Managing a Small Business vs. Managing a Big Business

So what's the difference? Does the size of the business really determine how you manage? In the true sense of the word "management," the answer most managers would give is "NO." ....... BUT ......... there are major differences in being a manager in a small business versus being a manager in a large business.

My first job after graduating from college was for a large corporation. At the time (June 14, 1969), it was in the top 20 on the Fortune 500 list. During my 14 years there, I held management positions in marketing, manufacturing, IT, and materials. Since 1983, I have owned my own businesses. The largest employed about 100 people. Is there a difference? YOU BETCHA !!!!!

There are two major differences. The first is cash. In a large corporation, managers talk about profit and loss. When I worked for the large corporation I never even talked about cash, let alone saw a check or dollar bill. Money for paying our bills was "magically" available when we needed it. I am not sure anyone even knew where it came from. After all, money was received at some unknown location and was disbursed from some unknown location. We just sent requests for bills to be paid. And all employees got paid on time.

With a small business, CASH IS KING. You don't pay bills or meet the payroll with profit. You do it with CASH. Unlike the large corporation where you wait until the end of each month to learn what your profit is, you must know the cash position daily at the small business. Many small businesses have closed their doors with a P&L statement showing a profit but no cash in the bank. If you don't manage cash well, you will not survive.

The second major difference is that a manager in a large corporation is a specialist and a manager in a small business is a generalist. Small businesses can not afford specialists. Most managers must wear many hats and be KNOWLEDGEABLE in many areas.

Instead of hiring people (who need to be managed) to perform all required services, smart small businesses will outsource as much as possible in order to save money. Often payroll and accounting will be done on a contract basis. An HR firm may be consulted when special information is needed or recruiting companies may be used when hiring needs to be done.

Yes, there are other differences but in my experience, these are the two main ones. Yes, the "principles of management" may be the same but "managing" is different.

If you have had different experiences, I would like to hear from you. Please feel free to comment.