This scenario may sound familiar: You’re one of the good guys. Your customers like and trust you. You offer quality products at reasonable prices. You’re a valued member of your community and active supporter of local charities. Life was good. Then you received the news that the dreaded BIG RETAILER is moving into the neighborhood. The prospect of dealing with this competition has you feeling nauseous and thinking of throwing in the towel. How can you compete with a big retailer when you’re a small business? What should you do?
Relax. You’re not licked yet.
Let’s face it. You always knew this day might come and at this point, it doesn’t matter whether you’ve prepared for it or not. What matters is what you do going forward. You need to be flexible, willing to embrace change and keep an open mind as to what your business might look like in the future.
We all know what big retailers add to the mix—cheaper prices, lots of choices and convenient parking. You might not believe it, but having the circus come to town isn’t a bad thing. Ideally, it means that all the vendors in town, including you, will get the opportunity to sell more balloons and cotton candy. When a big store joins the neighborhood, they’re stating that “This is a profitable business location, with plenty of potential customers, good traffic flow and opportunity for growth.” The perfect environment for any business regardless of size.
Before we get into how to make lemonade from lemons, we need to make sure all the ingredients are at hand. Your first task is to have a clear understanding of your business.
- What are you actually selling and to whom?
- Do your customers visit as much for the atmosphere or ambiance or your store as for the products you offer?
- Do your customers value charm, quietude, or vintage décor?
Profile both your business and your customer base in detail. Next, consider the things you can do better than the big retailers.
As a small business:
- Be Flexible! You can be more flexible, nimble, and energetic. You need to figure out how to leverage your agility.
- Find Your Strength. Emphasize what makes you special, distinctive or unique. What is the one thing you can do better than anyone else?
- Find Your Niche! You can’t be everything to everyone. That’s the realm of the big retailer. Instead, find your niche and focus on it.
- Customize. Offer customization or specialty products, think obscure but valued. These are areas where the big guys falter.
- Be better. Have a hook. Offer a handful of items that are cheaper, faster or more outstanding than what can be found elsewhere.
- Spot trends. You can cash in on trends and fads faster than the big stores. They have complicated relationships with suppliers, a board of directors and investors to consider. Their large staffs, budgets, and customer base affect their ability to take risks and draws out the decision-making process. Whereas, small businesses have the agility to circumvent obstacles, change direction, make new plans and take advantage of opportunities without considering what will happen to huge inventories sitting in warehouses halfway around the world.
- Excel at customer service. You can also outperform the big retailers in customer service. No need to wait for a manager’s decision, you are the manager. As an owner/operator, you deal directly with your customers, local charities, clubs, and peers. Make the most of one on one encounters and networking opportunities.
- Enhance your customer relationships. Your customer base is the most important asset you have. Find ways to communicate with them and keep your products, specialties, and sales in front of them. This can mean flyers, direct mail, a website, phone texts, Facebook page, Twitter, email, newsletters, local newspaper ads, etc. And, be sure to track what works best for which products.
- Get tech savvy. Today’s shoppers value convenience. Make sure you can deliver what your customers need, in-store, online, or by special delivery. And keep it simple.
- Consider partnering with other small businesses to increase your buying power and diversify your inventory.
No one said it was going to be easy, but with a little creative thinking and lots of perseverance, “You got this, and we are here to help.”
Manny Skevofilax is a consultant and speaker that assists his clients with successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny helps businesses to enhance their financial results by using his experience in strategic planning, financial statement analysis, operations, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at firstname.lastname@example.org.