Big vs Small
A question for all you small business owners out there – how many of you have previously worked for a very large corporation? And how many of you would go back to work at that big business again and no longer be your own boss?
Companies of 1000 or more employees employ 14 percent of the total U.S. workforce according to the U.S. Bureau of Labor Statistics.
In contrast, U.S. businesses with under 50 employees employ just over 40 percent of the workforce – and they make up about 90 percent of all U.S. businesses. In addition, small businesses contributed over 50 percent of total net job creation from 2013 to 2023 (the most recent data available).
Small businesses are, in my opinion – and based on those numbers, the backbone of America. But big business seems to have some unfair advantages, including the ability to minimize the impact of tariffs, obtain better pricing from wholesalers and distributors, and access funding and traditional business loans more easily.
Let’s reflect today on some of the benefits and disadvantages that come along with working for a very large employer. Feel free to share your own stories and experiences in the chat as well, if anything you read sparks a memory!
Shout Out to Big Business
Here’s my starting list of the pros of working for a big company:
- I had an annual performance evaluation to get feedback on how I was doing – and often at least a cost-of-living raise. This ritual is not nearly as common in smaller businesses.
- There was a clear path to promotion – I knew exactly where I stood on the ladder (associate, manager, director, AVP, VP, SVP, etc.) and could map out a path for my whole career if I wanted.
- The Human Resources department offered leadership development and other training programs to help underlings like me improve my skills and increase my chances of promotion.
- The company clearly stated its mission, vision, values and annual goals, and then directly connected my own personal goals to the corporate goals.
- This also meant that the company had a team of executives whose main goal was to set and drive strategy, with other executives in charge of sales, human resources, finances, and so forth.
- And let’s not forget about the benefits! Health insurance, dental and vision (!!), 401k, paid vacation, holidays, on-site daycare and gym, etc. etc.
Ah, the good old days. Show up, get the work done, go home.
Why I left Big Business
But not so fast. Surely, there was a reason that you decided to leave that cushy corporate job to start your own business! Perhaps you were subject to a massive layoff that had you distrusting big business job security (or Big Government job security). Or maybe you had visions for a path that wasn’t available to you at that corporate job. I am sure we all have some stories about the crazy corporate culture – and aspirations to avoid that as we grow our own businesses.
Here are just a few examples of frustrations related to working for “the man” that I do NOT miss:
- Being forced to attend a half-day seminar on how to fill out a travel expense form
- Witnessing a change in corporate strategy every 6 months (centralize, de-centralize, centralize, de-centralize)
- Giant and confusing org charts with so many layers and titles that information does not flow well up or down. Even more confusing after a layoff when you don’t know who on the org chart is still with the company
- Some “tweaking” of annual goals to make sure executives get their bonuses
- This was actually a corporate strategy shared by someone I know who worked for this large company: “Make more money; spend less money” (brilliant!)
- Living with power hungry control-freaks: One year into my first job, my director told me: “If I told you what I learned at the departmental meeting then you would know as much as I do, and I can’t have that because you work for me.”
- Frustration at my lack of access to the Executive Wing with private dining area and custom China because my security fob won’t let me into that wing of the floor
What are some of your favorite corporate stories? I’m sure we all have a few. So now that you’ve been reminded of why you no longer want to go back to the corporate world, let’s reflect a moment on what we can learn from the good parts of working at a big company. Here are a few questions to get us started. I hope you can think of a few to add along to these.
Compensation
Are you paying yourself what you’re worth?
Large corporations spend lots of time and money making sure that every employee is put into a particular pay grade based on their education and experience. Then they keep track of salaries for those job titles in their industry to make sure they remain competitive. Sure, as a business owner you have the opportunity to do well when the company does, through bonuses or owner draws. But what about your annual salary? Have you ever thought about what you would get paid for your current job if you were the head of a division of a larger company? What’s the right salary for you right now?
Do you promote yourself or any key employees – with a raise and new responsibilities?
While you may carefully track the going rate for your hourly employees to be sure that you don’t lose them to local competition, consider also your top employees – the salaried employees who focus on sales, engineering, operations management and other aspects of running your business. Do they have opportunities to take on new responsibilities? Does that come with a raise for them? What about for you, as your company grows, and your list of responsibilities does as well?
How do you handle promotions vs bonuses?
This has been a recurring topic at the Business Owner Roundtable group I run. How can you best recognize top performers? You know your employees talk and they have a good sense of the “pecking order” at your place of work. How can you customize financial compensation without frustrating your team? Some ideas from other business owners include providing revenue and profitability transparency to your whole team, using pay raises to reward consistent excellent performance, tying goals to bonus amounts for motivation (defined bonuses), or only offering bonuses based on business profitability (based on the owner’s discretion).
Succession Planning
Do you have a clear path forward for key employees?
What does the “ladder” look like at your business? You may not have a team of HR professionals setting job scales and salary ranges, but you might find that some of your employees are not satisfied with doing the same job for 10 years. Do you promote employees to “senior” positions based on experience? Is there room to move into other roles? How do you train employees to help them move into new roles or to take on new responsibilities? How do you recognize and reward employees – financially or otherwise?
Do you have a clear path forward for your business and yourself?
Consider this the “hit by a bus” question. What would happen to your business if you were hit by a bus tomorrow? Would your employees know how to keep it going? Do you have some sort of succession planin place? What can you start doing now to hand over some responsibility to others, and make sure that not too much of the company knowledge is in your head – or your soon-to-be retired employee’s head? Consider all the different tasks you handle every day – and those that your employees cover as well. What would happen if you – or a key employee -was out of the office and unreachable for four weeks? Start with those issues – payroll, following sales leads, accounts payable & receivable, etc.
Where is your “big team of executives” to aid in the strategic decision making?
How do you set your company strategy? Who is involved in the process? Do you have a retreat day – or several days – to step away from operations and do some serious strategic planning? Do you have a board of advisors to support the process? Or a group of peers? How far out do you plan? 3 months? One year? Three years? Consider the role of the corporate executives who plan for the future success of the Fortune 500 companies. Where can you find a group of professionals to help you do the same? Your corporate org chart might look like the one below, but I encourage you to seek out a group of peers, a community to hold you accountable and help with goal setting and problem solving. It can be lonely at the top so it’s nice to set aside time to get strategic – and emotional – support from others in the same boat.
How do you navigate the challenges of running your own business – and what lessons do you think you can learn from “Big Business”? And which ones are worth ignoring?