SMALL ISBEAUTIFUL
How to compete with bigger competors
Small, ambitious companies need to do some business ju
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jitsu to outcompete larger rivals. Their agility, speed andinventiveness can give them the edge
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Intel, the Intel Logo, Intel Inside, Intel Core, and Core Inside are trademarks of Intel Corporation inthe U.S. and/or other countries.
SMALL IS BEAUTIFUL
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SMALL IS BEAUTIFUL
HOW TO COMPETE WITH BIGGER COMPETITORS
It’s easy to forget today, but market leaders such as HP, Microso and Intel® were start
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ups too. HP sll hasits original garage.They didn’t (quite) go from garage to gargantuan overnight, so how did they outpace
their compeon – and how can small businesses do today emulate their success?
Technology has provided small businesses with new tools to slay bigger rivals. But where small rms usedto use the internet to disguise their size, now they revel in it, using size itself as a compeve advantage.It’s what eatbigsh consultancy boss Adam Morgan idened in “Eang the Big Fish” as thinking like a
“Challenger brand”. Small businesses can be more agile when it comes to acng on opportunies and –because necessity’s the mother of invenon –more innovave than their larger rivals.
So, here are some ideas to think about if you’re compeng against Goliaths:
1.
Take out costs
. It’s tricky for smallbusinesses to compete on price, butthis is less about lowering costs thanexamining your operang model totake costs out.Start by idenfying your real valueproposion – why do customers needyou? Are there costs you can take outwithout the customer knowing – or caring? Ryanair is the classic example, emulang US budgetcarrier Southwest’s model and relentlessly removing ‘frills’ throughout its supply chain. And whileboss Michael O’Leary is oen lampooned for it, Fresh Minds research suggests airline passengers
are less driven by brand than price when it comes to carriers.2.
Get your customers to fund your growth
. Instead of seeking bank or VC funding, grow organically,starng with a key customer. Gravitate to recurring, high margin revenue so you’re not lurchingfrom feast to famine or having to cut your prices to get by. Costco’s cash
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and
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carry model hasourished this way, its growth funded by commercial and individual customers who were willing tobuy in bulk to get low prices. Naked Wines’s customers are its “angels”, funding independent wine
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growers and pre
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ordering their stock. The earlier you buy, the cheaper the oering.
1 THE HP GARAGE IS CALIFORNIA HISTORIC LANDMARK NO. 976
BIRTHPLACE OF SILICON VALLEY. (1939 PHOTO)
SMALL IS BEAUTIFUL
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Naked is also a good example of another outsmarng strategy:
cut out the middle man
. By dealingdirectly with independent growers, Naked oers wine lovers indie labels at keen prices. It alsocreates a buzz and community around its business – customers are real stakeholders and rate winesand exchange views as if they were across the table from one another.4.
Create a new business model
. Award
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winning toy manufacturer and markeng business Wow!Stu has a model that eecvely makes the best of all worlds: it is funded by invoice discounng,manufactures in China, crowdsources invenons via the web and uses UK talent to build retail andbranding environments to sell products globally. You’ll need a decent web infrastructure for thistype of set
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up but cloud compung makes bricks
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and
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clicks hybrids possible.Be prepared to change tack if your rst (second, third) idea falls on stony ground. Says LondonBusiness School Entrepreneurship chair professor John Mullins:“Too oen small businesses fall in
love with a product or idea and forget they are in business to solve a problem.”5.
Capitalise on the crowd
. A limited budget need not hamper your ability to build ‘fans’ and winreferrals. At razor and shaving products business King of Shaves, Will King acvely uses Twier and
his blog to assert his underdog status, while promong products.
Beyond this, sites such as Groupon discount provider show how easy it is to grow fast and monesewebsites with ‘social commerce’ – group buying whereby a deal is oered if a certain number of people sign up to it. There are tools such as SyncFu that make s
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commerce accessible to anybusiness.
6.
Compete on service
. “Show your size is an advantage by turning around quotes fast or beingexible. Take advantage of the perceived arrogance of big businesses, and listen to customers – youmay get a sense of frustraon with a large competor,” says Dominic Monkhouse, managingdirector of the UK arm of hosng company PEER1.Read customer forums and online comments on
rivals’ service. Where can you do beer?
“Clients really appreciate the fact that the person proposing the outcomes is the person who’lldeliver it,” says David Pippe, founder of DWP Public Relaons. To keep payroll down, he maintainsan associate network, so he can scale up quickly without compromising quality.
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Value and values combined
can also give small companies the edge – think Innocent Drinks, orElla’s Kitchen – and even in commodised sectors, the human touch can be a deciding factor.Eclipse internet acvely uses its service quality to compete in a crowded market. Knowing customerfrustraon with call
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centres, it keeps its operaons local and follows up on help
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desk enquiries. It’sduring those conversaons that it can nd out more about what its exisng customers want –creang condence in their judgement that gives them a lever to oer more choices.
“People respond to brand personality and knowledgeable service. They appreciate speaking directly
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