3 Local Business Management Tips You Should Learn Today

Students who pursue management studies always aim to work in one the large corporates and investment banks. While small businesses like plumbing and carpet cleaning may not sound as appealing as a Wall Street banker job, the learnings that you take home from all these different jobs are essentially the same. Small businesses, thanks to their limited resources are much more challenging in terms of management and this is exactly why they offer students a greater exposure towards leadership and management than a business school would.

Here are three local business strategies that could be great learning lessons for a management graduate.

Focus on profit

Revenue, turnover and valuation are all figures that make your business seem bigger than it really is. What matters in the end is how much profit you bring to yourself. Think about it - if you sell gym equipment that costs several thousand dollars a machine, you can quite easily reach $100K in monthly revenue by selling just a handful of machines. But would that mean you have made it? Not quite - the profit per sale is the determining factor and unless you have sufficient profit to show (after accounting for your own salary), such a business cannot sustain itself forever. So the first lesson to know - profit is everything; revenues and valuations mean nothing.

Less advertising & more referrals

How do large corporates get the word out on their new launches? Through advertising campaigns of course. But small businesses often run on tight budgets that ad campaigns are extremely few and far between. These business owners rely much more on word of mouth referrals compared to large businesses. What this essentially means is that the mantra customer is king resonates much more with local businesses than large corporates.

In her column on the Forbes magazine, Marian Berege, the owner of Rianns Wedding and Events Hire, a Perth based events management company, says that although small business owners operate on shoestring budgets which restricts their operational freedom, many consider it a blessing in disguise since customers have come to realize that they get better value out of dealing with small businesses than with large ones. Ultimately, there are more repeat orders and referrals for such businesses.

Do things that don't scale

The advice for startup entrepreneurs to do things that don't scale was popularized by Paul Graham, the popular owner of the startup incubator firm, Y Combinator. Paul argues that in your initial days in a startup, you must not shy away from pursuing customer acquisition strategies that may not be realistic models in a large setting. Today, it is not uncommon for even large corporates to have incubation divisions where such marketing strategies are practiced. In truth however, small businesses have always been known to pursue such marketing techniques. Be it distributing fliers near a university campus or walking door to door asking tenants if they need landscaping, small business owners have done it all. It's only now that it is catching up at large corporates.

It is not true that you learn more in large businesses compared to small ones. The truth however is that the bitter truths of running a business are more often experienced in small businesses compared to large companies where there is often enough buffer to take in any setbacks.

 

[Dhruv Bindhani]

Students who pursue management studies always aim to work in one the large corporates and investment banks. While small businesses like plumbing and carpet cleaning may not sound as appealing as a Wall Street banker job, the learnings that you take home from all these different jobs are essentially the same. Small businesses, thanks to their limited resources are much more challenging in terms of management and this is exactly why they offer students a greater exposure towards leadership and management than a business school would.

Here are three local business strategies that could be great learning lessons for a management graduate.

Focus on profit

Revenue, turnover and valuation are all figures that make your business seem bigger than it really is. What matters in the end is how much profit you bring to yourself. Think about it - if you sell gym equipment that costs several thousand dollars a machine, you can quite easily reach $100K in monthly revenue by selling just a handful of machines. But would that mean you have made it? Not quite - the profit per sale is the determining factor and unless you have sufficient profit to show (after accounting for your own salary), such a business cannot sustain itself forever. So the first lesson to know - profit is everything; revenues and valuations mean nothing.

Less advertising & more referrals

How do large corporates get the word out on their new launches? Through advertising campaigns of course. But small businesses often run on tight budgets that ad campaigns are extremely few and far between. These business owners rely much more on word of mouth referrals compared to large businesses. What this essentially means is that the mantra customer is king resonates much more with local businesses than large corporates.

In her column on the Forbes magazine, Marian Berege, the owner of Rianns Wedding and Events Hire, a Perth based events management company, says that although small business owners operate on shoestring budgets which restricts their operational freedom, many consider it a blessing in disguise since customers have come to realize that they get better value out of dealing with small businesses than with large ones. Ultimately, there are more repeat orders and referrals for such businesses.

Do things that don't scale

The advice for startup entrepreneurs to do things that don't scale was popularized by Paul Graham, the popular owner of the startup incubator firm, Y Combinator. Paul argues that in your initial days in a startup, you must not shy away from pursuing customer acquisition strategies that may not be realistic models in a large setting. Today, it is not uncommon for even large corporates to have incubation divisions where such marketing strategies are practiced. In truth however, small businesses have always been known to pursue such marketing techniques. Be it distributing fliers near a university campus or walking door to door asking tenants if they need landscaping, small business owners have done it all. It's only now that it is catching up at large corporates.

It is not true that you learn more in large businesses compared to small ones. The truth however is that the bitter truths of running a business are more often experienced in small businesses compared to large companies where there is often enough buffer to take in any setbacks.

The article challenges the common belief that large corporations offer superior management learning experiences compared to small businesses. It argues that small businesses, due to their limited resources and inherent challenges, provide invaluable lessons in leadership and management that can even surpass those gained from business schools.

Here are three local business strategies highlighted as crucial learning lessons for management graduates:

1. Focus on Profit, Not Just Revenue or Valuation:
   
   • The article stresses that profit is the ultimate metric for business sustainability, not just high revenue or valuation.
   • It uses the example of selling expensive gym equipment: even with high monthly revenue from a few sales, if the profit margin isn't sufficient to cover expenses (including the owner's salary), the business isn't truly successful or sustainable.
   • Lesson: Management graduates should prioritize understanding and generating genuine profit, recognizing that top-line figures can be misleading.
2. Less Advertising & More Referrals (Customer is King):
   
   • Unlike large corporates with hefty advertising budgets, small businesses operate on tight budgets and rely heavily on word-of-mouth referrals.
   • This forces small businesses to embody the "customer is king" mantra more genuinely.
   • Marian Berege, owner of Rianns Wedding and Events Hire, is cited as an example, noting that despite budget constraints, small businesses often provide better value, leading to more repeat orders and referrals.
   • Lesson: Success, especially for smaller entities, comes from exceptional customer service and fostering strong relationships that drive organic growth through referrals.
3. Do Things That Don't Scale:
   
   • This advice, popularized by Paul Graham of Y Combinator, encourages startups (and, by extension, small businesses) to engage in customer acquisition strategies that might not be sustainable at a large scale but are crucial in the early stages.
   • Examples include distributing flyers near a university or going door-to-door for landscaping services.
   • The article points out that while large corporates are now adopting this idea through incubation divisions, small businesses have historically practiced such hands-on, unscalable marketing techniques.
   • Lesson: In the initial phases, direct, even labor-intensive, engagement with customers is vital for understanding their needs, building relationships, and getting the business off the ground, even if these methods aren't scalable in the long run.

In conclusion, the article argues that the "bitter truths" and practical challenges of running a business are often more profoundly experienced and learned in small businesses, where there's less "buffer" for setbacks compared to larger companies. This direct exposure provides invaluable real-world management and leadership skills.

 

[Simran Rai]

This article provides a refreshing and insightful take on how small businesses can be powerful training grounds for aspiring managers. Unlike the well-oiled machines of large corporates, small businesses expose students to real-world challenges—tight budgets, tough decisions, and direct customer interaction. The focus on profit over vanity metrics, the reliance on referrals instead of big-budget advertising, and the willingness to do unscalable things are core business lessons often lost in the theoretical frameworks of management schools. These experiences cultivate adaptability, creativity, and resourcefulness—traits every great leader needs. For any student aiming for success, the grit and grind of small business management might just be the most practical MBA there is.​

"Small businesses teach what textbooks can't—how to hustle, adapt, and lead when every dollar and decision truly counts."​