It's a nerve-wracking time to be a small business owner. Credit is tight, costs keep rising, and the news is full of stories of Main Street businesses getting pushed aside by big box stores and multi-national corporations.
It's true that a small business, whether it sells shoes or accounting services, can't compete on price; economies of scale always favor the larger player. However, when you look beyond price, a small business enjoys several strategic advantages that a big box retailer or large company cannot match, no matter how deep their pockets may be.
By understanding these five advantages of being small, you can better position yourself against these much larger competitors.
Advantage #1: People and passion
Small businesses are run by passionate owners, not employees who don't have any real investment in the big brand they work for. As an owner, you have a deep understanding and love for the product or service you are selling. You can discuss the nuances of your merchandise down to the smallest detail, and you probably even know your best customers by name. Clients and customers will form a special bond with a local business and pay a premium to have a trusted partner helping them make the right decision.
The takeaway: Worry less about trying to match the prices of a large chain, and focus on investing in customer service, product knowledge, and your own personal brand as a local business. Exceptional customer service doesn't happen overnight. If you have employees, make sure they are skilled, properly trained, well paid, and highly motivated to deliver the same care and customer experience as you.
Advantage #2: Agility and speed
Size is often the Achilles's heel of big business. Before a large retailer decides on a new product, decisions must wind their way through countless departments, managers, and executives. If that product flops, they're stuck with vast quantities of useless inventory. By contrast, a small business owner can turn on a dime, adapt to trends, respond to customer requests, and quickly remove any product or service that's underperforming.
The takeaway: Your ability to be nimble and adapt to trends is a key advantage. Don't shy away from making quick decisions: don't be afraid to use the feedback you get from a customer today to develop a new brand message, add a new product, or revise a service program.
Advantage #3: Technology
A decade ago, the best technology solutions were available only to those companies with large budgets and IT resources. Today, the pendulum has shifted, as consumer-oriented, cloud-based apps now offer the same tools and advantages, at a fraction of the cost. Big box stores have already sunk their time and money into technology systems from 20 years ago, and they're reluctant to ditch these investments outright. Yet smaller businesses aren't entrenched in older systems and have the flexibility to choose the best tools from today's modern options.
The takeaway: With cloud-based apps, you can afford to experiment. Look for the right technology for invoicing, customer loyalty, mobile marketing and other back-end and front-end tools. Technology can set you apart.
Advantage #4: Ability to experiment
Because small businesses are agile, they are able to dabble in numerous things to find the most effective solutions. It takes a Herculean effort to get sign-off at a large company, but a small business owner can try out Pinterest, realize it's not working, and stop. A home contractor can offer a financing deal for a week and see how customers respond, or an accountant can wake up one day and decide to change out the messaging on her home page.
The takeaway: Don't be afraid to try out new things. Some ideas will work, others won't. However, even your failed attempts bring you that much closer to finding the right solution. Without the red tape of a large organization, you can afford to experiment.
Advantage #5: Understanding the local market
While a large chain needs to spend hundreds of thousands of dollars on focus groups, market research, and analytics, small business owners just need to open their doors to understand their customers and local market. For example, a small business owner will understand the particular market needs of each section of town, or the nuances between the summer crowd and winter residents.
The takeaway: Your market is right in front of you. Talk to people, build relationships, and seek their input on a new product or service. You have the unique opportunity to tailor your merchandise or line of services to your specific market. Give your customers what they want: that's one of the most effective ways to compete against the generic offerings of a national or multinational chain.