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Page 116 GO IT ALONE!
you can achieve scale. Do you need to be the biggest entrant to achieve scale? No. Must you dominate your niche? No. Here’s a good rule of thumb: You want to set up a business that is big enough so that your company really matters to other people in your business chain.
My experience and research suggests the following analysis of how companies benefit by achieving scale: - Scale means better access to anyone who matters to your business. From senior executives at telecommunications companies to account executives supervising advertising programs at search engines, my ability to reach the right people and get things done escalated dramatically as the business grew in size. Whether you are trying to propose new ways of doing things or to solve problems that are part of your ongoing business, you are far more likely to see your phone calls answered and returned, and to get the ear of decision makers when you are a meaningful source of business to them.
- Achieving scale almost always means that you will earn more. Most companies, for example, expect to pay more per unit (through bonuses, incentives, and other arrangements) to their top producers. In fact, many companies set their base compensation lower than their actual profits permit, since they anticipate that significant producers will negotiate for higher fees.
- As you grow, wholesalers and suppliers start to approach you. Whether or not you choose to do business with them, this provides a perspective on the wholesale pricing that becomes available for your purchases. In a SmartMoney article on eBay merchants, the magazine persuasively makes this point:
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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.
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