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How Your Small Business can Survive When a Giant
Comes to Town
The arrival of a big
conglomerate often serves as a kiss of death to small businesses. For
how can you compete with these
giants in the face of the vast technological resources, deep pockets,
seasoned management, and the powerful brands of, say, a Wal-Mart, Kmart,
Tesco or Home Depot?
But as a small business you have more options than you might think.
Those options vary, depending on the nature of your company's
competitive assets. It is possible not only to survive but also to
thrive alongside the giants.
Small companies, more than the superstars, need to keep their eyes on
the ball. Here are some ways you can compete head-on with the industry
leaders.
Create your own niche
When you can't be the best in your entire product category, be the best
in at least one segment. Even multinationals know that they cannot serve
the whole world.
Focusing on a niche market is a powerful tool you can use to be able to
remain afloat in the face of intense competition from a giant
competitor. If you have a successful small company, you can decide to
serve market segments such as businesses rather than consumers, or
customers in selected industries with similar needs, or a specific
geographical area.
These decisions enable you to tailor product and service offerings to
the target market, entice the customers, and enjoy more profit than
those in the central marketplace.
Harness your frequent customers
One rule in marketing is that it is much more expensive to attract new
customers than to retain old ones. Make every effort to keep your
existing customer base come back to you. Offer special discounts; send
out a regular newsletter or product brochure, even start out a club.
Make your regular customers feel special and you can be sure that they
will continue to come back to you.
Use the Web
Electronic commerce is the leveler between great and small. A well
defined and effective website does not depend on large investment or
back office infrastructure. A business, no matter how small, can project
itself to be a big company on the Internet with a cleverly executed
website.
Even the largest companies, including Wal-Mart, are faltering in the
arena of e-commerce, probably due to lack of vision, poor execution or
competing information requirements. As the giant stumbles, the Web
creates the opportunity for leaner and more flexible competitors, such
as you.
Maintain flexibility
In order to survive you need to be nimble. You need to be quick in
identifying opportunities for your business. Giants are often hampered
by a complex organizational structure where approval for a business
decision can take days.
You do not have this kind of baggage to carry, and you need to make full
use of this advantage. Your size can also be your strength. Even the
telecommunications giant AT&T lost its market share by a once-small
company called MCI.
MCI introduced the product Friends and Family, a low long distance rate
offered only when customers recruited other customers (their friends and
families) into its "calling circle". AT&T could not respond. It could
not offer discounts for calling circles - everyone was already an AT&T
customer.
What About Price?
Using price to compete with a giant is a tricky proposition. Below-cost
promotions and giveaways to gain market share are questionable
approaches, and could even be suicide for small startups.
The key to remember is that your business model must provide customers
with long-range value above a price that covers costs. Unless your
business allows you to develop your inventory at prices much lower than
the giants (e.g. purchase odd lots, closeouts, and damaged goods), then
thread carefully on competing with national businesses on price.
Instead of focusing on price, you can offer excellent customer service,
develop unique distribution strategies, package for a specific market
segment or patent a technology. The key is to provide value to customers
and profit to your company.
Above all else, learn from the experiences of other small businesses
that faced similar competition from giants. There are a number of
success stories out there, maybe even in your own neighborhood. You just
need to keep your eyes open, study your market, and study your
competitor's strategies. It will be tough, but no one says that it
cannot be done!
Useful Web links include:
Competing with the Big Guys
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