5 Small Business Tactics for Beating Industry Goliaths
“… a very small man can cast a very large shadow.” – Lord Varys, Game of Thrones
Like most businesses, we started out small. From the beginning we've been outnumbered and outgunned, a bootstrapped company consisting of only four people while our established competitors had millions in capital and hundreds of employees on the payroll.
Yet during the four years that followed we soon realized that our small size was an advantage that could be exploited.
When you're a small business there is plenty to envy the big guys for. For sure they have the name and the capital to make some serious waves. But small businesses also have some advantages and options at their disposal, the kinds large companies can only dream of.
Here are some tips and tactics to make the most of your small size:
We all know the image of the friendly baker around the corner, the one that knows his customers by name and that puts his heart and soul into the bread. Contrast that with the bread section in your average supermarket: student part-timers refill the boxes with oven buns, wearing headphones to close themselves off from the world.
The power of staying close to the customer is a small business' most important weapon, yet one that is often not exploited to the fullest.
As companies grow larger, their customer-facing functions move down to the bottom-of-the-pyramid employees. In other words, customer interaction is left to people with neither decision power nor a deep interest in the company. All they do is communicate the formalized rules and phrases set up by the chiefs at the top of the totem pole.
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In a small business, on the other hand, customer contact is typically done by the business owner or by the people close to him/her. These are people who care, who can talk with the customer in a personal, friendly, and jargon-free manner.
When listening to such a person, you sense that he or she is in charge of things, you feel influence and power. When you are a small business owner, that person is you. Make it count.
Schedule some time each week to do customer support or sales yourself. Make surprise calls to your customers, be that personal touch that is so oftentimes missing. More than once the sole fact that we as founders were in close contact with the customer, made the difference in choosing us above our competition.
Big means slow. Few companies escape this rule, so exploit your smallness by being flexible and making fast decisions.
For people in small companies it’s hard to imagine the effort involved in making a change in a large corporation. Bureaucracy, bureaucracy everywhere! Political games, useless meetings, burnouts...
Sadly, most small businesses act as sheep rather than pioneers, waiting for the big guys to make a move and show that it’s safe for them to follow their lead. Be bold instead and pursue opportunities as they pop up.
Make use of quick financing
One major advantage that large corporations have over small fish is the leverage of capital. However, today's internet era has opened up a world of opportunities in small business funding.
At Userlike we used crowdfunding to support our first expansion. Another great example for small business funding is Kabbage.com, a service that offers flexible funding options suited to the needs of small business. It allows you to get your hands on working capital within minutes, the type of flexibility small businesses need to follow up on temporary opportunities.
Pick a fight with Goliath
This tactic requires some guts, but can be a good strategy to attract media coverage: differentiate yourself from your large competitors by attacking them on a certain practice that conflicts with your values.
Perhaps you’ve once witnessed a street scene of some guys or (even better?) girls fighting. While a few people will intervene when things get too hot, the average Joe’s first response is to stop and watch the show.
People love a fight as much as they love an underdog. Give the people what they want by taking on a bigger foe. You could for example write a press release or a blog post in which you criticize your large competitor for their company culture or their lame product design. This last point is what Steve Jobs attacked Microsoft on:
"I guess I am saddened, not by Microsoft's success – I have no problem with their success, they've earned their success for the most part. I have a problem with the fact that they just make really third rate products." (1996)
This ‘attack mode’ helped in positioning Apple in relation to Microsoft, with the former receiving the public’s sympathy because of its underdog position in those days. Fourteen years later, Jobs launched a similar attack on Google’s Android with accusations of idea theft:
“I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this.” (2010)
Yet it was not nearly as effective. Apple’s mad growth in the decade following its attack on Microsoft had made it very hard to be perceived as an ‘underdog’. This made Jobs sound more like a spoiled bully than a daring underdog. So while it’s a good tactic for smaller companies to take on larger ones, the opposite isn’t true.
This doesn’t mean that you shouldn’t be careful when bashing on your big competitors. Big companies have armies of lawyers at their disposal, which is probably a good enough reason for most small businesses to avoid conflicts.
When you do choose to pursue this tactic, stick to the following guidelines:
- Use ‘vague’ accusations that people can relate to. Jobs accused Microsoft of bad design and idea theft, accusations that we can recognize yet that on closer examination are very hard to prove. And because of this also hard to disprove. A specific accusation such as “competitor Y uses child labor” would have to be defendable in court. And we wouldn't want to go to court now, would we?
- Use the attack to clarify what you stand for , for what you are doing differently. Do make sure that you significantly differ from your competitor in that aspect.
- Don’t forget to show some respect. Compliment your competitor on what they are doing right (see the “they’ve earned their success” part of Job’s quote). This puts you in a more favorable light, preventing you to be perceived as 'sour'.
- Display an attitude of caring strongly about a specific issue , instead of caring solely about your business interests.
Be honest about your size
No pun intended. Small businesses often make the mistake of hiding their size and trying to sound 'big', which makes them lose their personal touch. It's better to be open about being a small business instead and proudly communicate the benefits that come along with it.
This would be a good time to quote a fitting hero, Tyrion Lannister from Game of Thrones:
“Let me give you some advice, bastard. Never forget what you are, for surely the world will not. Make it your strength. Then it can never be your weakness. Armor yourself in it, and it will never be used to hurt you.”
Yes, you are small. This allows you to stay agile and close to your customers. Yes, your competitors are big. This makes them slow and impersonal. Let the world know.