January 22, 2013

When Small Business Fails to Grow – Part 1

Came across this note from a contact on Twitter: “My friend just had to close his small shop. He said true retail is dead and that one just can’t compete with the big boys.” This saddens me. This shop closure represents a loss in many ways: loss of capital, loss of jobs, loss of a dream. And it didn’t have to happen. My guess, and it’s probably a good one based on the person’s comment, is that this shop owner didn’t know how to leverage his marketing assets.

He didn’t have a USP — a unique selling proposition. That is the BEST way to compete with the “big boys”. A small shop can differentiate in ways that are beyond the big box stores. It can offer more personalized service, including stronger customer relationships. It can offer niche products that are unprofitable for mass market stores to carry. It can add complementary services that enhance the value to the customer.

Marketing doesn’t have to cost a great deal of money. In fact, there are many things that a small business owner can do that cost very little, or that bring significant return on investment. Advertising is expensive and one of the worst ways to grow a small business on a budget because it often is not specific enough to track. Why pay to broadcast a radio commercial to a million people when only a few hundred are your true potential customers? A better idea is to conduct some research (requiring only legwork, elbow grease, and some time) to develop an understanding of exactly who is your ideal customer. Then creatively figure out how to channel their demand to your store. You can reach those customers with a few low-cost ideas.

It is important, too, to capture customer contact data for everyone who comes into your store. Customer relationships are the key to success for small business in the 21st century. Communicating, engaging, and interacting don’t cost much. The payoff can be thousands of dollars in profit that would otherwise go elsewhere. People shop where they feel valued, and where they get value for their money. Give your customer a reason to be loyal that goes beyond price.

Strategic alliances can also help boost revenue without spending money — partner with another business that offers products or services of interest to your customers. Effective response websites can be created and maintained for only a few hundred dollars (I have one that costs me less than $100 a year) and do the job admirably.

With a USP that is fully integrated into all your customer contacts, some attention paid to developing customer relationships, and leveraging other hidden marketing assets, small business can survive and thrive even when overshadowed by much bigger stores.

When a small shop closes, we lose the immense richness small businesses provide to the economy and the community. Think of your community without convenience stores, dry cleaners, gift shops, and restaurants. Not only are jobs lost, but the variety and potential for innovation provided by an independent business are also lost. While the rate of small business failure is greatest during its first 5 years, the usual reasons for such failure are lack of marketing (not enough customers or sales) and inadequate capitalization (not enough revenue because of lack of customers or sales).

Small businesses can compete with larger enterprises by focusing on the customers and making sure those customers’ needs are met. A satisfied customer will return again and again to repeat that positive buying experience. That is something the big boys cannot always replicate.

 

 

 

Comments (1)

Diane

April 1st, 2013 at 1:25 pm    


I’m excited I came across your blog post. As a small business owner I often look at what I cannot do versus what I can do. Knowing ones USP is very important as well having a vision and implementing a strategy to achieve ones vision.

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