Seven Ways A Small Business Can Fight Against A Goliath
For most entrepreneurs, suddenly being confronted by a large company can be a nightmare. Not only will you be dealing with a competitor with seemingly unlimited resources, but often the company is well-known nationwide or even internationally. In such a situation, many believe there is no chance of winning.
However, time and again, small businesses have not only held their own but also managed to thrive in such an environment. Some of them even go on to become giants, too. There are many ways to compete with the big boys and come out on top. I will discuss just a few of the most potent strategies.
Focus on a niche that is too small to be attractive. A corporate behemoth with billions in sales may not even try to enter a market whose potential size is counted only in the millions. For the small company, though, making millions is more than enough for their present appetite. Because of this reality, it would be an excellent strategy to look for markets that would not arouse a giant’s interest.
Capitalize on your “faster” response time. In almost all aspects, a small firm is faster than a large company. This is inevitable in big companies due to the number of people that must be consulted in making a decision. You could promote this inherent strength by emphasizing this capability. I know of one company that made this the key selling point. Not only was the owner able to get many customers, he also was able to charge premium prices as he had few competitors who could deliver as fast. He designed his entire workflow to further maximize his speed advantage.
Have more expert personnel. This is not applicable in all industries, but in the retailing industry here, most large firms rely on contractual workers who stay only for a few months. This results in personnel who are less experienced and knowledgeable on their products. Ironically, small retailers who have fewer resources are more likely to have senior people as they usually retain employees longer. You could enhance this advantage by investing in training. This will result in workers who are far more productive and motivated. Customers who interact with such employees will quickly feel the difference in the quality of service and are more likely to return. Long-time employees are also more likely to be loyal and this may be a factor in reducing internal theft, which is often rampant in the retail industry.
Renovate your place. If you are in a kind of business where appearances matter, you may be forced to improve the looks and facilities of your place. This option is not for everyone since this is very expensive. You must be very liquid to afford this defense but there are some cases where this is really necessary.
Review your pricing strategy. You cannot afford to ignore the price factor. You must study the pricing of your competitor and see how best to react. Be realistic enough to know that you are unlikely to survive a price war. There will always be customers who are price-sensitive. Note though that the sensitivity is not consistent for all items. There are certain items whose prices you must match, while there are items on which you could have a higher margin. Be prepared in case the incoming company will try to grab market share by temporarily making prices abnormally low. In this case, having enough cash to withstand the initial onslaught may be the key to survival.
Be closer to the customer. As large companies often have millions of customers, it is simply impossible to offer each customer the personalized service a small firm can provide. If you are the owner of the company, customers are usually delighted if you attend to them. It would do you well to leverage on this strength.
Have reserve cash at all times. One of the most critical assets to have is reserve cash. There are many options that need a lot of money to implement. With enough cash, you may be able to recover from a few mistakes while trying to figure out the best strategy.
A small business has many aces to use against bigger competitors. Its inherent flexibility and speed of reaction cannot be duplicated by large companies. Ultimately, however, it is the fighting spirit of the entrepreneur that will decide the battle.
*Originally published by the Manila Bulletin. C-6, Sunday, April 27, 2014. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.