Small Business Vs Big Business: Is Bigger Really Better?

Comparing small business vs big business: Inconsistent Excellence vs Consistent Mediocrity

The often-asked question: small business vs big business, which is better? Harry Catrakilis tackles the topic as it relates to the accounting industry and CPA firms, remarking on the pros and cons of small and large firms.

“Recently, a young professional asked me an intriguing question: “Mr. Harry, should we use a big, reputable chain or a neighborhood local business?” This question is particularly relevant in today’s world, where two significant trends are at play. Firstly, our education standards seem to be declining. Secondly, large companies leverage their substantial marketing resources to create a perception of superior service. However, true excellence in service often involves going the extra mile, which is frequently lacking in larger firms, resulting in a standard of service that is consistent but mediocre.

For example, a large payroll processing company recently convinced a small business owner to upgrade to their advanced platform, promising exceptional technology and cost benefits. The sales pitch was outstanding, but the implementation fell short. Out of 100 tasks, they successfully completed 85, failing on around 15. The prevailing logic from the payroll company was to focus on the successes and overlook the shortcomings. This approach often leads to frustration, as customers are passed from one representative to another, exacerbating the issue. Larger firms usually mean a larger client base, but with that the expectations of personal service is no longer fulfilled. Here is the common on-hold message “Sorry we cannot get to you we are servicing other clients”.

The challenge with larger companies is their reliance on standardized processes, which work well for common tasks but falter when attention to detail is required. Compare a mass-produced piece of clothing to one tailored exactly to your size. The mass-produced item may be an alright fit for the most part, but it will have a few issues compared to the custom-tailored piece. And in the accounting industry, ‘a few issues’ can be a massive problem for a client. Excellence, high quality, and attention to personal circumstances should always be expected.

During the COVID-19 pandemic, I read an opinion piece suggesting that American consumers should adjust their expectations regarding supply chain delays, comparing them to European consumers who are accustomed to waiting for products. This perspective implied that American consumer demands were unreasonable, which is a contentious viewpoint. Just because everyone else expects mediocrity, should we not aim for excellence?

To understand both sides, an argument in favor of larger companies is their ability to attract top talent, leaving smaller firms with fewer options. While this is valid to some extent, it’s important to note that large companies can sometimes stifle creativity and motivation of their highly sought after employees, placing talented individuals in rigid structures. Additionally, the trend of outsourcing has led to significant layoffs, further complicating the employment landscape within these larger companies. You may comparatively find more motivated and committed employees at a smaller firm, who prioritize the entire customer experience.

On the other hand, smaller firms may pose a risk of inconsistent experiences, as they usually do not cultivate the level of standardized processing that larger firms do. So, without a rigid process it depends heavily on the individual who performs the task.  A risk is that if the individual is switched then the experience is not consistent. However, this risk can be negated with thorough research when choosing a firm. My advice to discerning buyers is to consider boutique firms, which tend to be more personable and can offer a superior experience if chosen carefully.

A practical test of both large and small firms is to evaluate the firm’s responsiveness. Call the firm and see if you interact with a bot or a human. Send an email and assess the speed and personalization of the response. However, be cautious, as some sales organizations excel at initial interactions only to fall short post-sale.

So, how should one answer the question: should you go with a smaller firm or a big brand name today? In essence, larger firms often deliver consistent results, but the results are mediocre, while smaller firms offer greater results, but at the risk of being inconsistent. Which is more important to you: consistent mediocrity, or inconsistent greatness? As a sign I once saw put it, “Going the extra mile – now that is service.”” -Harry Catrakilis

The above article only intends to provide general information and reflection. It is not designed to provide specific advice or recommendations for any individual. It does not give personalized tax, financial, or other business and professional advice. Before taking any form of action, you should consult a financial professional who understands your particular situation. CKH Group will not be held liable for any harm/errors/claims arising from the blog. Whilst every effort has been taken to ensure the accuracy of the contents, we will not be held accountable for any changes that are beyond our control.