Yes, small businesses misunderstand their own business

Small businesses tend to be confident in their understanding of what they do. They know their offer, their process and the effort it takes to deliver their work.

That confidence often comes from proximity. Owners and leaders are close to decisions, customers and outcomes. Over time, this closeness begins to shape how understanding is formed.

What the business knows about itself starts to feel interchangeable with what customers understand about it.

Understanding forms inside the business first

In most small businesses, decisions are shaped by internal realities. Capacity, margins, skills and past experience all influence how the business is designed and described.

This creates internal coherence. The work makes sense to the people doing it.

Customers, however, encounter the business from the outside. Their understanding is shaped by moments of interaction, not by the reasoning behind decisions. They see outcomes rather than intent.

When these perspectives diverge, the business experiences friction that is difficult to explain. Customers ask questions that feel unnecessary. They hesitate at points that feel straightforward. They interpret value differently.

Assumptions fill the gaps

As businesses grow, direct contact with customers often becomes less frequent or less structured. Decisions still need to be made, so assumptions are used to fill the gaps.

These assumptions are usually reasonable. They are built from partial insight, individual conversations or what has worked previously. Over time, they become embedded in messaging, offers and priorities.

Once embedded, they are rarely revisited.

Familiarity reduces visibility

Working inside a business for long periods changes how clearly it can be seen. Language becomes compressed. Processes feel obvious. Friction becomes normalised.

This familiarity makes it harder to identify where understanding breaks down for customers. The business adapts internally instead, adding explanation, reassurance or complexity to compensate.

Without intentional effort, customer understanding slowly collapses inward.

A different way of knowing

Strong businesses invest in how they understand customers, not just how they reach them. They create structured ways to observe behaviour, test assumptions and connect insights across marketing, sales and delivery.

This work is rarely dramatic. It is deliberate and ongoing.

When understanding is treated as something that can be designed and maintained, businesses make clearer decisions and experience fewer surprises.