Before you knock the giant businesses, take a look at your own

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You get a lot of this big business bashing from people who should know better. One guy comes to mind. He sold his business to a big company. But he keeps knocking them because of some due diligence they did after he was paid out. I’m surprised he does this. They paid him millions and set him up for life.

The thing is, it’s no use criticising the large businesses without understanding them. You can be as “unconventional” as you like but you really need to know how big businesses operate, their strengths and weaknesses to find the gap for your small business.

I want to give an example. I think the fast food industry is familiar to everyone so this is the example I’ll use. The big fast food chains have plenty of customers. Why? Because they are delivering a product that people want, enjoy and will pay good money for. But they’ve got another thing going for them – that’s economies of scale. They are able to knock down the cost of a fast food meal and still make a profit. Think about that. It’s not something to gloss over. They compete on price. Their big competitor is not only down the road or next door but meals that can be prepared at home.

Yes, you may complain about fast food restaurants. Perhaps the consistency of food is not always right. Service may sometimes suck. Waiters hover around your table getting overfamiliar and end up asking you for a job. Funny, I don’t go to the fast food restaurant up the road any more because I’m not an employment agency. The managers the should tell their waiting staff not to get familiar with customers. Slow service. Poorly cooked meals. Mingy portions. And more. But these fast food chains keep making money.

You don’t have to be “unconventional” to find a chink in their armour. You’ve got to understand that there are two ways to compete – on price or differentiation. Differentiation is a big word but it really means value. As a small, nimble operator, you have to find the value that your customers will want. Not your perception of value but theirs. You can’t compete on price as a small business (unless, of course, you are selling a knocked down ultra cheap alternative or version). You’ve got to go for the breakthrough – and the breakthrough is offering something different of value.

Now that’s the theory. Enough of that. You may still be unconvinced. Let’s take an example of how a small business owner found the gap. A small business owner who opened a restaurant about three years ago in my suburb offers quality meals at much the same price as the chain and institutionalised restaurants. But you feel you are getting great value. There are other basics that this small business owner is using but we can get into those at another time. The point here is that even though this restaurant owner has a small range or a limited menu, the quality of these meals are superior to the institutionalised food operations. He has created a large following and now you can only go to his restaurant if you book at least a week in advance on any day of the week and weekend.

Small business success isn’t about being a magician and pulling magical tricks. It’s about finding the gap. Yes, it’s about finding a knowing weakness in the big business. Then it’s knowing how to exploit that weakness – and knowing how long it will last. If the big business sees what you doing, and it’s good enough they may well just focus their attention on the weakness and fix it. But by then, if you are a strategist, you will find your next opportunity.

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By Chesney on November 23, 2015 · Posted in Main Content

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