Archive for April, 2016

Finding Success In The Future Often Means Looking At The Past

April 11, 2016

For 30 years starting in mid-1980s, many mega-store organizations ended the profitable model of individually own stores and solo salespeople in diverse sectors of the economy.

Now, in turn, most if not all of these huge chains are feeling the pinch of the Internet, much to their chagrin.

Online boutique offerings in sectors as diverse as socks, hardware, shaving implements, insurance, movie distribution are impinging on the continued success of larger, better known conglomerates. Particularly hard hit are office supply chains, food markets, drug stores, auto parts, and car dealerships.

Despite efforts to make themselves more Internet driven, the situation is becoming more acute as the Internet permeates society more deeply each day.

Ironically, in the age of the Internet it is attention to old line, small business strengths leading the way for new entrepreneurs. They include:

  • Know your audience
  • Be flexible in product offerings
  • Attention to detail
  • Become closer to the customer
  • Focus on quality
  • Be there when the customer is ready to buy
  • Keep a tight rein on the money

Interestingly, these admonitions are found in many 20th century books on leading a small business.

Today, there are common threads to the reasons small businesses often outperform their bigger rivals. Those factors contributing to these successes, include:

  • Ease of marketing: The Internet has made it possible for new start-ups to reach target audiences at relatively low cost. Lists are available for almost any consumer or B2B marketing effort.  Big data is also transforming the way small businesses market, challenging bigger organizations in sophistication.
  • Cheap warehousing/distribution: There are services now storing, shipping, charging product and leaving the key sourcing and marketing functions to the entrepreneur. Offerings including free shipping has made physical locations less important than having the right mix of products.
  • Better customer service: Smaller enterprises can focus on interacting with their customer because they are closer to the buyer. Larger entities are trying to catch up but have a long way to go.
  • Ability to act quickly: Consumer and B2B trends rise and fall rapidly; alert small businesses can move faster than larger entities. Small businesses also appear in recent years to have a better ear to the ground then their larger rivals.
  • Expanded sales range: Over the last five years, the average selling range for small businesses has increased from 55 miles from a physical location to almost 100 miles. At the same time, large organizations have seen their selling range reduced to under 50 miles as mega-stores have increasingly become lost leaders.
  • Changing financial sources: Until recent years, financing options for small businesses were limited to banks, factoring organizations, friends and family; and venture capitalists. Today there are online lending groups and other non-traditional sources.  The result is a greater variety of challenges and successes in the small business sector.

Small business success requires hard work, intelligent design, a modicum of luck and an understanding of history.

Successful small business leaders have all of them.