It should be readily apparent that there are vast differences between a small startup venture and an established corporation, yet there seems to be a pervasive belief that the same strategies employed by a large business can be easily and successfully applied to startups of any size completely independent of the industry in which they function. This is a dangerous belief, and Murziline Parchment has expressed that it is important to clearly delineate the many strategic differences between large corporations and small startups.
Since large corporations tend to operate according to specific goals primarily focused on maximizing the return on investment for its shareholders, the strategies used to achieve these goals are often quite limited. Essentially, a large business can simply determine the most competitive market in which it can thrive by opting for large industries that hold promise for rapid and continued growth. Since entry into these kinds of industries is limited to a significant degree due to the need for a great deal of available capital, relatively simple business strategies can yield impressive returns on investor equity in both the short and long term.
According to Murziline Parchment, many large businesses also employ strategies aimed at market differentiation, in which the corporation wields its financial might in order to become either an exceptionally low-cost producer or a provider of a vastly expanded selection of goods or services in a market in which demand is already firmly established. Since these options are dependent on influencing existing markets through a sizable influx of capital, large corporations are able to function in ways that smaller startup ventures simply cannot.
One of the primary goals in the early stages of a startup is often nothing more than simple survival. As a result, business costs have to be tightly managed, and many startups accomplish this by cutting costs associated with personnel. This causes a clear conundrum, as the success of a small startup is dependent on talented and creative individuals committed to the achievement of company goals, yet the financial compensation available to these individuals is not commensurate to their worth. Startups must therefore find ways to attract talented individuals through means other than financial compensation, which clearly could not be more different from the manner in which large corporations attract talented personnel.
While this may seem like a major disadvantage for a startup, Murziline Parchment has suggested that it is much more likely to be a serious advantage if the right strategy is employed to attract talent. If a business is able to attract exceptional talent without being able to offer a competitive financial compensation package, then it must be because the company’s goals are such that talented individuals are willing to make a financial sacrifice. When team members believe in the company to this degree, it is much more likely that they will be highly productive and completely committed to the achievement of company goals. Investors are similarly attracted to companies that have goals they can appreciate for reasons beyond the potential return on investment.
In addition to establishing company goals that others can appreciate independent from potential financial outcomes, startups also have to develop a strategy aimed at clearly demonstrating the value of its goods or services to the industry it has targeted. While a larger corporation can create value simply by offering existing products and services at reduced rates or with greater variation, smaller startups must be able to show how their goods or services represent a step forward in innovation for that industry in order for the market to recognize its actual value. In terms of strategy, Murziline Parchment has noted that many startups must not only provide something innovative, but also have to market that innovation in a way that suggests there is a substantial likelihood that it will assist others in reducing existing costs or greatly enhancing potential profitability.
