Large multinational organizations will typically follow standard guidelines on how to grow and expand their business. General requirements such as extensive employee training, adherence to environmental standards and a thriving corporate culture are among the top requirements for a large business to succeed. However, the formula which is often used to ensure the success of a Wal-Mart, do not always apply to a small business. (For more, check out 6 Reasons To Be Excited About The Small Business Job Act.)

IN PICTURES: 8 Tips For Starting Your Own Business

One of the fundamental differences between a multibillion dollar corporation and a "ma and pa" style shop is that a Wal-Mart can enter a new market and remain unprofitable for years as earnings from prosperous locations support those that are not performing well. Large businesses have more and often unlimited resources to market their products and services, and are for the most part able to replicate a proven business strategy in a wide range of environment. The owners of large organizations are usually not involved with the basic day-to-day operations of the firm. Small businesses do not have such luxuries.

Although there is no proven formula for a profitable small business - otherwise we would all be rich entrepreneurs - there are several important traits that are common to most small businesses.

Cater to a Niche Market
A small grocery store simply cannot compete with a Wal-Mart, just as an independent toy maker cannot drive a Toys-R-Us out of business. Therefore, small businesses must cater to a particular niche market, either selling foods that are specific to a particular ethnic community for example, or building toys that are not easily accessible through major retailers. Targeting a small group of people who have specific demands is an ideal way to attract an initial customer base. (Don't miss Starting A Business? Consider This First.)

Get Cozy With Customers
Once a small client base has been established, it is vital to maintain good relationships with your customers. Unlike major chains which can advertise to the whole community, small businesses often rely on word of mouth recommendations. Whether you are an independent accountant or a fisherman, the most effective and cheapest way to attract more business is through referrals.

IN PICTURES: 8 Ways To Survive A Market Downturn

Be Flexible
Businesses that experience success in their initial endeavors should be able to expand to other markets while retaining the initial customer base. For example, a Russian grocery store can start to import Ukrainian and Polish food in order to attract more business. Such measures ensure business growth outside of the initial market while maintaining the original customer base that made the business successful.

Focus on Skills
Large businesses have the flexibility to move beyond their initial services simply by hiring experts in those fields. Small businesses, on the other hand, are not able to do so. Entrepreneurs who find success will usually focus on what they know.

A Canadian with an accounting background may not have the necessary skills set to open a Russian store. Likewise, someone who recently came over from Russia may not have the expertise to start an independent accounting practice. (To learn more, see Build Your Small Business During Downswings.)

Get Lucky
No matter how well planned out the business model, some businesses seem to catch on and others fail. Some small businesses even begin to expand, opening new locations and targeting broader range of consumers, yet others remain true to the owner's original idea. While hard work, location and a thought-out strategy can undoubtedly improve business activity, sometimes luck can be the most important driving force.

The Bottom Line
Successful small business entrepreneurs will seek out information on where an unfulfilled demand in their community exists and cater to fulfill that gap. However, there are certain fundamental differences between the operations of a large corporation and a small shop. Successful business owners will capitalize on these differences to implement a strategy that works in their favor.

For the latest financial news, check out Water Cooler Finance: The End Of The Recession.

Related Articles
  1. Entrepreneurship

    4 Things to Know About Your Company To Make a Successful Pitch to Investors

    Learn how to make a successful pitch to investors. Regardless of your industry, size or market, there are some questions all investors need to have answered.
  2. Entrepreneurship

    Top 4 Billionaires Living in Los Angeles

    Learn how these multibillionaires built their fortunes to stand out from the crowd of the countless ultra-rich who call Los Angeles home.
  3. Entrepreneurship

    Creating a Risk Management Plan for Your Small Business

    Learn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
  4. Investing Basics

    3 Business Tips from Restaurant Reality Shows

    The reality TV shows "Restaurant Impossible" and "Kitchen Disasters" offer lessons not just for restaurateurs, but for all business owners.
  5. Entrepreneurship

    7 HR Basics for Small Businesses

    Whether or not you are a fan of human resources, every employer needs to know the answers to these questions.
  6. Entrepreneurship

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  7. Entrepreneurship

    4 Most Successful Indiegogo Campaigns

    Learn about some of the most successful crowdfunding campaigns on Indiegogo, which raised millions of dollars for everything from electric bikes to beehives.
  8. Entrepreneurship

    How an Internet Sales Tax Will Affect Your Small Business

    Learn about how the Marketplace Fairness Act may impact small business owners should it pass in the House and what the act requires from business owners.
  9. Entrepreneurship

    Preparing Your Kids to Take Over Your Business

    Most family businesses do not survive in successive generations, but these steps can help ensure that yours will.
  10. Entrepreneurship

    How Gross Margin Can Make or Break Your Startup

    Find out how your startup's gross margin can impact your business, including why a mediocre margin may spell disaster for a budding business.
  1. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  2. How does escheatment impact a company?

    In recent years, state governments have become increasingly aggressive in enforcing escheatment laws. As a result, many businesses ... Read Full Answer >>
  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. Can I buy insurance to reduce unlimited liability in a partnership?

    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Flier

    The slang term for a decision to invest in highly speculative investments.
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center