HAVING A SMALL BUSINESS CAN BE YOUR GREATEST COMPETITIVE ADVANTAGE

HAVING-A-SMALL-BUSINESS-CAN-BE-YOUR-GREATEST-COMPETITIVE-ADVANTAGE

Before I founded Auction Alliance I had an auction business called Levco which I began in Bellville in 1992. I was 21 at its inception and as the only auction company in the Northern Suburbs of Cape Town it was fairly easy to drum up clients who didn’t want to deal with the larger auctioneers operating in the greater Western Cape.

Within a year or so, I had a nice client list which was built entirely through hitting the pavements and drumming up support for my start-up business. I was in my last year at University and quickly started making a good living. While my friends were struggling with exams and part-time jobs they didn’t like, I was doing exactly what I wanted to do.

The truth was Levco Group (I added the Group bit six months later) had a dirty little secret: It wasn’t really a ‘company’, and it definitely was not a ‘Group’. It was just me. My headquarters consisted of a small desk in my fathers cramped law firm which he rented in a down market part of the Bellville CBD.

I was a puppy straight out of school and I was pretty insecure about my solo status, so I went to great lengths to make things appear otherwise. When describing Levco, I always spoke in terms of ‘we’, ‘us’, ‘the team’, or ‘our offices’. I called myself a ‘Group’ which was me, my car and my phone. In fact, I trained myself always to use the collective first person—on the phone, in meetings, in letters, while pitching to potential clients, and in the proposals I submitted.

As clients never visited my ‘Group’s Head Office’ it was easy to keep the ruse going. Many of them probably had the impression that Levco was an actual company, complete with teams of auction professionals ensconced in cubicles, hard at work on their sales.

Why the bluffing? I was very young and inexperienced and felt clients would not take Levco seriously if they knew that it was just me. After all, what responsible businessperson would trust some 21 year old right out of University with their valuable assets? As the saying goes, no one ever got fired for hiring IBM, but it seemed certain that someone could get fired for giving me their valuable assets to auction. I felt I had no choice but to act big.

I remember the relief I felt when I hired my first employee in 1993. Suddenly, there really was a ‘we’ and an ‘us’. An enormous weight had been lifted, and I wondered how and why I had spent the past two years acting, and flat-out exaggerating my size.

Did the deception actually win me any business? Who knows? It may have helped me get a foot in a couple of doors. In retrospect, I find the fronting fairly amusing and I see so many start-up companies doing the same. Every time I see the word ‘Group’ on someone’s business card I think back to Bellville 1992.

When I sold Levco in 1995 to Seeff Holdings, which was a recently JSE-listed company, the plan was simply to be transparent with clients and let the chips fall where they may. That’s exactly what we (now really a “we”) have done for more than a decade and a half, whether it’s admitting when we make a mistake or making sure our auction results are public. We sleep well at night knowing we have nothing to hide.

I like to tell this story to young entrepreneurs when I meet them, because I see so many of them following the same pattern I did. They’re stretching the truth, acting, and misrepresenting themselves in the name of winning business. It’s especially common among young South African start-ups. Obviously I understand why they’re doing it. I just wish they understood why  it’s a bad idea, and completely unnecessary.

Fibbing about scale is only part of the problem. There’s an awful lot of résumé enhancement going on as well. Think about what’s really happening when you see, say, Old Mutual on someone’s client list. Do you think the person really worked for Old Mutual? Or perhaps it was just a small job for the OM broker down the street?

I once met an entrepreneur who told me that the Government was a client. I raised an eyebrow, “Really?” It turned out the company helped a state employee set up a personal web site on the side. When I asked him why he felt it was worth citing Government as a client, he told me it would help him build trust with other potential big clients. If they knew he’d worked with Government, they’d be more likely to hire him. I don’t think he even understood what he was saying. Building trust via deception? That ‘credibility’ isn’t going to take you very far. If you get caught in your bluff, you’ve lost the client for sure.

What’s more, the business culture has changed considerably since I was ‘running’ Levco in the early 1990s. There’s a lot more respect for small outfits and even solo players than ever before. Who isn’t still fascinated by the story of Mark Shuttleworth creating a billion Rand business on a laptop in his Durbanville kitchen? Who doesn’t admire the entrepreneur with the guts to do her own thing? Small is really where it’s at. Even the big guys act as though they wish they were smaller. The largest corporations in the world sell themselves using terms most often used to describe entrepreneurs: agile, flexible, customer-centric. They crow about the fact that employees are rewarded for acting like entrepreneurs. Think about all the executives who fantasize about running their own shows.

Does that mean they will award you the big contract? Perhaps not. Even in the age of the entrepreneur, not everyone is eager to place a major project in the hands of a small shop. Then again, clients who are impressed by scale aren’t the kind of clients you want anyway. Lots of start-up founders dream of working for a big brand, but the truth is it’s usually pretty crummy work. Instead, find like-minded clients closer to your own size, and grow with them. I can guarantee that you’ll wind up doing more interesting and more challenging work.

Another advantage to owning up to your slight stature: Your clients will always know whom they are dealing with. They’ll know they’ll get the most personal service possible. A lot of people have had the experience of working with a company only to see their key contact move on to another job. The relationship is lost. That’s not possible when it’s your business. You are your business. They’ll have you from start to finish. That’s a big advantage.

I wish I knew then what I know now: Being small is nothing to be insecure or ashamed about. Small is great. Small is independence. Small is opportunity. Celebrate it. Don’t hide from it. Businesses always benefit from being straightforward and clear. So don’t worry about it. Don’t act. Be upfront and honest, and bask in your smallness. It’s truly to your advantage.