
- Generally are better able to show that their idea is scalable and will generate large returns
Marketing: As with financing, both small and medium sized businesses tend to follow the same basic principles, the difference however lies in implementation. Differences in budget and approach for example are what differentiates small business marketing from that of larger businesses.
The figure above illustrates the business marketing cycle (How Small Business Marketing Differs from Big Business Marketing) for both small and large businesses.
What are some of the differences you've noticed between large and small businesses in your industry?
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