Is starting a small business actually riskier than starting a big one?

[Hamza2424]

Hello everyone, hope everyone is enjoying FIFA haha. Well, guys, I heard a businessman make a claim that caught me off guard: "Small businesses are riskier while starting a big business is not that risky". Initially, I was confused because how is that possible? Because if we do not have enough resources to go big in the first place, then we have to start small, right, but if starting small is risky, then what?

How is starting big not risky? I am going to give my explanation and you guys can give yours. We are here to brainstorm this idea to see what is what.

So my explanation is, when we start a small business, we give it our full potential, time, and money. We do not care about anything else. We do not take any leave. We do not go on trips. We just do our business with full dedication. If we get sick and get a disease that we can't do the business anymore, we might have to shut it down. But big businesses do not work like that. You have teams who work for you and manage things for you. They do all the work, and even if you want to go on trips or do something you want for a week or a month, your business will go on and it will never stop.

This is what I understand from the words of that businessman. and I don't have any other explanation for this. If you have any, then please share it here. Yeah I know about funding issues, credit issues etc. but still want to hear what else he could have mean? Have you hear anything like this before.

[Ambatman]

Hello everyone, hope everyone is enjoying FIFA haha.

No I'm not.

Small businesses are riskier while starting a big business is not that risky".

Size isn't a major decider
On paper it may look like more small business fail than big
That just because there are more and easy entry.
You loss more from a large business falling than a smaller one.

So my explanation is,

Despite the money and the man powers
Starting isn't something you just leave on others hands except you want the business to fail easily.
A matured business is different from a start up.

If you have any, then please share it here

one thing I would say is
Large business can enjoy from economies of scale
Not to mention if it's shaky just add more money something small scale usually lack. 

[Maslate]

From my personal perspective, starting a big business is riskier than building a small one, although both are actually risky in nature. Having a big business leads to higher financial devastation, especially when you have seen that the huge capital and the maximum efforts you invested on it have ended up as nothing.

On the other hand, starting a small business creates higher survival risk. Seeing you have small and limited capital, its hard to recover from a single loss, and its hard to compete to other business and build your name when you have limited income compared to those who are making massive and unlimited income.

[uneng]

Risks on each category of business depend on different aspects. Both can be quite risky, or not. It depends on how you are handling them and on the tendencies of the market you are focusing.

Actually, a small business can be riskier than a big one, because entrepreneurs going for the macro, are likely to have access to higher credit lines, and sources of income from another businesses from different sizes, so they have plan b, c and d in case something goes wrong with their brand new business. Meanwhile, someone starting a small business may have nothing else they could appeal to in case something goes wrong. It means a big risk to be taken.

[r_victory]

Starting a business is inherently risky, regardless of its size. I’ve never heard such a thing, and if I did, I would disagree immediately. A large business entails higher costs for infrastructure and inventory (if it focuses on selling physical products like food, clothing, etc.). Most businesses that are successful today started small. Look at Amazon—how do you think it started? What about Microsoft or Apple? Starting small allows you to validate the business before expanding. At the beginning, it’s impossible to know if it will succeed; it is a mistake to think you have to start big.

[programmer3666]

I think that businessman might have been looking at it from a privileged point of view. Not everyone has the capital or connections to start big, so small businesses aren't always a choice, they are a necessity. Take a village farmer who starts selling vegetables by the roadside. His risk is daily, if it rains, if no one buys, if prices drop, he goes home with nothing. But if he fails, he only loses what he had. Now imagine a top company like Dangote Group in Nigeria, they borrow billions, employ thousands and if things go wrong, entire communities are affected. The scale of loss is completely different.

[Davidvictorson]

I don’t think it is about starting a small or a big business. It should be between sole proprietorship and starting as a corporation.
The risk involved are many in the former
- using your own money
- can be used and even jailed for any wrong
- bears 100% of the risk
- no experience/lack of technical-know-how makes it more risky

For the latter the opposite is the case.
To put it plainly it is more risky starting a business as a sole proprietor than as a corporation irrespective of its size.

[rat03gopoh]

One thing that makes me curious is, do entrepreneurs really start from scratch? The further they "steal" the starting line, the easier it is for them to say such things.

I remember a few months ago, a young child (around 9 years old) became the subject of netizens' ridicule for talking about financial solutions like an old man, as if everything was easy, when in reality, he was the son of a rich man.

[AmoreJaz]

One thing that makes me curious is, do entrepreneurs really start from scratch? The further they "steal" the starting line, the easier it is for them to say such things.

I remember a few months ago, a young child (around 9 years old) became the subject of netizens' ridicule for talking about financial solutions like an old man, as if everything was easy, when in reality, he was the son of a rich man.

Most actually started from scratch or should I say from humble beginnings. It is not that they are already rich when they started. Definitely, there's. hard work involved

[Finestream]

Sometimes, its not on how small or big the business is, but on how competent and reliable a business operator is. Because the moment the person operating the business is not highly knowledgeable or skilled enough in the line of business he chose, the risk for failure will then increase.

Small or big business are both inherently risky. But having insufficient funds, lack of knowledge and skills, and lack of positive attitudes will beat the purpose of creating that business.

[Shinpako09]

One thing that makes me curious is, do entrepreneurs really start from scratch? The further they "steal" the starting line, the easier it is for them to say such things.

I remember a few months ago, a young child (around 9 years old) became the subject of netizens' ridicule for talking about financial solutions like an old man, as if everything was easy, when in reality, he was the son of a rich man.

Based on the School of Hard Knocks videos, there are millionaires who didn't come from wealthy families and still made it big. I'm sure even in your country you've heard stories like that. So yes, some people really do start from scratch.

Of course, their kids will already have a head start since they grew up in that kind of environment, so it's not surprising if they already have some knowledge about finance at a young age.

Maybe the reason that guy says starting big is less risky is because they already have the right connections. They already have a plan, as well as a backup plan. They have experience, they already know which path to take and which ones to avoid. People like that obviously have mentors guiding them.

[Peanutswar]

But the thing here is before you become a big business is you need to start it small, if you dont have a network, inheritance family wealth, and large sum of money you cannot make a big step to become a huge company already that someone work for you and makes money for your while you are sleeping, that's doesn't work like we have seen in the movies and in reality only rich people will have these "big company thing". Now if you are just commoner, would like to take risk to have a business from small sooner you want to scale it into bigger you need to suffer first, you need to push all of the hard works all of the life lesson you will take here before achieving to become big. Different people have different opportunities and challenges.

[Bitcoin.com97]

To me both are risky ,the small and big business, sometime I feel the big business is very risky because having so much goods will make one not to pay attention to details , but as time goes on I have come to realize that the two are very risky , because even the small business if attention and time is not given it can easily crash ,but I will always advice anyone who want start a business to start small ,pay attention as Time goes on you can add more to the business and get more acquittance to the system.

[LogitechMouse]

Hello everyone, hope everyone is enjoying FIFA haha. Well, guys, I heard a businessman make a claim that caught me off guard: ---
This is what I understand from the words of that businessman. and I don't have any other explanation for this. If you have any, then please share it here. Yeah I know about funding issues, credit issues etc. but still want to hear what else he could have mean? Have you hear anything like this before.

His words are coming from his own experience and I have nothing against that businessman because I'm pretty sure that he's an expert on what he's doing. If that's how he sees it then so be it.

For me, both have risks. Having only 3 people can still be considered as a small business, right? I mean if that's the case then I assume that you can still take care of yourself if you got sick, you can still go on trips because you have people that will take care of the "small" business, you can take your leave if you want to as long as you trust your people. Small businesses doesn't necessarily mean a "1-man" army where you will do everything... or at least that's how I see it. Big businesses on the other hand consists of maybe hundreds of people so what the businessman says does make sense. Big businesses requires a huge amount of money at first so if you don't have the money, I think it's pretty obvious that you will start small. Big businesses for me will only be less riskier if you're capable of handling it.

[Oasisman]

So my explanation is, when we start a small business, we give it our full potential, time, and money. We do not care about anything else. We do not take any leave. We do not go on trips. We just do our business with full dedication. If we get sick and get a disease that we can't do the business anymore, we might have to shut it down. But big businesses do not work like that. You have teams who work for you and manage things for you. They do all the work, and even if you want to go on trips or do something you want for a week or a month, your business will go on and it will never stop.

Well, you got some point. However, it's not right to assume that if a business owner from a small business got sick, nobody is going to step up from his family to continue the business on his behalf. Also, it is not safe to assume that a big company will continue to deliver good business without you (the boss) breathing down their neck. A lot of employees tend to become too complacent and comfortable, which leaves potential company gains on the table, without any bosses around, especially since the company is relatively new.
This is just one scenario, by the way. There could be a lot of things other than this to happen badly to a new business, whether it is small or big. But one thing is pretty sure, the bigger the capital, the bigger the risk involved.

Remember the famous Spiderman quote? "With great power comes great responsibility." This also means that the bigger the responsibility, the bigger the risk of failing. That's what running a big company is all about.

[DanWalker]

....but I will always advice anyone who want start a business to start small ,pay attention as Time goes on you can add more to the business and get more acquittance to the system.

I do not think that advice holds true in every case. Starting small can help reduce the risk but it can also cost you opportunities because your customer base is more limited and your ability to compete is weaker.

Instead of assuming you alway have to start small to minimize risk, build your business based on your plan, available capital, experience and risk tolerance. That is the right way to approach a business.

[AprilioMP]

So my explanation is, when we start a small business, we give it our full potential, time, and money. We do not care about anything else. We do not take any leave. We do not go on trips. We just do our business with full dedication. If we get sick and get a disease that we can't do the business anymore, we might have to shut it down. But big businesses do not work like that. You have teams who work for you and manage things for you. They do all the work, and even if you want to go on trips or do something you want for a week or a month, your business will go on and it will never stop.

This is what I understand from the words of that businessman. and I don't have any other explanation for this. If you have any, then please share it here. Yeah I know about funding issues, credit issues etc. but still want to hear what else he could have mean? Have you hear anything like this before.

Small businesses also involve the same time and all the associated costs of running a large business. The risks are also similar, though the magnitude is different.
Entrepreneurs who say they prefer running a large business over a small one have extensive experience and the courage to seek capital. Perhaps they resort to bank loans and repay them in installments. Perhaps they have experience that allows them to know how to thrive in a business, as I mentioned, they are familiar with it.
In my opinion, the difference lies in their savings, aside from their capital. When they fail, they can start again.

[Marvelockg]

Hello everyone, hope everyone is enjoying FIFA haha. Well, guys, I heard a businessman make a claim that caught me off guard: "Small businesses are riskier while starting a big business is not that risky". Initially, I was confused because how is that possible? Because if we do not have enough resources to go big in the first place, then we have to start small, right, but if starting small is risky, then what?

When someone makes a statement, he should be able to back it up with reasons why he makes such conclusion and not just make a baseless statement that when looked at broadly shows a sense of falsehood.

If you experience ten challenges in the process of running a small business, be sure to experience far more challenges while running a bigger one because you will have to deal with issue of staffing, government policies and lots more. What makes a business to thrive is not just how small the business is, it's rather dependent on the managerial skill of the individual concerned.

[viljy]

Thus, the difference in scale lies in the delegation of powers and functions from the business owner to hired managers. But then there is a problem that a small businessman who runs his own business does not have. And this problem is in the selection of personnel with the necessary competence and responsibility. There is a need for control. Business resources are being spent on this.

In fact, the larger the scale of the business, the less efficient the employees are, since a lot of resources are spent on control, which only supports the minimum required level of productivity. I don't think that permanent rest and shifting management to hired managers is the main value of big business. As soon as the business owner loses control (because he is resting here and there), the business will fall apart, everything will be stolen.

[Exitoral]

Both small and big businesses have risks. Most successful businesses today started as small businesses. So saying that starting small is riskier ignores the fact that big businesses also have risks.

You carefully pointed out why small businesses have risks in terms of the owner falling sick, which might cause the business to slow down or even shut down. Understandable. But big businesses have risks too. What if you employ the wrong person? Even if the person shows skills, there are countless cases where employees have brought big businesses down because of greed or a nonchalant attitude. There are also other risks like rent, loans, and taxes. Big businesses might default on any of these and face severe consequences.

In all, both big and small businesses carry risks. It's just that the risks are different for each.