SME’s suffer in many ways from the lack of scale when competing against much larger enterprises. However, if you look hard enough, there are always benefits to be found that may outweigh the costs.
- Small budgets mean reliance on qualitative rather than quantitative research and market intelligence, which require deeper pockets. Go out and talk to a few customers, ex customers, and non-customers in your market, you will learn more in a couple of afternoons than the spreadsheet jockeys in the larger companies will learn in a year.
- Make niche choices early. Rather than scanning the horizons for opportunities, pick a niche and own it. Chances are it will be something that the larger companies have overlooked, or is too small for them to allocate resources, but for an SME, they can be a great stepping-stone to profitability and growth.
- Revel in being the underdog. Avis Vs Hertz.: ‘We try harder’ the line Hertz used is the standard bearer for this battle of the underdog. We humans love to support the underdog against the impersonal giants.
- Be very price sensitive. Pricing high is always a good strategy, as it is easier to come down than to go up, and avoid predictable and regular discounting like the plague. Your larger competitor is unlikely to be as sensitive to the difficult task of optimising price as you are, working off price lists that are updated in total, from time to time.
- Pareto the pareto. Focus, focus. Bring all your resource’s to bear on a point of value you can deliver, don’t dissipate them by being all things to all people. This applies to customers, service offerings, communications, everything, focus on the points that will deliver the most bang for the buck. Be the king of ‘No’. Warren Buffet noted that the one common feature of successful people is that they say no a lot. The larger your competitor is, the easier it is for them to be distracted, and gummed up by bureaucracy.
- This point will seem inconsistent with the point above, but watch for anomalies. While focus is essential the risk is that you are so focused that you do not see things that will make an impact when they are just small points on the horizon. These small anomalies are the things that generate change. Large businesses tend to ignore them, or they get lost in the bureaucracy, SME’s have the opportunity to move quickly and decisively.
- Balance the tactical and strategic. Small businesses tend to be seduced by the tactical stuff. Short term this is OK but not a good long-term recipe. Both are necessary, but you must resist the temptation to worry about the future when it comes, as it is already here in some form, so you have to build for it before it gets to you. Be specific about the breakup you deploy, knowing the big blokes are stuck deploying changes in either.
- Be flexible and agile. They are different, flexibility enables you to move with the changes in the market, agility is more short term, enabling you to make choices that are outside the ‘brand architecture’ as they emerge. Pivot in the jargon, your larger competitors will find it hard to get out of their own way.
What have I missed?
