By Danielle Sabrina
Growth is at the forefront of any business owner's mind. And this emphasis isn't misplaced: after all, businesses have to grow to survive. That's why companies often set goals based on growth to reach some benchmark in terms of size, scope, or profit.
In some cases, however, it can be more rewarding (not to mention lucrative) to keep operations small, focusing on mastering your niche rather than being a jack of all trades.
Steve McLaughlin, for instance a former employee of investment banking goliath Goldman Sachs who started his own small investment bank 14 years ago isn't interested in becoming a giant international behemoth. Here's why McLaughlin says that small business owners like him can benefit from going deep rather than broad.
1. Word of mouth travels faster in a small niche.
When McLaughlin started his firm FT Partners in 2002, the rapidly growing financial technology industry was in its infancy. Seeing potential in the market, McLaughlin narrowed his niche to serve FinTech clients only a decision he views as integral to his company's success.
"If you do something really well in a small space, it doesn't take much for people to hear about it," McLaughlin recalls. Word of mouth travels fast in a small enough niche and as a result, business owners who carefully carve out their niche won't have to spend vast amounts of money on large-scale marketing efforts.
2. Decisions can be made more efficiently.
As companies grow, so too grows the bureaucratic process surrounding their decision-making. When making important decisions, large companies must go through multiple layers, consulting with a variety of separate departments before arriving at a conclusion.
Small companies, however, can make responsible decisions quickly without jumping through so many bureaucratic hoops. This allows you to keep up with changes in your industry even ones that, like FinTech, are evolving rapidly.
3. You can form more meaningful relationships with your clients.
When you're working with dozens or hundreds (or even thousands) of clients, people can easily become numbers, and relationship with your clients can feel transactional rather than personal. By staying small, however, business owners can more easily foster the kind of meaningful, personal relationships that clients seek.
"This way, you can foster long-term partnerships based on honesty and transparency," McLaughlin explains. "For instance, I sometimes tell clients not to take a deal, even if it's lucrative in the short run, because I know it will benefit them in the long run." Doing so has earned him his clients' trust and, in turn, their business.
McLaughlin has seen the positive effect of these kind of deep personal relationships, both on his clients and his colleagues. By really understanding their clients' needs, employees understand that they can and do make a big difference in their clients' lives which creates more meaningful, powerful results for the company and its clients alike.
4. You can give every client your 100%.
Throughout its 14-plus years of business, FT Partners has had ample opportunity to expand. McLaughlin, however, has chosen not to: "Even though we could be taking a larger market share, we'd rather focus on the potency of what we do."
Indeed, staying small allows businesses increase the quality and depth of their capabilities, instead of scrambling to expand their client bases. This creates a more rewarding experience for business owners and employees, allowing small businesses to truly give their best to all of their clients. And the power of this is clear: FT Partners earned second place in Business Insider's list of top investment bankers in the Bay Area, and McLaughlin was invited to moderate a panel at this year's prestigious Money 20/20 event.
Ultimately, then, growth isn't necessarily the be-all and end-all of running a business. As small business owners like McLaughlin show, the philosophy of "depth over breadth" is especially applicable to small businesses. Mastering one niche instead of taking on an entire industry can prove to be a more meaningful endeavor for business owners, their employees, and their clients.