Small businesses should not ignore new opportunities for the sake of cost-cutting, he advised
When running a small business in a recession, cost-cutting often becomes the name of the game. However, small businesses should not focus so much on cost-cutting that they lose their competitive edge, nor should they ignore growth opportunities, said Michael Dell, founder of the Dell computer company.
In an interview with Inc. magazine, Dell advised small businesses to keep an eye on productivity and excellence - and possibly even opportunities for small business growth - even amidst all their recessionary cost-cutting.
"[I]f all you do is cut costs, then you have nothing left," he told the magazine. "So now we're starting to see signs of growth coming back into focus. People are saying, 'Well, there are real opportunities out there.'"
In particular, if small businesses ignore the potential for growth, other businesses could take viable opportunities away from them. However, businesses should not pursue growth for the sake of growth, especially when they are not in the financial position to responsibly do so.
Dell advised businesses to take a realistic view of their resources, and to prioritize their opportunities accordingly. If they are presented with a number of growth opportunities, they should pursue the ones that are "easy and big," he said. "[O]nce you get them done, that will give you more fuel in the tank so that you can go do more."
With small business growth, as well as with overall business strategy, companies are advised to reflect on their strengths and what they can offer customers that is unique and that "no one else can deliver," Dell advised. Companies should focus on dominating that market share.
Small businesses without high amounts of capital should not be discouraged from following this advice, either.
Dell told Inc. that lean startups are often some of the most successful, because it forces them to be innovative and efficient.
He would know - he started his computer company with $1,000 in his dorm room at the University of Texas.
"What we learned in our business is that by being forced to come up with new ways of doing things, we actually invented a business process that was superior to our competitors and created all kinds of opportunities for us," he told the magazine.
The Kauffman Foundation has reported findings that would similarly encourage entrepreneurs to start or expand their business, even in tough economic times - the foundation reports that more than half of Fortune 500 companies were founded during a recession or bear market.
